I always keep hearing from private sector employees as they don’t get pension after their retirement age… but here is the solution and good news which is very simple to open and invest as well. Government of India has launched pension scheme for all the employees where one can start with a least yearly investment of Rs.6000.00 which is also eligible for tax benefit also and administrative charges are least as compared to other private pension funds.
NEW DELHI (Reuters) – The government will launch a new pension scheme for all private sector employees and self-employed persons from May 1 that will allow investment of 50 percent of funds in stock markets, an official said on Thursday.
“The new pension scheme for private sector employees is launched from tomorrow,” Meena Chaturvedi, Executive Director, Pension Fund Regulatory and Development Authority (PFRDA) told Reuters.
The scheme, which was earlier scheduled to be launched from April 1, was deferred in view of the Model Code of Conduct for Elections in the country.
In February, the PFRDA shortlisted six fund managers – subsidiaries of Reliance Capital, UTI, State Bank of India, IDFC, ICICI Prudential Life Insurance and Kotak Mahindra Bank for the new scheme.
An expert panel headed by HDFC Chairman Deepak Parekh, had recommended that the scheme should give investors the option to invest entirely in equity funds.
The panel, constituted by PFRDA, also recommended that other options could include a combination of investment in government bonds, bank deposits, liquid mutual funds, corporate bonds and index funds.
PFRDA has, however, reduced the limit of pension fund investment in stock markets to 50 percent. The subscribers will now have the option to invest half of their savings in an index fund comprising of country’s main indices.
They can also invest 100 percent of funds in central and state government bonds or selective mutual funds and fixed bank deposits.
Who will monitor this pension plan?
PFRDA was established by Government of India on 23rd August, 2003. The PFRDA Bill, 2005 is awaiting approval of Parliament. Pending passage of the Bill, the Government has, through an executive order dated 10th October 2003, mandated PFRDA to act as a regulator for the pension sector. The mandate of PFRDA is development and regulation of pension sector in India.
What is the administrative charges for maininting my funds?
The fund will be managed by six fund managers, appointed by the government at annual fees of 0.0009% of the invested amount, which is less than 1 paisa per Rs 100. The fund managers appointed by the PFRDA are SBI, UTI Asset Management, ICICI Prudential Life Insurance, Reliance Mutual Fund, IDFC Mutual Fund and Kotak Mahindra.
Where can I open my pension account?
To open a pension account, you will have to approach the branches of any of the 22 ‘point of presence’ (POP) service providers selected by the authority. These include the SBI and all its seven subsidiaries as well as ICICI Bank and Punjab National Bank. PFRDA chairman D Swarup said that to start with, there would be around 300 POPs in the country, which will soon be ramped up to more than 10,000.
The investor’s account will be kept by a recordkeeping agency appointed by the PFRDA. However, the investor will need to interact only with the POP, where he can deposit his annual/monthly contribution. The scheme gives the investor the option of shifting from one fund manager to another merely by instructing his POP to do so. The POP will convey the same to the record-keeping agency, which will shift the fund to the new fund manager, selected by the investor.
Source: Times of india and PFRDA website