The Pension Fund Regulatory and Development Authority (PFRDA) is seeking to bring various superannuation funds under its ambit, while it wants more deliberation on regulation of pension products offered by insurance companies and mutual fund (MF) houses.
"It is a good time to have a relook at the policy level and bring superannuation funds under the ambit of a regulator since the PFRDA is there," Hemant Contractor, the newly-appointed PFRDA chairman, told reporters on Wednesday. "We are just looking at funds where there seems to be a grey area."
Asked if the regulatory body would also seek to bring pension products of insurance companies and MF under its umbrella, PFRDA executive director R V Verma said the issue would need more discussion and had to be addressed by all regulators together. PFRDA, which has now got statutory powers, is compiling details of various superannuation funds run by companies to bring these under its regulatory ambit.
There are many schemes run by private firms for their employees, and managed by insurance companies such as the Life Insurance Corporation of India. Also, there are provident fund trusts affiliated with the Employees' Provident Fund Organisation.
PFRDA will also suggest repealing all archaic Acts, which have some bearing on pension products.
As the issues involve multiple regulators, it may be sent for consideration of the Financial Stability and Development Council (FSDC) headed by the finance minister.
The pension regulator has also urged the finance ministry to provide a level-playing field between the New Pension System (NPS) and comparable products like EPFO and insurance products offering retirement solution. The latter are exempt from tax at all stages but NPS is taxed at the withdrawal stage.
"We are engaging with the government on EEE (exempt, exempt, exempt) status for the NPS. They are sensitive to it," said Verma, adding that he was hopeful of a solution in the next Budget.
The total number of NPS subscribers has increased from 3.86 million in October 2012 to 7.44 million by the beginning of October 2014. Assets under management have expanded from Rs 21,951 crore to Rs 63,511 crore during the period.
Post notification of the Act, the PFRDA has so far framed twelve regulations, which are expected to be finalised within this calendar year. These include regulations on Pension Fund, Point of Presence (PoP), Aggregators, Central Record Agency (CRA), NPS Trust, Redressal of Subscriber Grievance and Custodian.
The Pension Advisory Committee (PAC) has already been constituted for finalisation of regulations and a study has been commissioned under the chairmanship of G N Bajpai for reviewing the investment guidelines, looking at the entire eco-system of the NPS architecture, and suggest changes and new measures.
"Amendment to the insurance act, where, under the insurance and pension fund, companies can have foreign investment up to 49 per cent is before Parliament. Once this is passed by Parliament, there would be more players, and much wider and deeper market, making the sector more efficient and professional," PFRDA chairman Contractor added.
