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Lok Sabha passes Pension Bill

Live Law News Network
5 Sep 2013 6:19 AM GMT
Lok Sabha passes Pension Bill
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The Lok Sabha has cleared ‘The Pension Fund Regulatory and Development Authority Bill’ paving the way for individuals to plan for their post-retirement needs. The Bill also allows foreign investors to acquire up to 26% stake in the sector subject to the rider that the ceiling will go up if the cap for insurance is raised to 49%.

The Bill has been passed after intense political debate and negotiations wherein the Government of India accepted a crucial suggestion made by the Parliamentary Standing Committee on Finance. In terms of the Committee’s suggestion, the Bill stipulates that the pension regulator, viz., the Pension Fund Regulatory and Development Authority, will ensure that fund managers offer at least one product with an assured minimum return to protect investors from any volatile effects in the market.

The Pension bill gives a statutory backing to the PFRDA thereby enabling it to frame rules and levy penalties. Presently, it regulates the National Payment System (NPS) through a trust. The NPS has a corpus of Rs 35,000 crore from nearly 53 lakh subscribers, a majority of whom are government employees.

Since the government offers little social security to those who are working in the private sector, experts believe that this enactment will strengthen the market and help people save for old age in a cost efficient manner. It must be noted that the Employees' Pension Scheme (EPS) is the only option for the private sector work force. But the EPS covers only a small percentage of the population with a majority of people working in the unorganized sector.

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