The New Pension Bill

The Rajya Sabha passed the Pension Fund Regulatory and Development Authority (PFRDA) Bill, which will help extend pension cover to more citizens of the country through PFRDA's New Pension Scheme (NPS).

• The main objective of the bill is to help extend pension cover to more citizens of the country through PFRDA's New Pension Scheme (NPS). Currently just 12 percent of the workforce in the country has any formal pension or social security plan.

• The passage of the Pension Bill will make Pension Fund Regulatory and Development Authority (PFRDA) a statutory authority. Earlier it had a non-statutory status.

• The Pension Bill would also provide subscribers a wide choice to invest their funds, depending on their capacity to take risk. A subscriber seeking minimum assured returns can opt for schemes providing minimum assured returns, as may be notified by the PFRDA.

• NPS is a defined contribution scheme and is based on the principle that 'you save while you earn'.

• The provisions of the Pension Bill will not apply to Employees Provident Fund Organisation (EPFO) subscribers. EPFO funds will be continued to be managed by the government.

• The Pension Bill allows foreign direct investment in the country's pension sector, the latest attempt by the government to attract more capital flows. Overseas investors can own stakes of up to 26% stake in domestic pension funds, or such percentage as may be approved for the insurance sector, whichever is higher etc.

• NPS was opened up for all citizens of the country including unorgnised sector workers, on voluntary basis, with effect from 1 May 2009.

• To encourage workers from the unorganised sector to voluntarily save for their retirement via NPS, the government launched the co-contributory pension scheme titled "Swavalamban Scheme" of NPS in the Budget of 2010-11.