PFRDA:- Pension Fund Regulatory and Development Authority
PFRDA: PFRDA was established by the Government of India on 23rd August 2003. PFRDA is the prudential regulator for the New Pension Scheme (NPS), which is a defined contribution pension system to be launched after the PFRDA Bill, 2005, is passed by Parliament. NPS will be available on a voluntary basis to all persons including self employed professionals and others in the unorganised sector. Nineteen State Governments have also issued notifications to opt for the defined contribution pension system for future State Government employees who will join the services of these Governments. For Central Government employees joining service on or after January 1, 2004, the new pension scheme is compulsory. Main Features and Architecture of the New Pension System The new pension system would be based on defined contributions. It will use the existing network of bank branches and post offices etc. to collect contributions. There will be seamless transfer of accumulations in case of change of employment and/or location. It will also offer a basket of investment choices and Fund managers. The new pension system will be voluntary. The system would, however, be mandatory for new recruits to the Central Government service (except the armed forces). The monthly contribution would be 10 percent of the salary and DA to be paid by the employee and matched by the Central Government. However, there will be no contribution from the Government in respect of individuals who are not Government employees. The contributions and returns thereon would be deposited in a non-withdrawable pension account. The existing provisions of defined benefit pension and GPF would not be available to the new recruits in the central Government service. In addition to the above pension account, each individual can have a voluntary tier-II withdrawable account at his option. Government will make no contribution into this account. These assets would be managed in the same manner as the pension. The accumulations in this account can be withdrawn anytime without assigning any reason. Individuals can normally exit at or after age 60 years from the pension system. At exit, the individual would be required to invest at least 40 percent of pension wealth to purchase an annuity. In case of Government employees, the annuity should provide for pension for the lifetime of the employee and his dependent parents and his spouse at the time of retirement. The individual would receive a lump-sum of the remaining pension wealth, which she would be free to utilize in any manner. Individuals would have the flexibility to leave the pension system prior to age 60. However, in this case, the mandatory annuitisation would be 80% of the pension wealth. There will be one or more central record keeping agency (CRA), several pension fund managers (PFMs) to choose from which will offer different categories of schemes. The participating entities (PFMs, CRA etc.) would give out easily understood information about past performance & regular NAVs, so that the individual would able to make informed choices about which scheme to choose.
But, one of the most important charter of demand from all Central Government Employees Unions and Federations is that “Grant statutory defined pension scheme to the employees of Central Government recruited after 1.1.2004 and withdraw the PFRDA Bill from parliament”