Taking forward financial sector reforms, the government today introduced a long-pending PFRDA Bill in the Lok Sabha to give statutory status to interim pension regulator and promoting old age income security. The Bill, introduced by Finance Minister Pranab Mukherjee, provides for establishing a statutory regulatory body to be called the Pension Fund Regulatory and Development Authority (PFRDA), which will undertake promotional, developmental and regulatory functions in respect to pension funds.
The principal Opposition BJP, however, came to the government”s support as the Left parties pressed for a division on a bill to regulate pension funds at the introduction stage itself.
The Bill was introduced after a division of votes, which showed as many as 115 members backing the proposed legislation, 43 opposing it and one member abstaining from voting. As many as 159 member were present in the 543-member House.
According to the statement of objects and reasons of the Bill, foreign investment policy for pension sector intermediaries, including the pension funds and central record-keeping agency, would be determined and notified outside the proposed legislation under Foreign Exchange Management Act.
The Bill also contains provisions for empowering the PFRDA to regulate the National Pension system (NPS), as amended from time to time. Moreover, it authorises the PFRDA to levy fees for services rendered by it to meet its expenses.
The pension fund regulator can also impose penalties for any violation of the provisions of the legislation, rules, regulations, etc, once the Bill is passed.
The Bill also makes a provision for establishment of PFRDA consisting of a chairperson, three whole-time members and three part-time members.
“The New Pension System as provided in the PFRDA Bill, 2005 would be renamed as the National Pension System,” the Bill said.
The government had constituted an interim pension sector regulator in 2003 through a resolution. Earlier, the PFRDA Bill was introduced in Lok Sabha in 2005, which was then referred to the Standing Committee.
The government proposed amendments in 2009 to give effect to certain recommendations of the Committee, but amendments could not be moved and the PFRDA Bill, 2005 could not be considered and passed, and the same lapsed due to dissolution of the 14th Lok Sabha.
Though the PFRDA does not have the statutory powers at present, it is regulating the New Pension System. The government had launched the New Pension System for central government employees joining service from January 1, 2004. Later it was extended to all citizens from May 1, 2009.