Cabinet likely to consider amendments to PFRDA Act soon
The Union cabinet is likely to consider amendments to Pension Fund Regulatory and Development Authority (PFRDA) Act, 2013 soon and a Bill may be introduced in the upcoming session of Parliament, sources said.
The amendment Bill may contain provisions on the separation of NPS Trust from the PFRDA, a hike in the foreign direct investment (FDI) limit for the pension sector to 74 per cent from the existing 49 per cent, among others, sources said.
In March, Parliament approved a bill to increase the FDI limit in the insurance sector to 74 per cent from 49 per cent. Insurance Act 1938 was last amended in 2015 which raised the FDI limit to 49 per cent, resulting in a foreign capital inflow of Rs 26,000 crore in the last five years.
With the amendment, sources said the powers, functions and duties of the NPS Trust, which are currently laid down under PFRDA (National Pension System Trust) Regulations 2015, may come under a charitable Trust or the Companies Act.
The intent behind this is to keep NPS Trust separate from the pension regulator and managed by a competent board of 15 members. Out of this, the majority of members are likely to be from the government which along with the states are the biggest contributor to the corpus.
Finance minister Nirmala Sitharaman had announced to separate NPS Trust from the PFRDA with appropriate organisational structure, keeping in view the wider interest of the subscribers and to maintain an arm’s length relationship of NPS Trust with the regulator.
The Trust was established by the PFRDA for taking care of the assets and funds under NPS. The proposal to separate the two job roles has been under consideration for the last couple of years.
The PFRDA was established to promote and ensure the orderly growth of the pension sector with sufficient powers over pension funds, the central record keeping agency and other intermediaries. It also safeguards the interest of members.