The Union Cabinet approves FDI hike in Pension Fund Regulatory & Development Bill from 26% to 49%. Till now, 26 per cent foreign direct investment was allowed in the insurance sector while the pensions business was closed to foreign investment.
Pension Fund Regulatory & Development Bill
Following are the major changes approved by Union Cabinet –
1- FDI on par with insurance proposed at 49%
The Cabinet did not specify the foreign direct investment (FDI) cap in the pension sector but the Finance Minister said it would be at par with the limit set for insurance companies which has now been raised to 49 per cent.
2- Empower the Interim Pensions Regulator – PFRDA to regulate the National Pension System and Other Pension Funds
The Pension Fund Regulatory and Development Authority Bill, 2011 seeks to give statutory
backing to the pensions regulator (PFRDA) that was set up through an executive order in 2003.
3- Provides One Assured Return Scheme Option
The amendments approved by the Cabinet specify that the subscriber seeking minimum assured returns shall be allowed to opt for investing his funds in such schemes notified by the Authority. Withdrawals not exceeding 25 per cent of the contribution made by subscriber will be permitted from the individual pension account subject to the conditions, such as, purpose, frequency and limits, as may be specified by regulations by the Pension Fund Regulatory Authority and Development Authority (PFRDA).
But nothing is going to change for retail buyer in short term, it will first go to parliament – first to Lok Sabha and then Rajya Sabha. So wait for some more time, till it will pass.