Pension fund regulator from January 1

The finance ministry has notified the formation of the Pension Fund Regulatory and Development Authority (PFRDA).

From January1, the PFRDA will manage the pension scheme for new government employees and others in the unorganised sector.

UK Sinha, joint secretary (capital markets), and M Prasad, joint secretary (budget), have been appointed part-time members of the four-member board. Vinod Rai, additional secretary (banking), has been appointed officiating chairman. The Centre is yet to appoint the two other full-time board members.

For the time being, the regulator will function from the old offices of the Insurance Regulatory Development Authority in the Jeevan Bharati building here.

The Centre has already received Parliament's sanction for the funds to build the new offices of the regulator.

The notification is a sequel to the Cabinet decision to set up a regulator to govern the new era of defined contribution-based pension.

Under this scheme, about 50,000 government recruits will get pension from the investments made from their own contributions to private pension funds.

The scheme will not cover the existing 3.5 million government employees.

The PFRDA will have to immediately decide on the appointment of a central record-keeping agency, which will track the monthly payments of all contributors to the pension fund.

Several companies, including National Securities Depository Ltd and UTI-ISL, have pitched for this. The regulator will also have to prepare guidelines for the new fund managers.

This will include at least one public sector company. The delay in the appointment of the regulator had led to apprehensions that the new pension architecture would not be ready for launch by the new year.

Other than government servants, the two-tiered scheme will be available on a voluntary basis to all persons, including self-employed professionals and others in the unorganised sector.

Private sector employees can also opt for it, in addition to their mandated contributions under the Employees' Provident Fund.