GOVT TO LAUNCH NEW PENSION SCHEME FOR PRIVATE SECTOR

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. The government had in 2004 launched a new pension scheme for its staff in order to reduce liabilities and offer workers better returns on their savings.