mumbai the insurance regulator has stymied its pension counterparts proposal to involve insurers in the distribution of the new pension system nps in a circular issued on monday to all insurance companies the insurance regulatory and development authority irda said no insurer could act as a point of presence for nps the only way insurance companies can participate in pension plan distribution is by setting up a 100 subsidiary for the purpose the money for the subsidiary should come from the promoters of the insurance companies and policyholder funds must not be used for the purpose also the investment in the subsidiary would be held as a nonadmitted asset in the insurance companys accounts and not be considered for computation of solvency margin which is the insurance industrys equivalent of capital requirementearlier the pension fund regulatory development authority pfrda had appointed 22 entities as points of presence for nps in other words individuals could transact through branches of these entities which included large banks such as allahabad bank axis bank and sbi affiliates besides banks finance companies and mutual funds pfrda had also approved the life insurance corporation and bajaj allianz as points of presence in the revised list only lic appeared after irda turned down bajaj allianzs proposal now the regulator has said no insurer can function as a point of presencein the case of any extraordinary lapses and contingencies that affect the interests of the subscribers the resultant losses would be funded through the shareholders account of the insurance company in effect the promoters of the insurance companies would meet all such losses under no circumstances would the policyholders funds be accessed for the said purpose irda said the insurance regulator added that if the pension authority ever introduces guaranteed return products insurance companies will need to take its permission before distributing them through their subsidiaries for distributing pension schemes pfrda called for companies with a minimum net worth of rs 100 crore profit record and distribution network the pension authority also wanted distributors to be regulated by either rbi sebi or irda most private life companies failed to qualify because they continue to be lossmaking industry officials feel that irdas concern on allowing companies to become points of presence was diversion of capital meant for the life insurance business