Lok Sabha Approves Pension Bill

Lok Sabha has finally approved The Pension Fund Regulatory and Development Authority (PFRDA) Bill, 2011 on Wednesday, 4th September 2013. The bill was referred twice before, to the standing committee in 2005 and 2011. The highlighting part is that the Government has accepted most of the recommendation given by the committee.

Some of the key amendments in the bill are:

The Bill will guarantee minimal return for its subscriber and would also provide an option to invest its funds in various government bonds as well as in other schemes where minimal returns are assured.

The Bill would furnish its subscriber with the leverage to withdraw the funds from Tier-I pension account subjected to the condition such as, purpose, frequency and limit as specified by the authority. 

It facilitates with a 26% of foreign investment in pension sector or as may be approved by the insurance sector, which ever would be higher. It enforces to have atleast one pension fund manager from public sector.

The Bill also emphasises on establishment of Pension Advisory Committee which would advise for proper regulation of PFRDA.

The National Pension scheme is made mandatory for all public sector employees who joined the service from January 1, 2004 except armed forces. Twenty six states in the country have already notified National Pension Schemes for its employees. 

Moreover, the scheme is approved for all the citizens of India even for unorganised sector, on voluntary basis from May 2009. To add on, the “Swavalaman”, the co-contributory pension scheme was announced in the budget of 2010-11 for unorganised sector's employee to voluntarily save their earning for retirement.

Besides all these, the bill would change present status of Pension Fund Regulatory And Development Authority from a non statutory to a statutory authority. The National Pension Scheme is based on the principle of “Pay as you earn”, which is specially implemented for the working professionals with a regular income.

The Bill brings in benefits for all the employees having routine income with assured return. Moreover, FDI in pension fund would be an add-on to it. Even subscriber won't be exposed to the Government default for their investments.