True to its mandate, the very first reform that the UPA government is likely to usher in will be one that looks at bringing old age security closer to the aam aadmi. The tool: Pension Fund Regulatory and Development Authority (PFRDA) Bill, which will expand to regulate all pensions in the country.
And with Left parties out of the UPA, the new Bill will not be a “minimalist bill”, according to a senior official who did not wish to be named. For starters, PFRDA will not only regulate pension funds initiated by it, but will carry a provision “to be notified at a future date”, that would enable it to regulate all pension products, across regulators.
Currently, pension products are an alphabet soup — they are regulated under three Acts of Parliament, pension products offered by mutual funds (regulated by Securities and Exchange Board of India) and by insurance companies (regulated by Insurance Regulatory Authority of India), apart from central and state government pension schemes.
And finally, there’s the new pension system --- arguably the world’s cheapest pension scheme (NPS) --- offered by pension fund companies and regulated by PFRDA.
In the new pension Bill, there will be a provision under which PFRDA will regulate all pensions in the country. “If an insurance firm is allowed to issue pension products, it should be regulated by PFRDA.”
The new bill — PFRDA Bill, 2005 lapsed when the previous Lok Sabha got dissolved — will have a focus on the youth that will enter the pension market today by buying a financial product that helps them accumulate towards a pension that it will draw two or three decades later. “The government has got a mandate from the youth and the new Bill will be written keeping the youth in mind,” the official said.