Prajna Capital - An Investment Guide

GLOBAL pension fund assets in the 11 major pension markets fell by $5 trillion in 2008 hit by volatile markets, a Watson Wyatt report said on Monday. The study said that over 2008, global pension assets fell to $20 trillion from $25 trillion, a fall of 19% which took assets below 2005 levels. Another reason for the decrease was lower government bond yields, which pushed pension liabilities further up. Pension schemes calculate their liabilities against AA-rated corporate bond yields — if yields fall, liabilities rise and vice versa. Watson Wyatt said it had selected government bond yields to facilitate liability comparisons across the 11 countries. All countries in 2008 saw significant negative growth in pension assets, the study noted, except for Germany, which was protected by its high allocation to bonds. Despite losing market share in the past 10 years the United States, Japan and the United Kingdom remained the largest pension markets in the world, accounting for 61%, 13%...

Private Insurers & Mutual FundsWith Experience Of Long-Term Funds May Take Lead BANKS, insurance companies and mutual funds will soon have the opportunity to manage pension funds. The Pension Fund Regulatory & Development Authority ( PFRDA ) sought applications from entities wishing to float pension funds to manage retirement assets of all Indian citizens, other than government employees already covered under the pension scheme. The criteria set out by PFRDA entitles government institutions, banks, insurance companies and mutual funds to sponsor a pension fund. One important condition is that the sponsor must have at least five years’ experience in running debt and equity funds and should have managed average monthly assets of Rs 8,000 crore for 12 months ending November 30, 2008. Insurance companies, being the only manager of long-term finance, are perhaps best suited to manage pension funds. We are very keen to participate in pension fund management. Among private li...

1) Voluntary pension fund Pension funds and retirement planning go hand in hand. A typical pension scheme involves making a voluntary contribution during one’s working life. The pension fund in turn invests it to create a corpus and pays a pension income to the individual on his/her retirement. A 39-year-old salaried individual contributes Rs 10,000 monthly to an eligible pension fund and is planning to retire at 45 years. On his retirement, he/She will receive a monthly pension of Rs 12,000 from this pension company. His taxation would be as follows: Pre-retirement, the contribution to the pension fund of Rs 1,20,000 is allowed as a deduction from his taxable income up to an aggregate amount of Rs 100,000 under Section 80C of the Income-Tax Act. He/She being in the highest bracket would get a tax break of Rs 33,900 on this account. On his retirement, his monthly pension will be taxed as salary at the applicable slab rates. Where He/She opts for a commuted amount of pension at the tim...