In a significant update for its staff, the Bank of India (BOI) has granted employees the freedom to choose their preferred pension fund and asset allocation under the Defined Contributory Pension Scheme (DCPS). This move aligns with the guidelines issued by the Pension Fund Regulatory & Development Authority (PFRDA), providing greater flexibility and control over retirement savings for employees. Earlier, the employees did not have the option to choose Pension Fund.
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New Policy Highlights
- The policy is applicable to employees who joined the bank on or after April 1, 2010, and are mandatorily covered under the DCPS.
- Earlier, BOI had adopted the Corporate-CG Scheme in 2012, with the default investment managed by SBI Pension Fund Pvt. Ltd..
- Following recent PFRDA guidelines under Section 20(2)(d) of the PFRDA Act, 2013, subscribers can now choose from multiple pension fund managers and asset allocation schemes.
Switch to Subscriber-Level Model
Based on a recommendation by the Indian Banks’ Association (IBA) Standing Committee on HR, the bank’s board approved the shift from the Corporate-CG Scheme to a Subscriber-Level Model on August 30, 2024. This enables individual employees to:
- Select any one Pension Fund Manager (PFM) approved by PFRDA.
- Decide their own asset allocation across various asset classes.
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Background
BOI adopted the DCPS in 2010, which is governed by the National Pension System (NPS). The earlier model centralized the investment approach, offering limited autonomy to employees. The new approach empowers employees to make personalized investment decisions to suit their financial goals and risk appetite. This policy change underscores BOI’s commitment to employee-centric initiatives, reflecting broader trends in the banking industry toward offering enhanced financial independence and flexibility to staff.
