The government is planning to float global tenders for pension fund majors. The Pensions Fund Regulatory and Development Authority, being set up by the finance ministry, will specify the net worth criterion for shortlisting the fund managers.

According to finance ministry officials, the government has decided to allow only six pension funds to operate in the country.

Five licences will be issued by the regulator to private funds through global selection, and one will be set aside for a public sector pension fund manager. The UTI Mutual Fund might apply for the sixth licence, they said.

The finance ministry has not specified any ceiling on foreign investment in the sector. However, with help from the pensions regulator, it may look at the issue of repatriation of profits earned by the funds.

Finance ministry officials said the pensions regulator would be in place by May. It will decide the norms, including those on entry and investment. "A global selection will ensure that the best players operate in India," an official said.

The government's pensions business will be opened first, and the private sector will follow in the course of 2003-04.

Apart from the six fund managers, there will be a depository in the pensions market. Banks and post offices would act as points of presence for collection of contributions from individuals, the officials said.

There will be a two-tier system for new government recruits, with a part of their salary earmarked as pension contribution.

The Centre will chip in with an equal amount. The employees can open a separate pension account, which will work on the lines of a public provident fund account.

The finance ministry sources said individuals would be allowed to choose their fund managers, and would have the option to switch. The net asset value of their investment would be made available by the pension fund managers daily, they added.

It has also been decided that the department of pensioners' grievances will warehouse data.

Information on existing pensions had already been collected, the officials said.

Pension selection

• Pensions regulator to be in place by May.
• No limit on foreign investment planned.
• Govt's pension business to be opened up first.
• NAVs to be disclosed daily.
• Individuals can switch fund managers.