The central government has appointed India Invest Economic Foundation, a private agency, as consultant for operationalisation of new pension scheme by this month.
Under the 12-month assignment, IIEF would assist the Department of Economic Affairs (Ministry of Finance) and the newly set up interim Pension Fund Regulatory and Development Authority in rolling out the new "defined contribution" pension scheme.
"Starting today, IIEF has decided to focus entirely on issues related to pension reforms and financial literacy," IIEF managing director Gautam Bharadwaj told PTI in New Delhi.
Set up in 1990, IIEF, a private agency working in the field of financial education and training, had been assigned by the World Bank to commission research on India's pension sector.
In view of the mounting pension liabilities due to the present system of defined benefit scheme, the government had decided to open the pension sector to public and private players and appointed an interim regulator.
The DC pension system would be applicable to new recruits, excluding defence personnel. The old GPF would be discontinued. The new regime envisages that 10 per cent of an employees' salary goes to pension along with a matching contribution from the government.
Till pension fund managers come into existence, the government would transfer 10 per cent of the salary of an employee to an escrow account with RBI, which would be allocated later to various funds of the employees' choice.
The new pension regime would offer consumers three choices -- a debt fund, a growth fund with higher equity exposure, and a balanced fund with equal mix of equity and debt; there would be easy portability among the schemes.
New pension schemes would be unit-linked, which means the net asset value of the fund would fluctuate with the day-to-day market price of securities.
The scheme is expected to offer lower administration costs through the centralised record keeping.
National Securities Depository Services is a candidate for the role of central record-keeping agency. Insurers and fund managers like ICICI Prudential, HDFC Standard Life,Principal Financial, Templeton, DSP Merrill Lynch and Kotak are waiting for the guidelines to before venturing into the pension sector.