Government panel wants PFRDA Bill to cap pension sector FDI at 26-per cent

The standing committee on finance has recommended a 26-per cent cap on foreign investment in the crucial pension sector and has asked the government to spell out foreign investment policy in the PFRDA Bill 2011.

The Standing Committee on Finance has also recommended that the foreign direct investment (FDI) in the pension sector may be capped at 26 per cent.

While the government's stance that foreign investment in pension sector be capped at 26 per cent on par with the insurance sector is in line with the standing committee's recommendations, the panel wants it specifically spelt out in the PFRDA Bill.

The standing committee has noted that the pension fund managers holding the stake of the old age income security of their clients cannot be compared with insurance entities in the financial sector and therefore the investment policy must be spelt out in the Bill itself.

Currently, there is no provision for FDI in the pension sector in the Pension Fund Regulatory and Development Authority (PFRDA) Bill 2011.

This is because the government is in favour of spelling out the foreign investment policy for pension sector intermediaries (including the pension funds and central record keeping agency) under the Foreign Exchange Management Act, 1999.