Keen to kickstart pension reforms, the finance ministry has asked the Pension Fund Regulatory and Development Authority (PFRDA) to notify all regulations by the end of the month. The government is also considering giving tax breaks to customers of National Pension Scheme (NPS) at the time of exit.
The regulator will soon notify 14 or 15 regulations which will bring in more clarity in the segment. The PFRDA Act was passed in 2013 and notified in February, 2014. The norms will cover the role of various stakeholders, aggregators, trustees, record-keeping agencies and custodians.
A senior official said PFRDA is putting in place all regulations to make the Act effective. The government has, however, decided against bringing Employees’ Provident Fund Organisation (EPFO) under the purview of the PFRDA.
PFRDA was functioning without a chairman for some time after Yogesh Agarwal quit the body last year. Former SBI managing director Hemant Contractor was appointed as chairman of PFRDA by the government in one of its first financial sector appointments two months ago.
PFRDA is also seeking tax relief for NPS like EPFO products. “We have been asking for tax incentives so that we can be on par with EPFO products. Right now it’s EET (no tax during contribution and accumulation but taxed during withdrawal) pension and we want to make it EEE (no tax at any stage). The government said we will look at it. When the tax issue is sorted out, there will be lot more interest,” said an official.
Out of the fund size of Rs 70,000 crore, nearly 80 per cent is government money. Barring two states, all the other state governments, have notified joining NPS. PFRDA was in talks with the other two state governments on joining NPS. Its mandate covers development of the pension sector as also framing regulations for the advancement of the NPS and protection of the interest of the subscribers.
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