New Delhi, Apr 27: The minimum capital required for setting up a pension fund is likely to be fixed at Rs 25 crore, one fourth of what is prescribed for the insurers. This minimum capital requirement has been mooted by India invest economic foundation, advisor to the government on pension, which recently submitted broad contours for the operational framework and selection of pension fund managers in the light of the recent opening up of the sector.

IIEF suggested that initially there should be six pension fund houses with one in the public sector. It also said domestic mutual funds with assets of over Rs 4,500 crore and global asset management companies, pension funds or insurers with assets of over Rs 100,000 crore and 20 years experience could be allowed to sponsor a new pension fund management company.

Domestic or foreign banks or FIS registered with reserve bank and having a minimum investment portfolio of Rs 4,500 crore could also set up pension fund companies. However, IIEF has suggested stringent conditions for the proposed PFMs, saying if assets of any PFM fall below 5.0 per cent of the total assets under management of the system, then the licence could be terminated and a new entity will have to be appointed through the bidding process.

In the case of termination of licence or disqualification, the PFM should not be allowed to re-enter for another three years, it suggested.

It recommended that PFMs, which would have to pay an annual licence renewal fee of rs 2.0 crore to pension fund regulatory and development authority, should be allowed to merge or buy out other PFMs in the long-term. Bureau Report