A parliamentary panel has recommended that subscribers to the New Pension Scheme (NPS) get an assured return of at least 9.5 per cent on their investments, which is the interest rate given by the Employees’ Provident Fund Organisation.
“The committee would recommend that the minimum rate of return on the contributions to the pension fund of employees should not be less than the rate of interest on the Employees Provident Fund Scheme,” said the panel in its recommendations on the Pension Fund Regulatory and Development Authority (PFRDA) Bill, 2011.
Subscribers to the Employees’ Provident Fund Organisation (EPFO) get an annualised interest of 9.5 per cent on their contribution.
“The government should devise a mechanism so that subscribers of the NPS get guaranteed returns on their pension, so that they are not at any disadvantage vis-a-vis other pensioners,” said the standing committee on finance, headed by Yashwant Sinha.
NPS, launched in January 2004, has about 24 lakh subscribers, mostly those employed with the central government.
Twenty-seven states and Union territories and many private individuals have joined the scheme, the total corpus of which now stands at Rs 10,000 crore.
The parliamentary panel has also suggested imposing a 26 per cent cap on foreign direct investment (FDI) in pension programmes, on a par with the insurance sector.
“The committee notes that foreign investment in the pension sector may be capped at 26 per cent,” the panel said.
The PFRDA bill, introduced in the Lok Sabha in March 2011, has no provisions on FDI.
The Pension Fund Regulatory and Development Authority Bill, 2011 will give legal backing to the regulator, allowing it to put in place a robust system for managing retirement savings and providing a framework to promote old age security.
The committee also suggested that the government make concerted efforts to extend the reach of the scheme in both the public and the private sectors.
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