The bill is aimed at having a regulator for managing the new pension system
NEW DELHI: The Pension Fund Regulatory and Development Authority (PFRDA) law may be in place by August, the Interim Pension Regulator, D. Swarup, said here on Saturday.
Speaking at a forum organised by CNBC-TV 18 and ICICI Prudential Life, Mr. Swarup said: "Hopefully, it [the PFRDA Bill] would come up for discussion in the monsoon session of Parliament."
The Bill, approved by the Law Ministry after the recommendations of the Standing Committee on Finance, have been incorporated, was aimed at having a regulator for managing the new pension system. For the existing pension funds floated by mutual funds and insurance companies, a transition period was to be provided to come within the ambit of the new regulator. "It is not that from day one, [that] existing products would be brought under PFRDA."
At present, the products of mutual funds are monitored by the Securities and Exchange Board of India, the market regulator, while those of insurance companies are handled by the Insurance Regulatory & Development Authority.
Mr. Swarup said that as regulator, he would keep the costs of funds at the minimum. Contributions to pension funds would not be permitted to be invested in individual equities. They would be restricted to only index-based funds in the securities market as such funds were less volatile, he said. At least one fund would invest solely in government securities, he said.
Unlike the rigidity in existing funds, there would be flexibility for subscribers to choose between fund managers and among the various products of the same fund, Mr. Swarup said. For this purpose, each subscriber would be provided with a Unique Account Number to deposit money anywhere at the designated collection centres, including post offices.
This, he said, would also be simpler for investors to keep an account of their investment in pension funds when they changed job or employment locations which, under the existing system, was a difficult proposition. A centralised record-keeper would be appointed to facilitate the flexible operations. The pension regulator would essentially manage the new pension system .