The Centre may allow more than six companies to set up shop in the pension funds sector.

The Cabinet note being moved by the finance ministry has inserted a provision that there will be six or more pension funds in the new sector.

The provision is important since several domestic mutual fund companies as well as fund management companies from abroad have sent representations to the government against restricting the number of pension funds.

The ministry had earlier restricted the number of pension funds to six because allowing too many options could create problems of choice for the depositors.

People joining government services this October will have to make their choice soon after their recruitment. With each company allowed to hawk three types of funds, there will be 18 options to choose from, with just six players.

However, finance ministry sources said the new clause was inserted in the note to show that the government was willing to increase the number of companies entering the field.

The number of annual recruits to government services is about 33,000, excluding the defence services.

Meanwhile, the railways have decided to accept the redefined contribution-based pension plan for their employees.

Senior officials of the railway ministry said they would accept the notification to be issued by the department of personnel and training.

The Cabinet is expected to approve the pension scheme by this month. Once it is approved, the finance ministry will issue the relevant notification to set up the Pension Fund Regulatory and Development Authority, which will seek registration of fund managers to create pension products for government servants as well as employees in the unorganised sector.

More options

• The finance ministry had earlier restricted the number of pension funds to six because allowing too many options could create problems of choice for the depositors.
• Several domestic mutual fund companies as well as fund management companies from abroad have sent representations to the government against restricting the number of pension funds.
• The number of annual recruits to government services is about 33,000, excluding the defence services.