Pension Fund Regulatory And Development Authority Bill (PFRDA) Bill, 2011

Current Status: Passed (Lok Sabha on September 04, 2013; Rajya Sabha on September 06, 2013; Ministry: Finance

The Pension Fund Regulatory and Development Authority Bill (PFRDA) Bill 2011 provides for the establishment of an Authority to promote old age income security by establishing, developing and regulating pension funds, to protect the interests of subscribers to schemes of pension funds and for matters connected therewith or incidental thereto.

An Interim Authority has already been created vide Govt Resolution dated 10th October 2003 and 14th November 2008 and is fully functional. The passage of the bill will confer statutory status to the Interim PFRDA to develop and regulate National Pension System (NPS) earlier known as New Pension Scheme.

The PFRDA, 2011 was passed by the Lok Sabha on September 4 with official amendments.  Rajya Sabha passed it on September 6, 2013. It was earlier introduced in Lok Sabha on the 24th March, 2011 to provide for a statutory regulatory body the Pension Fund Regulatory and Development Authority (PFRDA) under the provisions of the Bill. The legislation seeks to empower PFRDA to regulate the New Pension System (NPS).

The PFRDA Bill, 2011 was referred to the Standing Committee on Finance on the 29th March, 2011 for examination and report thereon. The Standing Committee on Finance gave its Report on 30th August, 2011. Some of the key amendments incorporated in the Bill based on the recommendations of the Standing Committee on Finance are as follows:

  • That the subscriber seeking minimum assured returns shall be allowed to opt for investing his funds in such scheme providing minimum assured returns as may be notified by the Authority
  • Withdrawals will be permitted from the individual pension account subject to the conditions, such as, purpose, frequency and limits, as may be specified by the regulations
  • The foreign investment in the pension sector at 26% or such percentage as may be approved for the Insurance Sector, whichever is higher
  • At least one of the pension fund managers shall be from the public sector
  • To establish a vibrant Pension Advisory Committee with representation from all major stakeholders to advise PFRDA on important matters of framing of regulations under the PFRDA Act

Beside above, the Bill would make the Pension Fund Regulatory and Development Authority a statutory authority. Presently, it has non-statutory status. The NPS is based on the principle that ‘you save while you earn’ especially for retirement and is mainly for those who have a regular income. 

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