Pension bill sails through Parliament after 9 years

Parliament on Friday passed the long-awaited Pension Fund and Regulatory Development Authority (PFRDA) Bill 2011 aimed to open up the pension sector to overseas investors and set up a statutory watchdog for the sector.

Parliament on Friday passed the long-awaited Pension Fund and Regulatory Development Authority (PFRDA) Bill 2011 aimed to open up the pension sector to overseas investors and set up a statutory watchdog for the sector.

The PFRDA Bill, 2011, was passed in the Rajya Sabha with 115 MPs voting in favour and 25 against including members from Left parties and Trinamool Congress. The Lok Sabha had passed the bill on Wednesday.

The legislation will grant statutory and quasi-judicial status to the PFRDA, which has been functioning since 2003 after being set up through an executive order.

It stipulates the FDI in pension sector at 26% or such percentage as may be approved for the insurance sector, whichever is higher. India could now see pure pension products available to those employed in the private sector, which would be governed by a regulatory authority. Currently, most pension plans are insurance-linked.

It will allow for withdrawals for specified purposes and subscribers will be able to choose from a range of schemes including those linked to investment in stock markets as well as low-risk government bonds that may offer assured returns. PFRDA will notify schemes where assured returns are offered.