Pension regulator PFRDA has now implemented a mechanism for making and reviewing regulations, bringing more transparency and certainty in the rule-making process.
This mechanism among other things provides that the regulator would be guided by an “economic analysis” of the proposed regulations before they are accepted and operationalised.
The “economic analysis” would include expected direct and indirect costs and benefits to subscribers, the economy, and society, due to the proposed regulation.
Also the “economic analysis” would have to delve into how the proposed regulations would further the objectives of the Act and the cost of not having the proposed regulations.
REGULATORY ADVISORY COMMITTEE
To make regulations and periodic review of regulations, the Pension Fund Regulatory and Development Authority (PFRDA) has now specified an institutional mechanism for constituting a Regulations Advisory Committee (RAC).
PFRDA Chairman has been empowered to nominate to the RAC a Wholetime Member of the Authority, not more than three independent external experts, and an executive director of the Authority, who would be the convenor of the Committee.
The RAC would have to submit its recommendations to PFRDA on the proposed regulations or amendments to the regulations.
These recommendations would be presented to the Pension Advisory Committee (OAC) and the PFRDA would consider the RAC’s recommendations and the PAC’s advise.
PUBLIC CONSULTATIONS
The PFRDA should allow the public a minimum of thirty days to submit comments before making regulations. It should also publish a statement of the problem addressed by the proposed regulations on its website, in addition to a draft of the proposed regulations.
BUDGET SPEECH
Finance Minister Nirmala Sitharaman said in her 2023 budget speech, “To simplify, ease, and reduce the cost of compliance, financial sector regulators will be requested to carry out a comprehensive review of existing regulations.
For this, they will consider suggestions from the public and regulated entities. Time limits for deciding the applications under various regulations will also be laid down.”
Post this announcement, financial sector regulators have been making changes to the processes by which regulations are framed and reviewed over the last year.