Passing of the pension bill in Parliament will help clear doubts of potential foreign players, said a pension regulator on Thursday, welcoming the union cabinet's nod to allow 26% FDI in the pension sector.

"The impact of the Parliament passing the pension bill will be that the authority will get statutory backing. This would enable the regulator to monitor the players more effectively and clear doubts in minds of potential players and investors," Yogesh Agarwal, chairperson, Pension Fund Regulatory and Development Authority (PFRDA), said over the phone from New Delhi.

The cabinet on Thursday cleared proposals to amend the legislations governing insurance industry to hike foreign equity from 26% to 49% and on pension to allow up to 26% stake to overseas investors.

Agarwal said the move would bring in more players into the pension sector while agreeing that in terms of foreign direct investment (FDI), the sums would not be huge as in the case of the life insurance sector.

For pension fund managers, the minimum capital required is Rs. 25 crore where as in the case of life insurers, it is Rs. 100 crore.

Further, majority of the life insurers are suffering from expense overrun needing fresh capital infusion.

According to Agarwal, the New Pension Scheme (NPS) is doing well in the government sector while in the private sector, issues of distributor remuneration and their reach are being addressed.

"The NPS corpus now is around Rs. 21,000 crore ($4 billion)," Agarwal said.