PFRDA, History, Functions, Recommendations & Amendment

PFRDA

The Pension Fund Regulatory and Development Authority Act of 2013 created the Pension Fund Regulatory and Development Authority (PFRDA), a statutory regulatory agency. It was created to oversee and control the National Pension System (NPS) and the Indian pension industry. It was founded in 2003 based on the OASIS (an abbreviation for old age social & income security) study by the Government of India and is currently managed by the Ministry of Finance. Furthermore, it was included in the National Pension Scheme.

PFRDA History

The Indian government asked a nationwide initiative dubbed “OASIS” to examine the nation’s strategies for ensuring old age income security. The Indian government implemented the report’s recommendations and replaced the former defined benefit pension system with a new defined contribution pension system. With the exception of the Armed Forces, the new pension system permitted new recruits to the Central/State Government service pension scheme.

On August 23, 2003, the Interim Pension Fund Regulatory & Development Authority (PFRDA) was first established to support, oversee, and advance the Indian pension industry. With effect from May 1, 2009, the NPS was subsequently made voluntary for all nationals, including those in the unorganised sector and self-employed professionals.

The Pension Fund Regulatory and Development Authority Bill of 2013 were passed by the Lok Sabha on September 4, 2013, and President Pranab Mukherjee signed it on September 19. On September 6, 2013, when it was introduced during the Rajya Sabha’s Monsoon session, it was made a Permanent Act. The 2003 IPRDA Bill had been replaced with a better version. According to the Indian Constitution’s Articles, the President of India is the PFRDA’s keeper, subject to his financial emergency powers. The PFRDA became a self-governing entity in the 2014–2015 fiscal year.

Also Read: NABARD

PFRDA Functions

The National Pension System (NPS) and the pension plans covered by this Act are subject to regulation, promotion, and maintenance by the Pension Fund Regulatory and Development Authority (PFRDA), a legislative body established by Parliament.

Similar to the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), the Insurance Regulatory and Development Authority (IRDA), and the Insolvency and Bankruptcy Board of India (IBBI), it is a central autonomous body that performs as a quasi-government organisation with executive, legislative, and judicial powers.

PFRDA oversees and regulates both the Atal Pension Yojana (APY) and the National Pension System (NPS). The Central Record Keeping Agency (CRA) and other intermediary organisations, including Pension Fund Managers, fall under its purview. It administers the APY and develops, promotes, and regulates the pension industry under the NPS.

National Pension Scheme (NPS)

It is a Central Government social security initiative. Except for members of the military services, personnel from the public, private, and even unorganised sectors are eligible for this pension system. It encourages people to make regular contributions to a pension account throughout their working careers.

After they retire, subscribers may take a certain amount of the corpus. An NPS account holder will receive the balance as a monthly pension after retirement. The NPS system is essential for everybody who works in the private sector and requires a monthly pension after retirement. With tax incentives under Sections 80C and 80CCD, the programme is transferable across occupations and places.

Atal Pension Yojana

It is a retirement programme targeted mostly at non-unionized workers including maids, gardeners, and delivery boys. This programme took the place of the previous Swavalamban Yojana, which was poorly received by the general public.

Its objective is to provide security by making sure that no Indian, regardless of age, needs to worry about illness, accidents, or diseases. The programme is open to employees in the private sector and those who work for firms without pension plans. On reaching the age of 60, one has the option of receiving a set pension of Rs 1000, Rs 2000, Rs 3000, Rs 4000, or Rs 5000.

Age and contribution level will be taken into account when calculating the pension. When a contributor dies, his or her spouse may apply for the pension, and the nominee will get the accrued corpus if both the contributor and the contributor’s spouse pass away.

PFRDA Recommendations

In order to safeguard the interests of subscribers, the pension fund regulator, the Pension Fund and Regulatory Development Authority (PFRDA), established a permanent committee to offer solutions to cyber security issues. PFRDA stated in its ruling that it is crucial for it to monitor technological developments and cyber security issues in order to safeguard the interests of pension subscribers.

The ‘Information Systems and Technology and Cyber Security’ committee will offer suggestions for how to link PFRDA technology with industry best practises. The panel’s suggestions “relative to the establishment of Management Information Systems (MIS), supervisory and regulatory platforms that might be used by the Authority to carry out its functions under the PFRDA Act more efficiently” would be made public. Additionally, the council would offer guidance on the fresh opportunities and challenges brought on by financial and regulatory technology.

PFRDA Amendment Bill for Pension Subscribers

The ‘Information Systems and Technology and Cyber Security’ committee will offer suggestions for how to link PFRDA technology with industry best practises. The panel’s suggestions “relative to the establishment of Management Information Systems (MIS), supervisory and regulatory platforms that might be used by the Authority to carry out its functions under the PFRDA Act more efficiently” would be made public. Additionally, the council would offer guidance on the fresh opportunities and challenges brought on by financial and regulatory technology.

This will spare customers from having to fill out numerous KYC forms and papers. Transfers and account opening will happen more quickly. Following the implementation of the changes, the duties of the market regulator Securities and Exchange Board of India (SEBI), IRDAI, and PFRDA would be further separated. After the Bill is approved, it’s likely that customers will have access to guaranteed pension packages with a fixed rate of return. There would be products available based on the risk appetite and age of the individual.

PFRDA UPSC

The PFRDA now has the requisite legal powers to oversee and keep an eye on the NPS institutions thanks to the PFRDA Bill’s passage at the end of 2013. By guaranteeing that NPS customers’ interests are put first, such a regulator can increase trust in the system. The PFRDA can also launch the following round of policy actions to guarantee expanded coverage of the larger informal workforce. With this, the NPS will bring the nation one step closer to providing seniors with social and financial security.

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