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Our Bureau

New Delhi , July 26

PENSION reforms are finally set to roll ahead. The Standing Committee on Finance that was studying the Pension Fund Regulatory and Development Authority (PFRDA) Bill, 2005, has given its go-ahead for the introduction of the Bill in Parliament with certain amendments, including placing a 26-per cent cap on foreign direct investment in the sector.

Giving the green signal to the Bill, despite several dissent notes appended by Left MPs, the committee has said the Government should explicitly disallow investment of pension fund corpus abroad. The report of the committee was presented in Parliament on Tuesday.

"Decisions relating to permitting FDI in the pension sector and deployment of pension funds outside the country should in no way be in variance with the related provisions applicable to the insurance sector," the panel said. FDI in insurance is restricted to 26 per cent at present.

The panel said the cap on FDI be specified in the PFRDA legislation itself, as is the case with the insurance sector.

"Unlike in the case of the insurance sector, the permissibility or otherwise of FDI in the pension sector - to be promoted and regulated under the aegis of PFRDA - as well as limitations or restrictions on deployment of pension funds outside the country have not been specified. The committee is of the considered opinion that any decision related to permitting FDI in the pension sector should be implemented only by bringing forward suitable amendments in the present legislation," the panel said.

The committee has also recommended that the option of a scheme where 100 per cent investment is made in government securities should be made available to the subscribers and this should be indicated in the PFRDA Bill.

The panel also said the proposal to have at least one public sector pension fund manager in the New Pension System should also be indicated in the Bill.

Moreover, while selecting the pension fund manager, preference should be given to companies that offer guarantees on returns.

"At the same time, it needs to be ensured that the subscribers have sufficient options of choosing funds/schemes that may fetch high returns on the basis of market performance," it said.

Dissent notes have been appended by six MPs - Mr Gurudas Dasgupta, Mr A Krishnawamy, Mr Rupchand Pal, Mr Laxman Seth, Mr Bir Singh Mahato and Mr Chittabrata Muzumdar.

In his dissent note, Mr Dasgupta said, "The sole aim is to channelise funds to stock market to boost the Sensex" and that "no FDI may be allowed in this sector. Poor man's savings cannot be permitted to be used by foreigners for their advantage."

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