Central Government clears changes in PFRDA Bill, allows 26% FDI in pension

Govt clears changes in PFRDA Bill, allows 26% FDI in pension

The govt on Wednesday approved amendments to the PFRDA Bill 2011 while agreeing to the proposed 26 percent foreign investment in the pension sector but refrained from providing assured returns to subscribers in the proposed law.

The government had decided not to mention FDI cap in the legislation itself for retaining the flexibility of changing it through an executive order. The 26 per cent FDI cap is to be mentioned in the regulations to the legislation.

The changes to the PFRDA Bill were approved by the Union Cabinet at its meeting in New Delhi.

The Bill, which has already been scrutinised by the Parliamentary Standing Committee on Finance, is likely to be taken up for consideration and passage in the Winter Session beginning 22nd November.

"The government is of the view that FDI cap in the pension should be at 26 per cent at par with the insurance sector. However, it would like to retain the flexibility of changing the cap of FDI as and when required and that is why it has not been kept as part of the bill", an official spokesperson said.

The proposed legislation, the official said, will not provide assured returns to the subscribers of pension schemes.

The Committee, which is headed by senior BJP leader and former Finance Minister Yashwant Sinha, wanted the government to specify the FDI cap in the legislation itself and provide minimum guaranteed return to subscribers.

The government also turned down the Committee's recommendation for allowing greater flexibility to subscribers of pension schemes for pre-mature withdrawal of funds from their accounts.

"The flexibility of withdrawals from funds under the pension scheme, however, would be tightened. It would be allowed only in case of genuine needs...It would be considered when the need is critical. It will not be allowed for frivolous reasons," the official explained.

The government, however, upheld the panel's suggestion to provide greater participation of the employees and stakeholders in the Pension Advisory Committee, the official said.

The Bill, which was introduced in the Lok Sabha on March 2011, was referred to the Standing Committee for consideration.

The government, it may be mentioned, has not been able to raise FDI in insurance from 26 per cent to 49 per cent because the changes require amendments in law. The Insurance (Amendment) Bill has been pending since 2008.

Once the FDI caps are mentioned in the regulations, it would be easier for the government to modify the ceilings, as and when needed, through an executive order.


Anonymous said…
its real injustice to government employees to deny their basic rights on their hard earned money. Government has to pay the price for such grave mistakes in the future.The only attraction to government jobs, a secure pension system is lost now.
Anonymous said…
The fund which is being invested in NPS is now declining day by day.Govt will not do favour for assured return.So the system is totally curse to the employees.Employees should organise firmly to protest implementation of this bill otherwise the future of employees will be ruined
Anonymous said…
Why not the minimum return has been guarented as suggested/proposed by the Committee? What about familly pension? If the same ammount is invested in Post Office Savings Scheeme (NSC) every month in twenty years CPF of Rs 1000/- would have yielded 4.68 thousands.Hence if Govt. does not guarentee this minimum ammmount, then intention must be queestioned.

P Satapathy

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