Parliament likely to table pension bill in May session

NEW DELHI The pension Bill may finally be tabled in Parliament in the forthcoming session in May. This is, however, subject to the results of the Assembly elections in the states. ���The bill is already pending, it is a matter of time before it is listed.

A lot depends on the results of the Assembly elections,��� a senior Finance Ministry official said. The Left parties have categorically opposed the PFRDA bill.

Assembly elections in the Communist bastion of West Bengal and Kerala conclude by early May, the government is then expected to push the PFRDA legislation in Parliament as all the new Central government employees from January 1 ���04 have been contributing to the new pension scheme, besides state government employees in 16 states.

The money is being deposited in the public account which provides 8% interest, just as in the case of the Public Provident Fund. The pension funds will manage money where it would earn returns offered by the pension fund under its various schemes, subject to the passage of PFRDA legislation.

To begin with, at least half a dozen pension funds would be set up in the country, of which at least one would be in the public sector. The government has already set up an interim Pension Fund Regulatory and Development Authority, headed by D Swarup.

The government favoured a switch-over to a new pension scheme, which has only defined contribution and not defined benefit in the face, making pension bills which are increasingly becoming unsustainable. The original PFRDA bill does not provide for withdrawals of mandatory contributions.

A parliamentary standing committee has already vetted PFRDA legislation and the bill that is being brought will incorporate the committees��� recommendations, including opening up of pension funds to foreign direct investment. The FDI cap is expected to be at the same level of the insurance sector, which is now at 26%.

The standing committee has suggested that there should at least be one scheme which provides totally risk-free returns by investing the entire pension contribution in government securities.

The standing committee has also recommended that there should be a provision for withdrawal of the mandatory contributions made by employees to the pension scheme.