Pension bill passed with 115 MPs voting in favour
The Parliament on Friday passed the Pension Fund Regulatory and Development Authority (PFRDA) Bill, 2011 that aims to create a regulator for the sector and allows at least 26 per cent FDI.
The bill was passed in the Rajya Sabha with 115 MPs voting in favour and 25 against including members form Left parties and TMC. The bill was passed in the Lok Sabha on September 4.
Replying to the debate, finance minister P. Chidambaram said, “Some of them have legitimate concerns, which we have to address. The bill has travelled for nine years. Let us give the bill the honour that it deserves and pass it.”
The bill would make the PFRDA a statutory authority. The bill provides subscribers a wide choice to invest their funds including for assured returns by opting for government bonds as well as in other funds depending on their capacity to take risk, a provision that came from opponents of the legislation.
It pegs the FDI in pension sector at 26 per cent or such percentage as may be approved for the insurance sector, which ever is higher.
Mr Chidambaram said the New Pension System (NPS) aims to promote “saving while you earn” especially for retirement and is mainly for those who have a regular income. He said government had accepted all but one of the recommendations of the Standing Committee on the subject.
On security of funds and returns, he said, “There is enough structure in place in NPS that funds will be managed well and safely.”
“NPS gives better returns than EPF. The returns are more than government bonds. Returns are quite adequate.”
The Pension Bill has been hanging fire since 2005 when it was first introduced in Parliament. It was reintroduced in 2011.
The minister said the current system is unsecured, hence, it was necessary to make the PFRDA a statutory authority as it is managing the corpus of Rs 35,000 crore belonging to 52.83 lakh subscribers including those of 26 state governments.
On members’ suggestion to bring down the employee’s annual contribution from `6,000. He said, “This is not a large amount. Given the current salary and possibility 7th pay commission in two years , saving of `500 per month is feasible.”
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