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The Government is likely to allow up to 26 per cent foreign direct investment (FDI) in the sensitive pensions sector.
However, the revised Pension Fund Regulatory and Development Bill 2011, cleared by the Cabinet on Wednesday does not include a clause on FDI.
Although some changes in the original Bill has been done on the basis of the recommendations of the Standing Committee of Finance, but recommendation regarding FDI in the pension sector has been ignored.
Sources said the provision for allowing FDI in the pensions sector will be created under the rules which will be framed under the Act, but will not be a part of the Act itself, as had been recommended by the Standing Committee.
Instead, foreign investors will be allowed to pick up equity under an executive order, the sources added.
Various provisions of the Foreign Exchange Management Act (FEMA) will be applied on this.
The Bill will now be taken up for consideration and passage during the forthcoming winter session of Parliament, starting November 22.
However, the Government is believed to have accepted the Standing Committee's recommendation on providing the facility of ‘repayable advance' from the pension fund.
The Committee had advocated such a facility for subscribers to enable them to meet important commitments.
For this purpose, pension subscribers may be allowed to take a repayable advance from their accounts, say after 10-15 years of service.
The Committee is learnt to have advised the Government to make suitable enabling amendments in the Bill.
The Pension Fund Regulatory and Development Authority Bill, 2011, was introduced in the Lok Sabha on March 24, 2011.
It aims to promote old age income security by establishing, developing and regulating pension funds and to protect the interests of subscribers of various pension fund schemes.
The Bill provides for establishing a statutory regulatory body to be called the Pension Fund Regulatory and Development Authority (PFRDA). This authority will undertake promotional, developmental and regulatory functions in respect of pension funds.
The proposed Bill will empower the PFRDA to regulate the National Pension System, as amended from time to time.
The Bill also authorises the PFRDA to impose penalties for any violation of the provisions of the legislation, rules, regulations, and so on.
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