News: UK insurance cos eye Indian pension space

(TV18 22/03/2006) Mumbai - British insurance companies like Sun Alliance, Aviva and Prudential, who have joint venture partners in India, are upbeat about the government's intention to raise the FDI limit in insurance to 49%. As tariff's are decontrolled starting January 2007, they can bring in new products along with the additional capital.

But, what they are now eyeing is a share of the pension pie, they hope the PFRDA bill, which the government hopes to introduce in the monsoon session of Parliament, will make the envrionment a lot friendlier.

Stephen Haddrill, DG, Association Of British Insurers says, "What we need is a stable regulatory regime and a single regulatory regime. To have a pensions regulator and an insurance regulator at the same time, there's a problem there.

In the UK, insurance companies pay more pensions than the government does. That's the situation they want to see in India. Life insurance companies being allowed to act as pension fund managers offering bundled insurance and pension products. 89% of the Indian workforce is not covered by any pension scheme and it's a huge market waiting to be tapped.

"People are talking about a limit of six players in the market. There's a real appetite in the industry to serve the market. So, why limit it at that number? You're actually cutting off opportunities," reacts Haddrill.

They also want tax incentives to encourage long term savings and a higher fees for intermediaries offering advice-based products. The total central and state pension liability is over Rs 64,000 crore. Couple this with a huge uncovered market and you realise just why foreign players want faster liberalisation.