Lok Sabha Passes Pension Fund Regulatory and Development Authority Bill, 2011 with official amendments; Subscribers Seeking Minimum Assured Returns Allowed to OPT for Investing their Funds in such Scheme Providing Minimum Assured Returns
The Pension Fund Regulatory and Development Authority Bill (PFRDA), 2011
was passed by the Lok Sabha today with official amendments. It was earlier
introduced in Lok Sabha on the 24th March, 2011 to provide for a statutory
regulatory body the Pension Fund Regulatory and Development Authority (PFRDA)
under the provisions of the Bill. The legislation seeks to empower PFRDA to
regulate the New Pension System (NPS).
The PFRDA Bill, 2011 was referred to the Standing Committee on Finance on the
29th March, 2011 for examination and report thereon. The Standing Committee on
Finance gave its Report on 30th August, 2011. Some of the key amendments
incorporated in the Bill based on the recommendations of the Standing Committee
on Finance are as follows:
a) That the subscriber seeking minimum assured returns shall be allowed to opt
for investing his funds in such scheme providing minimum assured returns as may
be notified by the Authority;
b) Withdrawals will be permitted from the individual pension account subject to
the conditions, such as, purpose, frequency and limits, as may be specified by
the regulations;
c) The foreign investment in the pension sector at 26% or such percentage as
may be approved for the Insurance Sector, whichever is higher;
d) At least one of the pension fund managers shall be from the public sector;
e) To establish a vibrant Pension Advisory Committee with representation from
all major stakeholders to advise PFRDA on important matters of framing of
regulations under the PFRDA Act.
Beside above, the Bill would make the Pension Fund Regulatory and Development
Authority a statutory authority. Presently, it has non-statutory status. The
NPS is based on the principle that ‘you save while you earn’ especially for
retirement and is mainly for those who have a regular income.
This Bill would also provide subscribers a wide choice to invest their funds
including for assured returns by opting for Government Bonds etc. as well as in
other funds depending on their capacity to take risk.
The NPS has been made mandatory for all the Central Government employees
(except armed forces) entering service with effect from 1.1.2004. Twenty six
(26) States have already notified NPS for their employees. NPS has been
launched for all citizens of the country including un-orgnised sector workers,
on voluntary basis, with effect from 1st May, 2009.
Further, to encourage the
people from the un-organised sector to voluntarily save for their retirement,
the Government has launched the co-contributory pension scheme titled
“Swavalamban Scheme” in the Budget of 2010-11. As on 14th August, 2013, the
number of subscribers under NPS is 52.83 Lakh with a corpus of Rs.34, 965
crore.
In order to effectively invest and manage huge funds belonging to a
large number of subscribers and to ensure the integrity of NPS, creation of a
statutory PFRDA with well defined powers, duties and responsibilities is considered
absolutely necessary and would benefit all NPS subscribers.
The PFRDA Bill authorizes the PFRDA to establish a Pension Advisory
Committee by notification under Clause 44 of the PFRDA Bill, 2011. The object
of the Pension Advisory Committee shall be to advise the Authority on matters
relating to the making of the regulations under the PFRDA Act.
Market based returns and wide coverage based on several investment options in
the pension sector will build up the confidence in the subscribers, whereas withdrawals
for limited purposes from Tier-I pension account will be an incentive for them
to join NPS
//copy// source :PIB
