New Delhi, June 2: The insurance industry is thoroughly confused and discouraged about the government’s plans to set up a separate pension regulator.
With the government proposing to form a separate pensions regulator — Pension Regulatory Development Authority (PRDA) — it is becoming exceedingly difficult for life insurers who intend to sell annuities to second-guess the moves of the new forthcoming regulator.
“We don’t know the rules and conditions which the new regulator will come up with. But if they are asking us to set up two different companies and adhere to two separate solvency margins, it will make things extremely difficult for us,” said Peter J Akers, CFO and appointed actuary of Birla Sun life Insurance on the sidelines of an educative session on unit-linked insurance products.
Akers said an insurer will only increase its cost burden and other administrative responsibilities if it forms a separate pension company.
“It is just going to increase costs for everybody and make the entire set-up very complicated. How is any one company expected to have two huge solvency margins. We still don’t understand the need of a separate pension regulator in India when it is not followed anywhere else in the world,” said Akers.
The industry is also unhappy with not having any post-budget debate on pensions. Earlier, at the felicitation of the outgoing chairman of IRDA, Rangachary, private insurers had said the government was keeping the industry out from any deliberations on the new system.
The industry is also perturbed about the fact that apart from UTI, only five other pension funds are permitted to be formed. Insurers feel that it was needless to have such an arbitrary number as their are 12 active life insurers who are either doing or are equipped for handling pension business.