The PFRDA (Pension Fund Regulatory and Development Authority) Bill was introduced in Parliament on 24 March. With strong support from the opposition, the Bharatiya Janata Party (BJP), it is likely to be passed soon. In October 2003, the government mandated PFRDA to act as a regulator for the pension sector. Once cleared, the Bill will give the interim regulator legal backing with more powers.
With the introduction of the New Pension System (NPS), the government has moved to a defined contribution-based pension system. We talked to Yogesh Agarwal, chairman, PFRDA, about the Bill and the Bajpai Committee report that should help the NPS take off. Excerpts:
What other clearances does the PFRDA Bill need to become a law?
After the Lok Sabha, it would need to be passed by the Rajya Sabha. With the Congress and the BJP on the same page, it should soon become a law.
What changes could it bring for pension accountholders?
Nothing. The only change will be that what is actually done on ground will now acquire legal footing. Once the Bill gets the approval, the regulator will get additional powers to penalise those who do not follow the guidelines.
What other changes can we expect once the Bill gets through?
Not much is going to change. Right now, the question of penalising defaulters does not arise. Presently, the pension sector is in the development phase, which is more important. Penalising and such things may come a couple of years down the line.
Many initiatives have been announced to boost the NPS’ reach. Any increase in the number of accountholders?
At present, there are about 1.7 million subscribers registered under the NPS and this number is rising. Out of this, 43,522 are from the unorganised sector, which is seeing growth too. If you look at NPS Lite, which we launched last September, we already have around 500,000 subscribers. The finance minister has said that he expects 2 million subscribers by end of March 2012. However, the main scheme faces some fundamental issues which need to be sorted out. For that we are waiting for the Bajpai Committee report. We expect the scheme to take off once it comes out. I expect to receive it by 15 April.
How have your fund managers fared?
At present, total assets under management under different schemes is Rs 8,542.47 crore. I think the pension fund managers are doing a great job; they are providing returns averaging 12-14 per cent. Compared to other investment avenues, NPS is one of the best if you look at its returns.