PFRDA ordinance issued to reform pension

NEW DELHI: In a major reform measure, Government today issued an ordinance to set up a full-fledged Pension Fund Regulatory and Development Authority, which would have same statutory powers as Market regulator SEBI or IRDA in their respective areas.

PFRDA, which is now an interim body under Finance Ministry, will come into being from January one 2005. Having its headquarters in New Delhi, PFRDA will have a chairman and five members, of which three would be whole-time members.

Elaborating on the ordinance, senior Finance Ministry official U.K. Sinha told reporters that the chairperson will retire at the age of 65 years, while the members at 62 years.

Sinha, however, did not give any time-frame by which the chairman would be appointed but only said it would happen shortly.

It would, however, take six months to a year to have pension fund in place. It is expected that there may not be many pension funds as is the practice all over the world. But one of the pension fund would be in the public sector.

More that 40,000 central Government employees have already joined the new pension system since January one 2004. As maintenance of their records through interim arrangements was not working satisfactorily and many states wanted to join the new scheme, there was need to expedite setting up of PFRDA through the ordinance route, he said.

Six state Governments -- Andhra Pradesh, Tamil Nadu, Rajasthan, Himachal Pradesh, Chhattisgarh and Jharkhand have already notified the new pension scheme for its new Government employees. Almost all other states have also expressed their willingness to join the new pension scheme.