The Centre may hike the foreign direct investment (FDI) limit in the pension sector to 74 percent and a Bill pertaining to the matter is expected to come in the next Parliament session, according to sources.
Last month, Parliament approved a Bill to increase FDI limit in the insurance sector from 49 percent to 74 percent. The Insurance Act, 1938 was last amended in 2015 which raised FDI limit to 49 percent, resulting in foreign capital inflow of Rs 26,000 crore in the last 5 years.
Amendment to Pension Fund Regulatory and Development Authority (PFRDA) Act, 2013 seeking to raise FDI limit in the pension sector may come in the monsoon session or winter session depending on various approvals, sources said. Presently, the FDI in the pension fund is capped at 49 percent.
The sources added, “the amendment Bill may contain separation of NPS Trust from the PFRDA. The powers, functions and duties of the NPS Trust, which are currently laid down under the PFRDA (National Pension System Trust) Regulations 2015, may come under a charitable trust or the Companies Act”
The intent behind this is to keep NPS Trust separate from the pension regulator and managed a competent board of 15 members. Out of this, the majority of members are likely to be from the government as they, including states, are the biggest contributor to the corpus.
The National Pension System (NPS) was introduced by the Government of India to replace the defined benefit pension system. NPS was made mandatory for all new recruits to the central government service from January 1, 2004, and has also been rolled out for all citizens with effect from May 1, 2009, on a voluntary basis.
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