Pension Scheme update

The government has secured the support of BJP on the bill to reform the pension sector by agreeing to the main opposition’s demand that the scheme offer a minimum assured return and foreign investment be capped at 26%. The new pension scheme will offer an option for an assured return of 8.6% for investments in government bonds, while subscribers willing to take a higher degree of risk can look at other choices, where their contributions are invested in a mix of private and government placements. An understanding over the Pension Fund Regulatory and Development Authority (PFRDA) Bill was arrived at a meeting on Monday between finance minister Pranab Mukherjee and BJP leaders in Parliament. However, no consensus was possible with regard to the Companies Bill. The bill was introduced in Parliament in the face of Left resistance with BJP’s backing and now its prospects of passage seem bright and it may be moved on Wednesday. The terms of the deal are on the lines of the recommendations of the parliamentary finance standing committee that did not agree with the Centre’s proposal that foreign investment in pension funds be raised to 49%, and also called for an assured rate of return, arguing that senior citizens should be given security on their investment.