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Govt plans to invest pension funds

  • Published at 12:39 am August 26th, 2016
  • Last updated at 12:39 am August 26th, 2016
Govt plans to invest pension funds
To bring dynamism in the process, a committee will be formed soon for amending 1974 public retirement law and later an executive order might be issued to make the plan effective, if necessary, official sources said. A pension fund is a common asset pool run by a financial intermediary on behalf of a company and its employees, to generate stable growth over the long term and provide pensions for the employees when they retire. “The main objective of creating this scheme is to ease financial risk of the government,” said an official in the Finance Ministry. In this context, the government will also create universal pension scheme for harmonising between private and public pension schemes. According to the proposed scheme prepared by the Finance Ministry, a pension authority will be formed to operate the pension fund that may be contributed by both the private and public employees and firms. The government primarily estimated that the size of the public pension fund will be Tk16,535 crore. MoU-sign_Photo(India) To operate the pension fund, the pension authority will set up pension enrollment office, record keeping agency and select trustee, custodian, fund manager and annuity service provider. The scheme proposes that this universal pension scheme would be made mandatory for the public sector and voluntary for the private sector. Under the plan, pension enrollment office will cater pension ID to the public and private employees and central record keeping agency will maintain all ID and data, and accounts information. As a trustee of the fund, bank will receive subscription from pensioners and firms owners. Fund manager will provide all kinds of facilities. The pension fund will be transacted through the nominated trustee bank and central record agency will share information with the fund manager. Annuity service provider will provide financial services to the pensioners and also give policy to the pensioners at the stage of their old age. Life insurance will provide proper policy to their customers. In some cases, the government will provide annuity services to the pensioners. At present, many countries use this system for commercial purpose. In USA, pension funds are being invested in stock market.
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