The newest addition to the Pension Bill allows subscribers to invest in stock market with a cap of 26% FDI and also provides old age income security for government employees
The Pension Fund Regulatory and Development Authority Bill (PFRDA), 2011 was passed by the Lok Sabha today in the Parliament. It was earlier introduced in Lok Sabha on the 24th March, 2011. The Bill has been in the works for almost a decade and got delayed due to vociferous opposition from various allies of UPA government such as the Left and later Mamata Banerjee of Trinamool Congres.
The newest addition to the bill allows subscribers to invest in stock market with a cap of 26% foreign direct investment. The Pension Bill also provides old age income security for government employees. It calls 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).
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. Currently the NPS is implemented in 26 states with a subscriber base of 52.83 lakh and a corpus of Rs 34, 965 crore. The NPS has been mandatory for all central government employees except the armed forces with effect from 1/01/2004. 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.
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