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Thursday, September 05, 2013

Lok Sabha Passes Pension Fund Regulatory and Development Authority Bill, 2011 with official amendments

with 7 comments
Press Information Bureau 
Government of India
Ministry of Finance 

04-September-2013 18:31 IST

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. 
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7 comments:

Anonymous said...

India Now there are two category one Government and one so called Government Employees.Now its high time Employees entered in service after 2004 i.e. under NPS must form their own union to look after their benefits of service because the union leaders already in service before 2004 are only looking after their benefits and safe guarding their interest only.New bill passed in the parliament is against the interest of Government employees.

M.K.Chauhan
GSI,Kolkata

Anonymous said...

It is unfair with the Government employees entered into service after 2004.Now the employees under NPS must form their own union to fight their cause as the unions lead by employees before 2004 are playing in the hand of government and not supporting the cause of employees under NPS.

M.K chauhan
GSI,Lucknow

Anonymous said...

It is unfair that the future of employees is kept with corporates. The persons in CPF should understand this. For example, see your share rates in SBI/LIC/etc, it has declined and the net amount saved is comes down about 5 to 10 percent. The Central govt employees union should fight for this. expect comments/relevent rules on this
by Kandhan

sumit said...

We have to think about our pension scheme now otherwise this government is going to screw us at the time of retirement.. Think of future guise otherwise we will be in big trouble.. NPS is actually playing with our future..

Anonymous said...

kya jo employee 2004 se appoint hue hai wo apne pension account se paisa utha sakte hai.jaisa ke log aspne P.F se uthate hai,,
if any one have any idea please tell me.

Anonymous said...

IN PENSION SCHEME IS HIGHLY OBJECTIONABLE GOVERNMENT WILL LOOSE CONTROL ON THEIR EMPLOYEES.MARKET RISK TO EMPLOYEES SAVINGS IS HIGHLY OBJECTIONABLE.

Anonymous said...

I don't understand that when government of india implemented this nps scheme what our civil servants were doing? They should have thought that one day their own children are going to feel insecure in govt jobs, due to this policy. Why they kept mum? Why they had not raised their voice against it?
A central government employee after putting in 35 - 36 years of service is not eligible for pension. Whereas a politician (MLA/MP) once elected even for a few days is entitled to pension for life time.
Wah!



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