Implementing PFRDA Act 2013 in letter and spirit a major task: Chidambaram

Finance Minister P. Chidambaram has said implementing the Pension Fund Regulatory and Development Authority (PFRDA) Bill in letter and spirit would be a major task for the government.

Addressing the Fourth Meeting of the Consultative Committee attached to the Ministry of Finance here, Chidambaram said most countries are moving from a 'defined benefit' pension system to a 'defined contribution' system to enable pension related commitments to be sustainably discharged.

He said that the National Pension System (NPS) was a step in this direction.

He mentioned that the PFRDA Act would give statutory status to the PFRDA, the pensions sector regulator, and in addition to other objectives, would aim to address apprehensions regarding safety and yield under the NPS.

He stated that the salient provisions of the Act related to subscriber interest include choice of pension fund manager and investment schemes to the subscriber, availability of minimum assured return schemes to be notified by the PFRDA and the option of investment only in government securities.

Subscribers with greater risk appetite had the option of investing in equities and other areas. However, there was a cap placed on these options to prevent excessive risk taking, the finance minister said.

Chidambaram also reiterated the need for keeping inflation in check to ensure good real returns, focusing on the unorganized sector, including agricultural labour, ensuring that pension fund managers were of the highest ability and standing and the need for suitable publicity to create awareness about NPS, were made by members.

Chidambaram replied to the various suggestions and queries of the members and explained how the Act and efforts of the Government since 2003-04 had tried to address these concerns.

He mentioned that these initiatives were relatively recent in origin. Hence, work on the NPS was still a work in progress that would, however, achieve these various objectives over time.

He mentioned that at present the total pension funds under NPS were to the tune of Rs. 37,000 crore and added that investment of these funds would be made in accordance with the law passed by Parliament.