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MFs look for pension business nod in Budget
BS Markets Bureau in Mumbai |
February 20, 2003 14:44 IST
The mutual fund industry has made a Budget proposal to allow asset management companies to participate in the pension industry.
According to Sanjay Sachdev, chief executive officer and managing director of IDBI-Principal MF, AMCs should be allowed to develop pension products.
Incidentally, the Insurance Regulatory Development Authority has not allowed mutual funds to participate in the pension sector. Following the opening up of the sector, many foreign-owned funds had expressed their willingness to participate in the domestic pension business.
Sachdev said that mutual funds have demonstrated strong administrative, record keeping and investment management expertise. The recommendation is to have a separate pension authority to oversee the operations of AMCs with respect to the pension business.
The average life expectancy of an Indian is projected to be around 80 years by 2020, which will bring in an expected life span of 20 years beyond the age of 60. In fact, the number of people aged 60 and above is also expected to move to 8.9 per cent of the population by 2016 (around 13.5 crore people).
"Thus, an average Indian will need adequate savings to support approximately 15-20 years of retired life once he or she has crossed the productive working years," Sachdev pointed out.
"With increased life expectancy, coupled with traditional modes of income security like joint family systems facing collapse, there is expected to be a greater burden on our pension system going forward," he said.
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