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Pension Fund Regulatory and Development Authority

The Pension Fund Regulatory and Development Authority (PFRDA) was established in 2003 to regulate and develop the pension sector in India. It aims to promote old age income security and protect the interests of subscribers to pension funds. The PFRDA regulates various existing pension schemes like the EPF and implements the new National Pension System, which allows individuals to contribute to defined contribution pension plans. The NPS was expanded to all Indian citizens in 2009 but faces challenges in increasing coverage and shifting mindsets from traditional defined benefit plans.

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Paritosh Chaudhary
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385 views11 pages

Pension Fund Regulatory and Development Authority

The Pension Fund Regulatory and Development Authority (PFRDA) was established in 2003 to regulate and develop the pension sector in India. It aims to promote old age income security and protect the interests of subscribers to pension funds. The PFRDA regulates various existing pension schemes like the EPF and implements the new National Pension System, which allows individuals to contribute to defined contribution pension plans. The NPS was expanded to all Indian citizens in 2009 but faces challenges in increasing coverage and shifting mindsets from traditional defined benefit plans.

Uploaded by

Paritosh Chaudhary
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

Pension Fund Regulatory and Development Authority

OBJECTIVES To promote old age income security by establishing, developing and regulating pension funds. To protect the interests of subscribers to schemes of pension funds.

Result of OASIS (Old age social Income Security) Committee Established by Government of India on 23rd August, 2003. The Government has, through an executive order dated 10th October 2003, mandated PFRDA act as a regulator for the pension sector Its a Governments effort to find sustainable solutions to the problem of providing adequate retirement income.

Backdrop
First investment based pension fund-UTI 1994. The pension market is unorganized. It covers hardly 3%. In 2000-23% people employed in govt. organisation were covered under govt. benefit pension scheme and 49% employed in private sector were covered under mandatory EPF.

Pension Reforms
Oasis Committee Recommendations 10 % of annual incr. fund invested in equity and 20% in private corporate bonds Rate of interest should be at least 5 %. Setting of private funds should be allowed. Regulatory body should be set up. Allowed to invest in secondary market Fund should be managed by professional fund managers. Pension fund manger should offer schemes of 3 categories: safe income, balanced and growth income Individual retirement Pension Account.

Current Pension Schemes: Civil services Pension Scheme (Pay-as-yougo) Schemes-EPF, EPS, PPF Government Employees pension Scheme,1995 BEPS and IEPS,1993 Privately Administered- LICVPBY, NJA, NJD,NJS

COMPOSITION OF AUTHORITY The Authority shall consist of a Chairperson and not more than five members, of whom at least three shall be whole-time members, to be appointed by the Central Government.
PRESENT BOARD OF THE AUTHORITY: SH. YOGESH AGARWAL-CHAIRPERSON SH. TARUN BAJAJ- PART-TIME MEMBER SMT. MADHULIKA P. SUKUL- PART-TIME MEMBER

Pension Reforms
New Pension Scheme 2003: The following contribution guidelines have been set by the PFRDA New govt. employee, self employed professionals and

those in organized sector will be allowed to opt for the contributory pension schemes.

Monthly contribution from employee should be 10% of employees salary and dearness allowances and matching cont. from employer. Indivisual should exit from scheme at the age of 60 years but they would have to invest mandatory 40% of pension fund to purchase IRDA insurance company. Minimum amount per contribution: Rs. 500 per month State govt can choose to join this new pension scheme

Pension fund managers can choose one of the 3 options: 60% of fund will be invested in Govt papers 30% in corporate bonds 10% in equity

40% in govt securities & corporate bonds 20% in eqity 50% in govt securities and corporate bonds 50% in equity Pension fund manager is free to invest in international markets

NEW PENSION SYSTEM


It is an initiative of Pension Fund Regulatory and Development Authority (PFRDA), the apex body established by Government of India to regulate and develop the pension sector in India. NPS has been extended to all citizens of India with effect from 1st May 2009. PFRDA has launched NPS- Lite which specifically targets the marginal investors and promotes small savings during their productive life. NPS-Lite Model" is designed to ensure ultra-low administrative and transactional costs, so as to make such small investments viable

Challenges to NPS
Difficult to tackle unorganized Sector Difficult to shift from defined benefit plan to defined contribution plan to all.

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