Yashwant Sinha led Parliamentary Standing Committee’s recommendations on the PFRDA Bill

A parliamentary Standing Committee on Finance headed by Yashwant Sinha in its recommendations on the Pension Fund Regulatory and Development Authority (PFRDA) Bill, 2011, recommended that subscribers to the New Pension System (NPS) should get an assured return on their investments. The committee also suggested imposing a 26 per cent cap on foreign direct investment (FDI) in pension programmes.

The PFRDA Bill introduced in the Lok Sabha in March, 2011 includes no provisions pertaining to FDI. The committee opined that the inclusion of FDI policy in the provisions of the PFRDA Bill would be appropriate.

The committee suggested that the government should devise a mechanism so that subscribers of the NPS get guaranteed returns on their pension, so that they are not at any disadvantage via-a-vis other pensioners. The committee also reccomended that the minimum rate of return on the contributions to the pension fund of the employee should not be less than the rate of interest on the Employees Provident Fund Scheme.

No pension fund management company in India currently offers a guaranteed pension product.

The committee further suggested that the government make concerted efforts to extend the coverage of the scheme in both the public and private sector. The committee suggested setting up of a Pension Advisory Committee under the Bill to look into the interest of the subscribers.

The committee wanted that the Pension Advisory Committee be delegated more power and independence to play a more meaningful role by rendering advice suo—motu even on matters not referred to it.

As on 31 March 2011, total assets managed by the pension fund managers amounted to Rs.8,585 crore.
Subscribers to the Employees Provident Fund Organisation (EPFO) get annualised interest of 9.5 per cent on their contribution. The NPSlaunched in January2004 has about 24 lakh subscribers, mostly those employed with the Central Government.

At present, seven fund houses — LIC Pension Fund, SBI Pension Funds, UTI Retirement Solutions, IDFC Pension Fund Management Company, ICICI Prudential Pension Fund Management, Kotak Mahindra Pension Fund and Reliance Capital Pensions Fund manage the investment corpus.