Lok Sabha Passes Pension Bill Wednesday Sep 4,2013

The Lok Sabha on Wednesday gave its approval to the Pension Fund Regulatory and Development Authority Bill (PFRDA), 2011

The bill seeks to establish, develop and regulate pension funds to protect the interests of subscribers to schemes of pension funds and assures minimum returns to subscribers.

 The Govt said the bill was based on the principle "you save while you earn"

The PFRDA Bill, 2011, provides for market based returns and wide coverage based on several investment options in the pension sector with an aim to building confidence in the subscribers. It will have provision for withdrawals for limited purposes from Tier-I pension account, an incentive for subscribers to join the National Pension Scheme (NPS)

The corpus of the NPS having 52.83 lakh subscribers (including those of 26 state governments) was about Rs 35,000 crore

 The bill also seeks to Grant Statutory Status to the Pension Fund Regulatory and Development Authority.The bill seeks to empower PFRDA to regulate the NPS.

The bill was referred to the Standing Committee twice -- in 2005 and 2011. The bill provides for 26 per cent foreign investment in pension sector or as may be approved for insurance sector, whichever is higher. It also provides that at least one of the pension fund managers shall be from the public sector.

The NPS has been made mandatory for all the central government employees (except armed forces) entering service with effect from January 1, 2004

 It has been launched for all citizens of the country including unorganised sector workers, on voluntary basis, from May, 2009.

Note

• The PFRDA Bill was introduced in Parliament in 2005 but lapsed after the the term of the house ended. It was re-introduced in 2011 and received fresh Cabinet approval in Oct 2012

• The National Pension System(NPS) has been operational since 2004 and is mandatory for all Central Govt Employees who joined service from January 2004. 

• 26 State Govts have also signed the scheme and the NPS was opened to everyone in 2009

As on August 14, 2013, NPS had 52.83 lakh subscribers and a total corpus of Rs 34,965 crore.