A parliamentary standing committee has favoured offering minimum guaranteed returns to subscribers of the New Pension System (NPS) and recommended a 26% foreign direct investment (FDI) cap in the pension sector through a legislative process. The parliamentary standing committee on finance which submitted its report on the Pension Fund Regulatory and Development Authority (PFRDA) Bill on Tuesday, said that "as any effective pension scheme needs to be underpinned by stability of returns and reasonable post retirement incomes, it is imperative that the government should provide for minimum guaranteed return and not the mere camouflage of market-based guarantee."
The committee, headed by former finance minister and Bharatiya Janata Party (BJP) leader Yashwant Sinha, recommended that the minimum rate of return on the contributions to the pension fund of the employee should not be less than the rate of interest on the Employees Provident Fund scheme
In the absence of such a guarantee, the NPS cannot justifiably claim to provide old age income security," it said.
The government had introduced the Bill in the Lok Sabha in March.
The PFRDA is yet to get statutory powers and the interim PFRDA is functioning since 2003 through an executive order.
The NPS was made mandatory for all new recruits to the government except armed forces with effect from January 1, 2004. It was opened to all citizens of India from May 1, 2009 on a voluntary basis.
As many as 27 states governments have notified and joined the NPS for their employees. As of now, its subscriber base has crossed 1.1 million with a corpus approaching Rs7,000 crore. The government is of the view that FDI in the pension sector should be capped at 26%, but the standing committee said the ceiling should be specified in the legislation itself and not through an executive order.
Source : Hindustan Times.
1 comment :
A move which should have been thought by the government before launching the NPS itself. Citizens are not fools to invest their hard earned money in a scheme where there is no guarantee of return even the rate of return appears to be astronomically high. Any individual require full financial independency and security when he attains the age of 60+.Otherwise any scheme framed by any government can remain on papers on experimental basis only.
Another scheme which is not attracting by individuals is Medical insurance schemes framed by Insurance companies, where medical insurance cover is available only upto the age of 75 years whereas actual coverage required is when a person is getting older and older.
Who formed this foolish and useless scheme god only knows. That is the reason individuals are no going for medical insurance scheme, where they are required to loose money when they are healthy and not requiring any medical reimbursement(Majority of employees get reimbursement by their employers)without any return and they get nothing when they are actually old and in need of coverage.
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