After a delay of nearly a decade, Parliament on Friday passed a key economic reforms legislation, the Pension Bill, that aims to create a regulator for the sector and allows at least 26 per cent FDI.
The Pension Fund Regulatory and Development Authority (PFRDA) Bill, 2011, 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 in Rajya Sabha, 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 Pension Fund Regulatory and Development Authority a statutory authority, unlike its present non-statutory status, he said.
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.
Presently, saving for retirement by people is very low in the country. 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, Chidambaram said.
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 EPS. 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.