The Telegraph
Since 1st March, 1999
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PC pill for pension pain relief

New Delhi, Nov. 21: The government’s plan to push through the pension bill in the winter session of Parliament may hit a stumbling block.

Union finance minister P. Chidambaram today asked the Left parties to agree to a list of four amendments he has drawn up for inclusion in the new pension bill.

The amendments provide for a cap on foreign direct investment at 26 per cent and give pension plan holders the option to park all of their savings in government securities. While the amendments ensure that pension funds cannot park funds abroad, they allow part withdrawal from pension accounts by forming a Tier-II account and enlistment of at least one PSU fund manager. However, these proposals are unlikely to cut much ice with the Left.

“We will continue to oppose the bill tooth and nail ... the amendments are not satisfactory,” said CPI leader Gurudas Dasgupta.

The Left parties, other than the CPM, are staunchly opposed to the bill in its present form. However, the position of the CPM is rather ambivalent as the party has neither supported nor opposed the bill.

All the four amendments are based on suggestions made by the standing committee on finance and these were not acceptable to the Left, Dasgupta said.

Dasgupta and Rup Chand Pal, a CPM member of the Lok Sabha, are members of the committee that has been vetting the bill. Both found the amendments unsatisfactory, as did the DMK representative on the panel.

The Left parties, in all probability, will give their feedback on the amendments by December 15. With the winter session closing on December 23, there will be still some time for Parliament to discuss the bill.

If the Left parties continue to oppose the bill, the government can pass it only with the support of the Opposition ' Bharatiya Janata Party.

Dasgupta fears that by allowing pension contributions to be parked in the stock market, collective savings could be frittered away.

Dasgupta and his comrades also oppose the way in which the government is seeking to transfer the power to legislate on policy issues to the new pension regulator.

Section 14 of the bill states the new regulator will lay down “norms for the management of the corpus of the pension funds, including investment guidelines”. This means that unlike the Insurance Regulatory Development Act, this bill does not specify whether and how much of the corpus needs to be invested within the country.

Similarly, Section 13 of the bill states that the pension fund regulator’s ambit will not be limited to just the new pension scheme of the government but will cover “any other pension scheme not regulated by any other enactment”. This could lead to the regulator privatising the sector without Parliament’s approval.

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