 "Pension Bill to attract new players, improve service quality: India Inc")
"The passing of this bill (PFRDA) will lay the road for new products and players to enter the pension market. The competition may even help in increasing efficiency and quality of service," industry body Ficci said.
The statutory powers bestowed on the interim regulator, PFRDA, will help in regulating the market and build greater accountability, it added.
The long-pending Pension Bill, a key economic legislation assuring minimum returns to subscribers, was approved by the Lok Sabha yesterday, with the government saying it is based on the principle that "you save while you earn".
"This (passage of the Bill) will boost confidence of the foreign investor in the sense that there could be political consensus on key economic reforms," Assocham Secretary General D S Rawat said.
The Pension Fund Regulatory and Development Authority (PFRDA) Bill, 2011, provides for market based returns and wide coverage based on several investment options in the pension sector with an aim to building confidence in the subscribers.
It pegs the FDI in pension sector at 26% or such percentage as may be approved for the insurance sector, which ever is higher.
"We hope that with the passage of the Pension Bill, the government will be able to create a level playing field for all stakeholders. With the enactment of this important Bill, the expected level of Foreign Direct Investment (FDI) will flow into the country," PHD Chamber of Commerce and Industry Suman President Jyoti Khaitan said.
It will have provision for withdrawals for limited purposes from Tier-I pension account, an incentive for subscribers to join the New Pension Scheme (NPS).
"The Bill will provide fresh, and much required, impetus to promoting NPS across all age groups and industry," Ficci said.
The corpus of the NPS having 52.83 lakh subscribers (including those of 26 state governments) was about Rs 35,000 crore.
The Bill also seeks to grant statutory status to the Pension Fund Regulatory and Development Authority (PFRDA).
The bill would provide subscribers a wide choice to invest their funds for assured returns, like opting for government bonds as well as in other funds depending on their capacity to take risk.
"We believe the reform will go a long way in increasing the coverage of formal pension and social security plans in India where only around 12% of active workforce has any formal pension or social security plan," CII Director General Chandrajit Banerjee said yesterday.