PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY SUMI GOPINATH MACFAST
Pension Fund Regulatory and DevelopmentAuthority was established by theGovernment of India on 23rd August 2003to promote old age income security byestablishing, developing and regulatingpension funds, to protect the interests ofsubscribers to schemes of pension funds andfor matters connected therewith orincidental thereto.
• The Pension Fund Regulatory and Development Authority Bill, 2005 was initially introduced in the Lok Sabha in March, 2005 to provide for a statutory PFRDA.• The Bill lapsed on dissolution of the 14th Lok Sabha.• The PFRDA Bill, 2011 was introduced in the Lok Sabha on the 24th March, 2011.• The legislation sought to empower PFRDA to regulate the New Pension System (NPS).
COMPOSITION OF AUTHORITYThe Authority shall consist of a Chairperson and not more than five members, of whom at least three shall be whole-time members, to be appointed by the Central Government.
Official amendments to the Pension Fund Regulatory and Development Authority Bill, 2011 that the subscriber seeking minimum assured returns shall be allowed to opt for investing his funds in such schemes as may be notified by the Authority;withdrawals not exceeding 25 per cent of the contribution made by subscriber will be permitted from the individual pension account as may be specified by PFRDA
the foreign investment ceiling in the pension sector at 26 per cent or such percentage as may be approved for the Insurance Sector, whichever is higher may be incorporated in the present legislation;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.the membership of the PFRDA will be confined to professionals having expertise in economics, finance or law only.
The New Pension Scheme (NPS)It has been made mandatory for all the Central Government employees (except Armed Forces) entering service with effect from 1.1.2004. Government has launched the co-contributory pension scheme titled "Swavalamban Scheme" in the Budget of 2010-11. As on 7th September, 2012 subscribers under NPS was 37.45 lakh with a corpus of Rs. 20535.00 cr. To ensure the integrity of NPS, creation of a statutory PFRDA is considered necessary.
Background: The following recommendations of the SCF have not been accepted:As regards the recommendation of SCF for compulsory insurance of the funds of subscribers by pension fund managers, a provision has already been made in the PFRDA Bill, to protect the interest of the subscribers by ensuring safety of contribution of subscribers and also by keeping the operational costs in check
As regards the selection of pension fund managers in such a manner that one third of all such fund managers are from the public sector, since a provision has already been made in the PFRDA Bill that at least one of the pensions fund shall be from the public sector which sets a floor, the ceiling can be any number based on objective criteria