Date:12/02/2007 URL: http://www.thehindubusinessline.com/2007/02/12/stories/2007021202131400.htm

Back UTI MF may get big pie of new pension fund

N.K. Kurup
Namrata Gada

" The pension scheme can be implemented by a Cabinet decision and we have indications we will get the majority share."

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Mumbai Feb. 11 UTI Mutual Fund is expected to manage a large part of the government employees' pension fund under the new pension scheme being finalised.

Mr U.K. Sinha, Chairman and Managing Director, UTI Asset Management Company, said UTI Mutual Fund would get a major share of the corpus. Besides UTI Mutual Fund, SBI and LIC Mutual Funds could be managing the corpus, estimated to be around Rs 400 crore.

The government has already indicated a new investment scheme for pension funds collected from Central and State Government employees recruited from January 1, 2004.

All States, except Kerala, West Bengal and Tripura, have agreed to the new pension scheme. An interim scheme for the management of the fund is expected to be announced shortly.

"We have indications that we will get the majority share," Mr Sinha, who was Joint Secretary in the Ministry of Finance before joining UTI, told Business Line.

UTI Mutual Fund is the largest fund house in the country in terms of the number of investors though it lost the number one position in terms of assets under management (Rs 37,535 crore) to Reliance Mutual Fund recently (Rs 39,019 crore) as on January 31.

Cabinet decision

The Finance Minister had indicated that the new pension fund would be managed by public sector fund mangers.

The fund managers will have to follow the investment norms laid down by the Finance Ministry, which allow investment of 15 per cent of the fund in equities — 10 per cent through mutual funds and five per cent directly.

According to Mr Sinha, the scheme does not require any legislative measure and can be implemented by a Cabinet decision.

The fund collected from the employees recruited since 2004 is being kept in a government account earning a fixed interest. The argument in favour of the scheme is that it could earn a higher return for the employees' fund.

According to reports, the Government has initiated the process of selecting a Central Record-keeping Agency (CRA) for implementing the new pension system. The CRA will maintain the data system and will be responsible for keeping the accounts of each members of the scheme.