A long-pending, key economic reform legislation — the Pension Fund Regulatory and Development Authority (PFRDA) Bill 2011, which opens the doors to 26 percent foreign direct investment (FDI) in pension funds, was approved by the Rajya Sabha on Friday. The bill aims to create a regulator for the pension sector and extend the coverage of pension benefits to more people. The Pension Bill has been hanging fire since 2005 when it was first introduced in the Parliament. It was again reintroduced in 2011. Replying to the debate on Pension Bill, Finance Minister P. Chidambaram said 26 states have joined NPS and it would help extend pension benefits more people. Here’s a look at the key features of the Pension Bill: * With the passage of the bill, more citizens of the country will be able to get pension cover. NPS has a corpus of around Rs. 35,000 crore with around 53 lakh subscribers, including those of 26 state governments.Currently just 12 percent of active workforce in the country has any formal pension or social security plan. * Under the National Pension Scheme every subscriber will have an individual pension account, which will be portable across job changes. The subscribers will get to choose fund managers and schemes to manage their pension wealth. They can also switch schemes and fund managers. However, under the scheme, investment risk is entirely borne by employees. * There is also an income security plan optional for the unorganised sector. Swavalamban Scheme was been launched by the Government of India to encourage people from the unorganized sector to voluntarily save for their retirement. The scheme was launched in 2010-11 budget. * The Pension Fund Regulatory and Development Authority Bill 2011 will give statutory powers Pension Fund Regulatory and Development Authority (PFRDA) which was established in August 2003 as a regulator for the pension sector. With statutory powers the authority can pull up errant pension sector participants and ensure better subscriber protection. * The Pension Bill would also provide subscribers a wide choice to invest their funds, depending on their capacity to take risk. A subscriber seeking minimum assured returns can opt schemes providing minimum assured returns, as may be notified by the PFRDA. The only missing aspect of the NPS architecture is tax benefit as the 60 percent corpus a subscriber can withdraw on maturity is taxable. Read more at: firstpost/economy/rajya-sabha-passes-pension-bill-all-you-need-to-know-about-nps-1086473.html?utm_source=ref_article
Posted on: Sat, 28 Sep 2013 19:57:16 +0000
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