PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY
NOTIFICATION

New Delhi, the 14th May, 2020

PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY (PENSION FUND) (THIRD AMENDMENT) REGULATIONS, 2020

No. PFRDA/12/RGL/139/9.—In exercise of the powers conferred by sub-section (1) of section 52 read with clauses (e), (m), (n), (o) and (p) of sub-section (2) thereof of the Pension Fund Regulatory and Development Authority Act, 2013 (23 of 2013), the Pension Fund Regulatory and Development Authority hereby makes the following regulations to amend the Pension Fund Regulatory and Development Authority (Pension Fund) Regulations, 2015 namely, –

1. These regulations may be called the Pension Fund Regulatory and Development Authority (Pension Fund) (Third Amendment) Regulations, 2020.

2. These shall come into force on the date of their publication in the official gazette.

3. In the Pension Fund Regulatory and Development Authority (Pension Fund) Regulations, 2015:-

(I). In explanation to proviso to sub-regulation (3) of regulation 3, the words ‘section 617 of the Companies Act, 1956 (1 of 1956)‟, shall be substituted by ‘section 2(45) of the Companies Act, 2013 (18 of 2013)‟.

(II). Sub-regulation (2) of regulation 4 shall be deleted.

(III). Sub-regulation (3) of regulation 4 shall be renumbered as sub-regulation (2).

(IV). In clause (f) of sub-regulation (1) of regulation 5, after the words ‘National Pension System or any other pension scheme regulated’, the words „or administered‟ shall be inserted.

(V). In regulation 8, after clause (b) of sub-regulation (1), a new clause (c) shall be inserted as below-

“(c) The joint ventures between the sponsors, may also apply provided the joint venture falls or will fall under the jurisdiction of one of the financial sector regulators. The joint venture shall at least be at the memorandum of understanding execution stage and the joint venture should be finalized within one month from the date of appointment of sponsor;”

(VI). In regulation 8, in sub-regulation (1), clauses (c), (d), (e), (f), (g), (h), (i) and (j) shall be renumbered as clauses (d), (e), (f), (g), (h), (i), (j) and (k) respectively.

(VII). In regulation 8, in sub-regulation (1), after clause (k), clause (l) shall be inserted as below-

“(l) any other conditions as may be specified by the Authority as part of selection process.”

(VIII). In regulation 8, in sub-regulation (3), clause (a) shall be substituted as below-

“(a) Initially, the sponsor shall be required to provide the pension fund with adequate and necessary infrastructure, dedicated manpower, systems and procedures, information technology and information security systems with capabilities to adapt to future changes or any other requirement as may be specified by the Authority;

Provided that the pension funds shall set up their own necessary infrastructure, dedicated manpower, systems & procedures, information technology and information security systems within a period of twelve months form the date of issuance of certificate of registration;”

(IX). In regulation 8, in sub-regulation (3), clause (c) shall be substituted as below-

“(c) the pension fund shall ensure that the key personnel viz. the Chief Executive Officer, Chief Investment Officer, Chief Risk Officer, Chief Information and Security Officer (CISO), Fund Manager, Operations Manager, Compliance Officer or other positions, as may be notified by the Authority, from time to time have the adequate qualification and experience in the requisite field;”

(X).In regulation 12, after sub-regulation (m), sub-regulation (n) shall be inserted as below-

“(n) Every pension fund shall adhere to Cyber security policy, Common Stewardship code and voting policy on assets held in the name of National Pension System Trust, issued by the Authority for the purpose.”

(XI). Regulation 15 shall be substituted as below-

“Valuation of scheme assets.– The assets/securities held in the name of National Pension System Trust and managed by the pension funds under the pension schemes regulated or administered by the Authority, including assets/securities below investment grade, shall be valued in accordance with the guidelines issued by the Authority from time to time.”

(XII). In regulation 22, sub-regulation (9) shall be substituted as below-

“(9) The pension fund shall adopt best governance practices for investments and risk management viz. creation of risk management and research department, constitution of Investment Committee and Risk Committee, whose composition, functions and duties shall be such as specified in Schedule X.”

(XIII). In regulation 22, after sub-regulation (17), sub-regulation (18) shall be inserted as below-

“(18)A pension fund undertaking the activities as point of presence (POP) upon being registered by the Authority for the purpose shall maintain separate infrastructure, manpower, accounts including revenue and expenditure in order to maintain arm‟s length distance from the fund management activities.”

(XIV). In regulation 26, in sub-regulation (3) in explanation to clause (a), the words ‘section 226 of the Companies Act, 1956 (1 of 1956)‟, shall be substituted by ‘section 141 of the Companies Act, 2013 (18 of 2013)‟.

(XV). In Schedule III, sub-paragraph I of Part B shall be substituted as below-

“I. For the purpose of this part, the expression „assets under management‟ shall mean the value of the assets held by the pension fund as disclosed by it under sub-paragraph III of Part B below.”

(XVI). In Schedule V, in sub-paragraph (b) of paragraph 2 at Sl. No.(1) in the table under column 5, the words „By 9.00 PM on the same day’ shall be substituted by „On the same day as per time limit decided by Chairperson from time to time‟.

(XVII) In Schedule V, in sub-paragraph (b) of paragraph 2 at Sl. No.(2) in the table under column 5 the words ‘By 9.00 PM on the same day’ shall be substituted by ‘On the same day as per time limit decided by Chairperson from time to time ‘.

(XVIII). In Schedule V, after table in sub-paragraph (b) of paragraph 2, the words „** Contents of „Annual Report‟ are as per Financial Statements and Auditor‟s Report under Schedule VIII‟ shall be substituted as‘** Contents of „Annual Report‟ are as per Financial Statements and Auditor‟s Report under Schedule VII‟. (XIX). In Schedule VI, in paragraph III, sub-paragraph (c) shall be substituted as below-

“(c) A pension fund shall not make any exaggerated statement whether oral or written to the Authority, the National Pension System Trust or subscribers, either about its qualification or capability to render certain services or its achievements in regard to services rendered to the Authority, National Pension System Trusts or subscribers.”

(XX). In Schedule VI, in paragraph IV, sub-paragraph (b) shall be substituted as below-

“(b) A pension fund or any of its directors, or employee or an associate of the pension fund shall not, either through its account or their respective accounts or through their family members, relatives or friends indulge in any insider trading. Further, they shall adhere to the guidelines issued in this regard by the Authority from time to time.”

(XXI). In Schedule VI, in paragraph VI, point (b) of sub-paragraph (e) shall be substituted as below-

“(b)in case an employee of a pension fund is rendering such advice, he shall also disclose the interest of his dependent family members to pension fund including their long or short position in the said security, while rendering such advice.”

(XXII). In Schedule VII, in paragraph IV, after first sub-paragraph (iii), the second sub-paragraph (iii) shall be re-numbered as sub-paragraph (iv).

(XXIII). In Schedule VII, in paragraph IV, the address of NPS Trust shall be substituted as below-

“The Board of Trustees
National Pension System Trust
B-14/A, 3rd Floor
Chhatrapati Shivaji Bhawan
Qutab Institutional Area
Katwaria Sarai
New Delhi 110 016.”

(XXIV). In Schedule VIII, in the heading, the words „enter into a banking agreement‟ shall be substituted as „enter into an arrangement‟.

(XXV). In Schedule X, sub-paragraph (1) of paragraph I shall be substituted as below-

“1. Pension fund shall constitute an Investment Committee consisting of two independent directors, the Chief Executive Officer, Chief Risk Officer and the Chief Investment Officer or Fund Manager in case CEO and CIO are the same official.”

(XXVI). In Schedule X, sub-paragraph (1) of paragraph II shall be substituted as below-

“1. Pension fund shall constitute a Risk Management Committee which shall consist of at least one independent director, the Chief Executive Officer, Chief Risk Officer, Chief Investment Officer or fund manager in case CEO and CIO are the same official and the Compliance Officer. The director should not be the same as the one on the Investment Committee.”

(XXVII). In Schedule XI, paragraph 10 shall be substituted as below-

“10. The pension fund shall maintain books and records and comply with the disclosure requirements specified by the Authority or National Pension System Trust from time to time and also as detailed in Schedule V.”

(XXVIII). In Schedule XI, paragraph 23 shall be substituted as below-

“23. The pension fund shall constitute an Investment Committee and a Risk Management Committee as set forth in Schedule X.”

SUPRATIM BANDYOPADHYAY, Chairperson

[ADVT.-III/4/Exty./24/2020-21]

Footnote:

1. The Principal Regulations, The Pension Fund Regulatory and Development Authority (Pension Fund) Regulations, 2015 were published in the Gazette of India on 19th May, 2015 vide No. PFRDA/12/RGL/139/9.

2. The Pension Fund Regulatory and Development Authority (Pension Fund) (First Amendment) Regulations, 2016 were published in the Gazette of India on 8thSeptember, 2016 vide No. PFRDA/12/RGL/139/9.

3. The Pension Fund Regulatory and Development Authority (Pension Fund) (Second Amendment) Regulations, 2020 were published in the Gazette of India on 5th February, 2020 vide No. PFRDA/12/RGL/139/9.

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