The Union Cabinet on Wednesday approved the Pension Fund Regulatory and Development Authority (PFRDA) Bill 2011, but rejected certain key suggestions made by the parliamentary standing committee on finance.
Under the approved draft, 26 per cent foreign direct investment will be permitted in the pension sector, and sectoral FDI caps will be incorporated in the regulations once the bill becomes an Act of Parliam-ent. This will allow the government to keep the FDI issue flexible, as it would not be required to approach Parliament for this purpose. The parliamentary panel headed by senior BJP leader Yashwant Sinha had urged that the FDI cap be incorporated in the legislation itself.
The Cabinet, at its meeting chaired by Prime Minister Manmohan Singh, also turned down the suggestion to provide for “minimum assured returns” on deposits in pension funds.
The PFRDA Bill 2011 seeks to open the pension sector to private sector and foreign investment. The bill is likely to be taken up for consideration and passage in the Winter Session beginning November 22.
“The government is of the view that the FDI cap in the pension (sector) should be at 26 per cent, at par with the insurance sector. However, it would like to retain the flexibility of changing the cap of FDI as and when required, and that is why it has not been kept as part of the bill,” government sources said.
The government also turned down the committee’s suggestion that subscribers be given greater flexibility to withdraw funds from their accounts.