New Delhi, June 24: The Cabinet is likely to clear a finance ministry proposal to set up an interim Pension Regulatory Development Authority (PRDA) later this month. A legislation, to be brought before Parliament in the monsoon session, will then formalise the PRDA.
The PRDA, which is likely to be initially a three-member body, will have the power to license, register and supervise pension funds. It will prescribe investment guidelines, accounting standards and disclosure norms for fund managers. It will also fix and review fees charged by various players to schedule determination of these fees to prevent the start-up costs from getting embedded in the system permanently. It will also act as a policing authority against fund frauds and as a judicial authority in resolving disputes and redressing investor grievances.
The PRDA will also be charged with implementation of relative return guarantees, including risk management to ensure adequacy of collateral. It will standardise reports on pension flows, patterns of investments, pay-outs and expenses to ensure investors are informed about the health of the fund.