Lok Sabha passes pension Bill
The Lok Sabha, the lower house of Indian parliament, on Wednesday cleared the Pension Fund Regulatory & Development Authority Bill, 2011, a move that is expected to boost flow of personal financial savings into domestic capital markets.
The Bill that has been passed with some amendments while maintaining the foreign direct investment (FDI) cap at 26 per cent for the time being will provide the Pension Fund Regulatory Authority (PFRDA) with statutory powers.
It provides for returns based on market and broad coverage based on numerous investment options in the pension sector in order to build confidence in the subscribers.
Speaking about the Bill, a finance ministry official said, "The Bill offers a wide ranging investment options to the subscribers. This includes assured returns as well by opting government bonds."
In addition, it will offer provision for withdrawals for restricted reasons from Tier-I pension account, an enticement for subscribers to become a member of the New Pension Scheme (NPS), which was introduced in 2004.
It is also expected to attract foreign investments. KPMG India's director Vineet Agarwal said the opening of the domestic pension sector, even at 26 per cent, would encourage foreign pension firms to invest their money in India.
The Bill will now be moved in Rajya Sabha, the upper house of Indian Parliament, for deliberation and passing.