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Foreign insurers, asset managers and banks are preparing to tap India's retirement savings. On August 23 the Indian government cleared a plan that is a first step towards pension deregulation.
New government employees will move to a defined contribution pension system in January next year instead of the defined benefit scheme to which government employees currently contribute. The plan will be managed by private managers and will be open to the self-employed or those who work in the vast unorganized sector as well as company and government employees.
UK Sinha, a senior finance ministry official, told a capital markets conference in Mumbai early last month that an interim pension regulator would be set up soon that will lay down the rules and license private fund managers to run the scheme. Investment rules were expected to be a lot more liberal than current ones, he added, and would allow for increased investment in equity as well as investment abroad.
HSBC chief executive Stephen Green, on a visit to India soon after the conference, told the media that his bank was keen to enter India's pension sector and would wait for the regulations.