This move would bring it in line with the insurance sector, where 100% FDI is already allowed.
Last year, Parliament passed a Bill that increased the FDI limit in the insurance sector from 74% to 100%.
Previous amendments to the Insurance Act of 1938 were made in 2015, which elevated the FDI limit from 49% to 74%.
An amendment to the Pension Fund Regulatory and Development Authority (PFRDA) Act of 2013, aimed at boosting the FDI limit in the pension sector, is expected during the Monsoon or Winter Session, contingent upon various approvals, sources indicated. Presently, the FDI in pension funds is restricted to 49%.
Additionally, sources mentioned that the amendment Bill may propose the separation of the NPS Trust from the PFRDA. The responsibilities and functions of the NPS Trust, currently defined under the PFRDA (National Pension System Trust) Regulations 2015, may be governed by a charitable trust or the Companies Act, as per their insights.
The goal of this initiative is to isolate the NPS Trust from the pension regulator and ensure its management by a capable board of 15 members. The majority of these members are expected to be from the government, as they, along with states, represent the largest contributors to the fund.
The PFRDA was established with the aim of promoting and ensuring the orderly development of the pension sector, equipped with sufficient authority over pension funds, the central recordkeeping agency, and other intermediaries. It also plays a crucial role in safeguarding the interests of members.
The National Pension System (NPS) was introduced by the Government of India to replace the defined benefit pension model. From January 1, 2004, NPS became mandatory for all new recruits in central government services (excluding the armed forces initially) and was rolled out for all citizens on a voluntary basis starting May 1, 2009.
The government’s strategic shift from a defined benefit, pay-as-you-go pension model to a defined contribution scheme, NPS, was driven by the increasing and unsustainable pension expenses. This transition aimed to liberate limited governmental resources for more productive and socio-economic development.
Also Read: TVS Supply settles dispute with ZTE, withdraws insolvency plea in NCLAT
(Edited by : Juviraj Anchil)
