The Lok Sabha on Wednesday passed the Pension Fund
Regulatory and Development Authority (PFRDA) Bill, which seeks to give
statutory powers to the interim regulator, constituted way back in 2003
by an executive order.
The pension reforms Bill has fixed the ceiling on foreign direct investment (FDI) in the pension sector at 26% — to move in sync with that for the insurance sector.
The Bill passed by the lower house on Wednesday carried some amendments to the one tabled in 2011.
The earlier version had kept the option of FDI cap outside the purview of the legislation, as it was believed the FDI cap could be raised through an executive order.
However, the revised Bill included it as part of the legislation following objection from Parliament’s standing committee on finance. Other amendments include providing subscribers the option of investing in the schemes that provide minimum assured returns.
On this, Bhratuhari Mahtab (BJD) asked for amendments that the government should give minimum assured returns equivalent to at least rate of interests provided by the Employees' Provident Fund Organisaiton (EPFO).
Finance minister P Chidambram said how can he give an undertaking in advance that assured returns would be higher or lower to EPFO rates. However, all the money could be invested in government securities, he said.
The proposed new pension fund regime would make it mandatory that at least 40% of the subscribers' money has to be annuitised.
The new pension fund regime, if it comes into force, will allow subscribers to withdraw up to 25% of their contributions in some cases. These cases and the number of withdrawals will be decided by PFRDA.
The proposed law will give statutory powers to PFRDA, which is anyway regulating funds to the tune of Rs 35,000 crore at the moment. It has been regulating NPS since January 1, 2004. NPS is different from the earlier pension system in that it has defined contributions, while the earlier one had defined benefits.
All central government employees, except armed forces, who joined the services since January 1, 2004, are part of NPS. So far, 27 states and Union Territories have notified NPS for their employees. There are now eight fund managers for NPS.
NPS has been launched for all citizens of the country. It also includes unorgnised-sector workers, on a voluntary basis, since May 1, 2009. To encourage people from the unorganised sector to voluntarily save for their retirement, the government also launched the co-contributory pension scheme, called the ‘Swavalamban Scheme’ in Budget 2010-11. As on September 7, 2012, NPS had a subscriber base of 3.75 million.
The PFRDA Bill was originally introduced in 2005 to provide for a statutory PFRDA. However, that Bill and the official amendments, based on the recommendations of the standing committee, could not be considered by the 14th Lok Sabha and lapsed with the lower House’s dissolution.
The pension reforms Bill has fixed the ceiling on foreign direct investment (FDI) in the pension sector at 26% — to move in sync with that for the insurance sector.
The Bill passed by the lower house on Wednesday carried some amendments to the one tabled in 2011.
The earlier version had kept the option of FDI cap outside the purview of the legislation, as it was believed the FDI cap could be raised through an executive order.
However, the revised Bill included it as part of the legislation following objection from Parliament’s standing committee on finance. Other amendments include providing subscribers the option of investing in the schemes that provide minimum assured returns.
On this, Bhratuhari Mahtab (BJD) asked for amendments that the government should give minimum assured returns equivalent to at least rate of interests provided by the Employees' Provident Fund Organisaiton (EPFO).
Finance minister P Chidambram said how can he give an undertaking in advance that assured returns would be higher or lower to EPFO rates. However, all the money could be invested in government securities, he said.
The proposed new pension fund regime would make it mandatory that at least 40% of the subscribers' money has to be annuitised.
The new pension fund regime, if it comes into force, will allow subscribers to withdraw up to 25% of their contributions in some cases. These cases and the number of withdrawals will be decided by PFRDA.
The proposed law will give statutory powers to PFRDA, which is anyway regulating funds to the tune of Rs 35,000 crore at the moment. It has been regulating NPS since January 1, 2004. NPS is different from the earlier pension system in that it has defined contributions, while the earlier one had defined benefits.
All central government employees, except armed forces, who joined the services since January 1, 2004, are part of NPS. So far, 27 states and Union Territories have notified NPS for their employees. There are now eight fund managers for NPS.
NPS has been launched for all citizens of the country. It also includes unorgnised-sector workers, on a voluntary basis, since May 1, 2009. To encourage people from the unorganised sector to voluntarily save for their retirement, the government also launched the co-contributory pension scheme, called the ‘Swavalamban Scheme’ in Budget 2010-11. As on September 7, 2012, NPS had a subscriber base of 3.75 million.
The PFRDA Bill was originally introduced in 2005 to provide for a statutory PFRDA. However, that Bill and the official amendments, based on the recommendations of the standing committee, could not be considered by the 14th Lok Sabha and lapsed with the lower House’s dissolution.
