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IRDA may issue pension bonds at Rs 100 face value

Insurance Regulatory and Development Authority chairman N Rangachary on Thursday floated a novel idea of 'pension bonds' worth Rs 100 and higher denominations in a bid to popularise social security schemes among the unorganised and self-employed sectors.

The bonds, which would be at affordable price and have long-term maturity period would be repaid in the form of pension after the person retires, Rangachary told reporters on the sidelines of a function of the insurance ombudsman.

The bonds would not bear any interest as offered by others, he said.

He said the bonds could be 'non-transferrable' with face value of Rs 100 or higher denomination of Rs 1,000. The amount has been kept low keeping in mind the unorganised sector.

The bonds would also facilitate self-employed persons who might not be able to pay a handsome premium regularly but would like to have a pension stream in the future years.

The concept is being floated for comments and if accepted the regulator would decide who would issue the bonds -- government or IRDA, who would administer and manage it, and the different channels through which the bonds could be sold.

Rangachary said banks and post offices could be used to sell the bonds.

He also assured that persons investing in these pension bonds would get tax exemptions as is the case with other annuity schemes.

The income bracket to which a major population of the unorganised sector belongs would get tax exemptions any way, he said.

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