Over 120 delegates from mutual fund, insurance, bank and pension fund industry congregated at the Indian Pension Fund Congress 2013 held in Mumbai.
Themed ‘Providing investment and partnership opportunities for pension funds, investors, asset managers and government’, the event kicked off on November 29 with panelists sharing insights on global best practices and innovation in pension funds and insurance industry.
VK Sharma, MD, LIC was bullish on the prospects of variable annuity products. Variable insurance products provide a minimum guaranteed payment along with additional income depending on performance of portfolio since they typically invest in equity. He suggested pension fund managers to market pension products like mobile phone companies by generating a need among people.
In a panel discussion moderated by Kshama Fernandes, CEO, IFMR Capital Finance on ‘Old age planning for young country: policy to implementation’, Ajay Shah, Senior Fellow, National Institute of Public Finance and Policy and Renuka Sane, Researcher, Indian Statistical Institute recommended passive fund management strategy to generate optimal returns in pension funds due to their cost effective nature.
While discussing product innovation, a panel consisting of SB Mathur, part time member, IRDA, Arvind Usretay of Mercer Consulting and Anil Ghelani, CIO, DSP BlackRock Pension Fund Manager stressed the need to shift existing model of pension funds from Direct Benefit (DB) to Direct Contribution (DC). Usretay was of the view that health insurance cover should be added to pension products so that retirees can get a monthly income flow along with a health cover.
Biswajit Mohanty, CEO, SBI Pension Fund stressed that pension fund managers should assume fiduciary responsibilities of their subscribers by shielding them from volatility, downturn and capital erosion. The industry needs to put in place a strong risk management system, transparent model, complete disclosure, simple terminologies, colour coding and know your product (KYP) compliance so as to build trust among people, he said.
In another panel discussion on alternative investments for pension funds, panelists consisting of S Mainak, MD LIC, Arvind Chari, Head – Fixed Income, Quantum MF and Vineet Sukumar, CFO, IFMR Capital urged policy makers to allow pension fund managers to invest in private equity and real estate just like developed economies. The panel believes that these avenues can beat inflation and generate optimal returns for pension fund subscribers in a long term.
Explaining how niche strategy worked well for his company, Davinder Singh, Chief Business Officer, DLF Pramerica said that his company had sold life insurance policies to many army personnel who are considered as risky for insurers to cover due to uncertain events. However, his company found that physical fitness of such professionals is far better than other people and death mortality rate in army is only 1/10th of death occurs due to road accident. He also recommended insurers to give their services in remote areas to increase penetration and grow business.
In a panel on how mutual funds and ETF are changing the alternative investment landscape, Sanjiv Shah, CEO, Goldman Sachs MF and Anubhav Srivastava, Head- Product Development, Motilal Oswal MF explained how low cost ETFs can help build a huge corpus for retirees in the long run. The panel said that ETFs charge very low expense ratio compared to active funds. The difference can be added to portfolio and create major difference over a long period, they added.
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