Mumbai: Fund managers for the new pension system would be only from Indian entities, the Pension Fund Regulatory and Development Authority (PFRDA) said in an official release said.

The release comes in the wake of reports that foreign and private firms may be allowed to manage pension funds.

The PFRDA has invited applications from public sector entities for appointment of fund managers. Only government-owned companies or public financial institutions in which not less than 51 per cent paid-up share capital is held by the central government or partly by it and one or more state governments, can apply.

The sponsors must have at least five years experience of fund management and average assets under management of not less than Rs.10,000 crore for March 2007. So, even among public sector entities, only those with sufficient experience and financial strength can apply.

The selected entity would have to incorporate the pension fund manager as a separate public sector company.

Direct or indirect foreign investment in the pension fund manager, if any, shall not exceed 26 per cent of its paid-up share capital. This is in accordance with the report of the Standing Committee on Finance, which examined the PFRDA Bill 2005.

The Left parties, meanwhile, asked prime minister Manmohan Singh to immediately freeze such a process pending a final decision on the New Pension Scheme (NPS).

In a letter to the prime minister, the Left parties wondered how the finance minister allowed an interim body like the PFRDA to go ahead with invitation of bids for sponsoring the pension fund under NPS.

The Left is opposed to NPS, which would be based on contribution by the employees, and have said that only public sector entities should be entrusted with the task of managing the pension funds.

The government, while conceding the demand for vesting state-run companies the task of managing the funds, has allowed for FDI in the entities that will be floated by public sector institutions for the job.

"As you are aware, the Left parties have been opposed to PFRDA Bill. We have had a number of rounds of discussions on the matter in the UPA government-Left Coordination meeting," a letter signed by senior Left leaders said.

The PFRDA has already appointed National Securities Depository Limited (NSDL) as the central record keeping agency and invited preliminary bids to appoint pension fund managers. The last date for submitting expression of interest is May 25.

Once the pension fund managers are appointed, PFRDA will allow them access to the pension funds of employees of central government and state governments.