The finance ministry will appoint a pension regulator in April. It will also open the pension business to government employees first and then extend it to the private and unorganised sector.

According to the roadmap drawn up by the ministry, there will be six private fund managers and a central depository in the Indian pensions market. Banks and post offices will act as points of presence for collection of pension contribution.

The Pensions Fund Regulatory and Development Authority will initially be set up through an executive order but the government proposes to introduce a bill in Parliament.

The regulatory body will be modeled on the lines of the Securities and Exchange Board of India and the Insurance Regulatory and Development Authority.

Official sources said that the new regulator will decide entry, investment and other rules, which will be applicable to the various players in the business.

They indicated that the government will adopt a system more in line with the recommendations of the Dave Committee report on Old Age Social Income Security (Oasis) rather than the plan laid out by IRDA in 2001.

Officials said new government recruits will be able to avail of a two-tier pension system.

According to this, a prescribed portion of their salary will be earmarked as contribution towards pension, while the government will make a matching contribution.

In addition, they can also open a separate pension account which will work on the lines of a public provident fund.

Those who avail of the scheme will be allowed to choose their fund manager and also have the option to shift to another player if they are not satisfied with the management of their funds.

The net asset value of their investment will be available on a daily basis.

Officials said the problems associated with lack of data on pensioners have been sorted out and the department of pensioners' grievances would warehouse such data. Data on existing pensions have been collected and is already in place, they added.

According to the initial plan, for the private and the unorganised sector, the minimum contribution for the fund was to be fixed at Rs 500 a year.

If the deposit tenure was less than 35 years, the government had proposed to increase the annual contribution so that the minimum amount after 35 years was Rs 200,000.

Pension highlights

• Six fund managers, central depository, points of presence in banks and post offices proposed;
• Entry, investment rules to be prescribed by pension regulator;
• Investors to have option to change fund managers;
• Daily NAV to be made available.