Govt keeps FDI in pension out of Parliament ambit

The earlier draft of the Bill had sought to allow up to 26 per cent FDI in the sector,as in the case of the insurance companies.

The Bill only seeks to set up a statutory pension regulator which would have the legal backing to enforce contracts and supervise the functioning of the National Pension System as well as other pension funds. It also aims to permit pension funds to invest a part of their corpus in equities.

“The thinking in the government is to get the Bill enacted as soon as possible so that the PFRDA,which is only an interim regulator gets full powers. The issue of FDI can be dealt with separately,especially once there is more clarity on the insurance sector,” a finance ministry official said.

The PFRDA Bill which was originally introduced in Parliament way back in 2005 was vetted by the Standing Committee on Finance,which had suggested that FDI in the sector should be in consonance with that in insurance sector.

Dhirendra Swarup,former chairman of the PFRDA also agreed and said,“The government had accepted the Standing Committee’s recommendation on FDI. It may have decided to not include it in the Bill as it is difficult to amend it and increase the sectoral cap. The FDI clause is a part of the Insurance Act and now the government is finding it tough to hike.”

The Centre has been keen to increase the FDI limit in insurance sector form 26 per cent to 49 per cent for quite a few years now but has been consistently opposed by the Left parties. At present,a Bill to this end is pending with the Standing Committee on Finance which is yet to finalise its views.

Meanwhile,the PFRDA Bill has sought to bring all government employees who are a part of the NPS under its ambit. It further said that 27 states have also agreed to join the pension scheme under the proposed law that is expected to provide social security to millions of employees and funds for infrastructure sector.

The Union Cabinet had approved the Bill last week and the finance ministry is hopeful that it will not be referred to the Standing Committee again as it incorporates all the recommendations from 2005. The Bill is also expected to sail through quite easily in the Parliament as the main Opposition— the BJP has indicated its support.

Social security for all

* Bill seeks to set up a statutory pension regulator to enforce contracts and supervise functioning of NPS and other pension funds

* It aims to govern investment norms for pension funds and permit them to invest a part of their corpus in equities

* Bill seeks to bring all government employees,who are a part of the National Pension System,under its ambit

* 27 states have agreed to join the pension scheme under the proposed law that is expected to provide social security to millions