JOIN USLIC holds back on allotment of new pension system
“We have halted the operation following the IRDA circular. We have approached the regulator to find out if there could be any exception,” LIC Managing Director A K Dasgupta told PTI. When LIC had applied before interim pension regulator PFRDA to undertake activity of Points of Presence (PoP), there was no such circular, he said, adding that, however, the company will abide by the regulatory order. Earlier this week, IRDA asked insurance companies to set up a subsidiary if they want to be Points of Presence (PoP) under the New Pension System.
“No insurance company can act as PoP,” IRDA circular had said. PoPs are contact and collection points for customers wanting to be part of NPS. LIC is only life insurance company which has been shortlisted by the PFRDA as one of the PoPs. The other 21 PoPs include, State Bank of India, ICICI Bank, IDBI Bank, Oriental Bank of Commerce, Axis Bank and Union Bank of India. The investment in the subsidiary would be held as a non admitted asset in the insurance company’s accounts and would not be considered for the purpose of computation of solvency margin, IRDA said.
Norms for formation
Setting guideline for formation of a subsidiary, the insurance regulator said the capital requirements of the subsidiary would be met through the shareholders’ funds.
PFRDA rolled out pension plan for all citizens other than government employees on May 1. Pension fund managers have to manage three separate schemes, each investing in a different asset class. These assets classes are equity, government securities and credit risk bearing fixed income instruments.
On the basis of the recommendations of the NPS Trust and on advice from the government, it has been decided that investment by an NPS participant in equity would be subject to a cap of 50 per cent.