The bill was cleared by the Lok Sabha on Wednesday.
It was earlier introduced in Lok Sabha on the Mar 24, 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," the Ministry of Finance said in a statement on Wednesday.
Some of the key amendments incorporated in the Bill based on the recommendations of the Standing Committee on Finance are:
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 26pc 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 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 May 1, 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 Aug 14, 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 NPSsubscribers.
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.
--IBNS (Posted on 06-09-2013)