Economy

Govt moves Bill to regulate pension fund

Our Bureau New Delhi | Updated on March 12, 2018 Published on March 24, 2011

Mr Namo Narain Meena

Foreign investment policy to be notified out the proposed legislation





The fledgling pension sector may soon get a boost with the Centre taking steps to establish a statutory regulator for this sector. The much awaited Bill to establish a statutory pension sector regulator — PFRDA — was introduced in the Lok Sabha by the Minister of State for Finance, Mr Namo Narain Meena, on Thursday.

However, this Bill titled the Pension Fund Regulatory and Development Authority (PFRDA) Bill 2011, unlike its earlier version of PFRDA Bill 2005 (as modified by official amendments), does not cover the foreign investment policy for pension sector intermediaries (including pension funds and central recordkeeping agency).

It has now been decided that the foreign investment policy for pension sector would be determined and notified outside the proposed legislation under the Foreign Exchange Management Act (FEMA). This is in line with the recent legislations in the financial sector where foreign investment is determined under FEMA law.

In the PFRDA Bill 2005, as modified by the official amendments, the foreign investment policy for pension funds and central recordkeeping agency was part of the said Bill. The Government had proposed official amendments in January 2009 to give effect to certain recommendations of the Standing Committee on Finance. However, the official amendments could not be moved and the PFRDA Bill 2005 could not be considered and passed due to the dissolution of the 14{+t}{+h} Lok Sabha.

As a precursor to the statutory pension regulator, the Centre had constituted an interim pension sector regulator by the name ‘Interim Pension Fund Regulatory and Development Authority” through a Government resolution in October 2003.

Constitution

Meanwhile, the latest Bill provides that the statutory PFRDA will consist of a Chairperson, three whole-time members and three part-time members. The PFRDA Bill 2005, as modified by the official amendments, had provided that the PFRDA will consist of a Chairperson, three whole-time members and two part-time members.

Under the latest legal framework, the new pension system (NPS), which was operationalised from January 1, 2004, would be renamed as national pension system. Also, the National Pension System Trust would be recognised as an intermediary in the PFRDA Bill 2011.

The PFRDA Bill 2011 was introduced in Lok Sabha only after a division was ordered by the Lok Sabha Speaker, Ms Meira Kumar. The introduction of the Bill was opposed by CPI (M) leader Mr Basudeb Acharya, who also asked for a division. This was however challenged by Parliamentary Affairs Minister, Mr Pawan Kumar Bansal, who cited rules to state that the person opposing the introduction of a Bill should also give the reasons for it.

The treasury benches were caught unaware when the Lok Sabha speaker gave a ruling for division. The attendance on the treasury benches was thin and many senior leaders including the Prime Minister, Dr Manmohan Singh, the Union Finance Minister, Mr Pranab Mukherjee and UPA Chairperson Ms Sonia Gandhi were not present in the House.

As many as 115 members, including 30 from the BJP, voted in favour of introduction of the Bill, 43 membrs opposed it and one abstained. Only 159 members were present in the 543 member House when the voting took place. The Left Parties had also opposed the PFRDA Bill 2005 during the UPA-1 regime.

>krsrivats@thehindu.co.in



Published on March 24, 2011
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