What is proposed?
In the recently-concluded Budget session, the government tabled the Pension Fund Regulatory Development and Authority, or PFRDA, Bill, 2011 in Lok Sabha that will reform the pension sector further and empower the regulator. It aims to curtail the government's pension liabilities and speed up the development of the sector.
What will change?
The Bill will give the PFRDA statutory powers to regulate and develop the industry. "Currently, in case of any rule violation, the PFRDA has to move the civil court. The Bill will enable the regulator to cancel licences or levy penalties on its own," says Gautam Bhardwaj, Director, Invest India Economic Foundation, a Delhi-based pension policy think tank.
The Bill will also make the pension system, which was introduced through an executive order in 2004, into a law. It permits private companies to manage Central and state government pension funds. The government is expected to announce a separate foreign investment policy later.
In countries such as Germany, Japan, the Netherlands, the United States and Britain, which are members of the Organisation for Economic Cooperation Development, pension regulators have been around for many years. In Britain, for instance, the pension regulator was given enormous powers under the Pensions Act 2004.