PensionIndia

India's cabinet has approved allowing foreign direct investment in the country's burgeoning pension sector as it looks to press ahead with stalled economic reforms.

Global financial players have long been lobbying for access to the lucrative pension sector that is expected to expand rapidly as millions of young Indians join the work force in the world's second most populous nation.

The change is contained in a proposed pension bill to be considered by parliament during the winter session which begins next week and is seen by investors as a key economic reform.

The government today approved amendments to the PFRDA Bill 2011 while agreeing to the proposed 26 per cent foreign investment in the pension sector but refrained from providing assured returns to subscribers in the proposed law.

The government had decided not to mention FDI cap in the legislation itself for retaining the flexibility of changing it through an executive order. The 26 per cent FDI cap is to be mentioned in the regulations to the legislation.

The changes to the PFRDA Bill were approved by the Union Cabinet at its meeting here.

Only a few months ago, an executive from the top reverse mortgage lender called me and said it felt as though we were living through Andrew Ross Sorkin’s “Too Big to Fail.”

Much like the movie, many any of the institutions that helped build the industry were disappearing overnight. Obviously on a smaller scale, but nonetheless just as dramatic for many of us who have built businesses on top of this industry as the largest reverse mortgage lenders exited one after the other.

MF Global Holdings Ltd., the holding
company for the broker-dealer run by ex-Goldman Sachs Group Inc. (GS)
co-chairman Jon Corzine, filed for bankruptcy protection as it
seeks to reorganize after making bets on European sovereign

British companies that provide employees with defined-benefit retirement plans face a pension deficit of 295 billion pounds ($476 billion), the Sunday Telegraph reported, citing research by accounting firm KPMG.

The aggregate deficit is the mark-to-market funding valuation of all defined-benefit pension plans in the U.K. as of Sept. 30, the London-based newspaper reported. BT Group Plc’s pension fund liabilities are about 250 percent of its market value, compared with 195 percent for BAE Systems Plc (BA/) and 112 percent for Royal Bank of Scotland Plc, according to the Telegraph.

As companies battle the economic slowdown, the employees at large companies in the US and Europe seem to be facing the axe in a major way.

More than 1,35,000 job cuts have been announced by just about a dozen multi-national companies in past few months in their efforts to slash costs and those from the financial services space are among the worst hit.

However, the employees in India have largely been spared of these layoffs, although most of these companies have significant presence in the country.