New Delhi, July 13: Favouring a competitive market to ensure growth in long-term savings, leading industry chamber, CII today said there should not be any cap on the number of players entering the Indian pension sector and life insurers should not be asked to segregate their existing pension business. "There should be no cap on the number of players permitted to participate in the pension market. Limiting the number of players would impede growth in the pensions market and also restrict the choice available to consumers," the Confederation of Indian Industry said in a statement.
Stressing on level-playing field, CII said there was an urgent need for government to initiate pension reform in the country as the number of people above 60 years was expected to rise to 9.0 per cent of the population by 2016.
Pointing to the vast population of people still remaining out of any social security cover, it said provident fund and pension schemes cater to only 11 per cent of the organised sector. The pension schemes of life insurance companies cover a fraction of the unorganised sector. "The cost to the exchequer on account of government pension schemes is immense and can not be sustained in the long run," CII said putting up a strong case for entry of a large number of private players in the pension sector.
CII, however, favoured a suitable entry criteria that may be prescribed by the upcoming pension fund regulatory and development authority, as it is the case with IRDA.
The chamber said life insurance companies should not be asked to form a separate entity for their pension business as IRDA has already mandated maintainance of separate balance sheet for their pension business. Bureau Report