New Delhi. The central government is considering major changes regarding foreign investment in the pension sector. There is talk that the limit of foreign direct investment (FDI) in pension funds can be increased from the current 49 percent to 100 percent. If this proposal is implemented then a big change can be seen in the pension system of the country.
Preparation to amend the law
According to media reports, the government is preparing to amend the Pension Fund Regulatory and Development Authority (PFRDA) Act. This change is likely to be introduced in the upcoming session of Parliament. Currently, the limit of foreign investment in the pension sector is fixed at 49 percent.
insurance sector model
The government has already allowed 100 percent FDI in the insurance sector. Now this model is being considered to be implemented in the pension sector. Its objective is to promote foreign investment and strengthen the financial sector.
Changes possible in NPS system also
The amendment proposal may also include changes in the structure of the National Pension System (NPS) Trust. At present the trust operates under the rules of PFRDA, but in the future it may be changed to a more independent structure. For this, the possibility of forming a new management board is also being expressed, in which the government will continue to have a major role.
Structure of pension system in India
In India, NPS was implemented in place of the old pension system for new government recruitments from the year 2004. Later in 2009, it was opened as an investment option for all citizens.
What will be the impact of 100% FDI?
If full foreign investment is allowed in the pension sector, competition in this sector may increase. With this, investors are expected to get new options and better returns. Apart from this, improvements can also be seen at the level of technology, management and transparency.
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