Pension Fund Regulatory and Development Authoritys

Dr. Abhinn Baxi

Pension Fund Regulatory and Development Authoritys

Result of OASIS Committee. PFRDA was established by Government of India on 23rd August, 2003. The Government has, through an executive order dated 10th October 2003, mandated PFRDA to act as a regulator for the pension sector. The mandate of PFRDA is development and regulation of pension sector in India.

Pension Fund Regulatory and Development Authoritys

Backdrop First investment based pension fund-UTI 1994. The pension market is unorganized. It covers hardly three percent. SchemesEPF, EPS, PPF

Pension Fund Regulatory and Development Authoritys

Current Pension Schemes Government Employees pension Scheme BEPS and IEPS Privately Administered LICVPBY, NJA, NJD,NJS

Pension Reforms
Oasis Committee Recommendations 10 % of annual incr. fund Rate of interest should be at least 5 %. Setting of private funds should be allowed. Regulatory body should be set up. Favorable Tax Treatment for such investments. Individual retirement Pension Account.

Pension Reforms
New Pension Scheme 2003 The following contribution guidelines have been set by the PFRDA: Minimum amount per contribution: Rs. 500 per month Minimum number of contributions: 4 in a year (at least 1 in each quarter) Minimum annual contribution: Rs 6,000 in each subscriber account

Investment options
E Class: Investment would primarily in Equity market instruments. G Class: Investment would be in Government securities like GOI bonds and State Govt. bonds C Class: Investment would be in fixed income securities other than Government Securities

Challenges to NPS
Unorganized Sector Agriculture workers Temporary and casual workers Self employed persons