Debating India

Pension reforms on fast track

Monday 16 May 2005

New Delhi, May. 16 (PTI): After banking reforms, the Government has put pension reforms high on the agenda and is pitching for early passage of the PFRDA Bill.

The Finance Ministry has requested Parliamentary Standing Committee on Finance to give its recommendations on PFRDA Bill within the monsoon session of Parliament starting in July end.

Accordingly, the committee has convened a meeting with interim pension regulator PFRDA, tomorrow to discuss various aspects of the Bill, official sources told PTI today.

"PFRDA will explain the various provisions of the Bill to members of the Standing Committee," an official said.

The PFRDA Bill was introduced in the Lok Sabha a few weeks ago but was referred to the House Committee following stiff opposition from the Left parties.

Sources said PFRDA will explain the importance of the Bill in pushing ahead pension reforms in the wake of rising pension liabilities of both the Centre and States, now at over Rs 50,000 crores or 1.5-1.6 per cent of the GDP.

The most alarming trend is that the Pension Bill is growing by 18 per cent per annum and is unsustainable for both the Centre and States in the years to come.

The NDA Government had initiated the new pension system in January 2004 for new recruits. So far, 15 States have expressed their willingness to join the NPS and nine of them have already notified it.

Left parties have objected to the Bill on the ground that the NPS is a defined contribution scheme and promises no assured return as against the present defined benefit scheme.

However, PFRDA maintains that NPS will be able to offer a much higher return in the long term as the funds will be allowed to be invested in equity.

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