PFRDA, the government is negotiating to adjust the law to cover pension funds

(This story originally appeared in blank on July 19, 2021)

The Government and the Pension Fund Management & Development Authority (PFRDA) is discussing amending the law to ensure regulation of a large number of superannuation funds that are now free from the necessary scrutiny.

Although there are no official estimates, around 400-500 are considered “unregulated” super funds, with 50-60 being the big players. There are at least three governing bodies for the retirement business, with PFRDA handling National pension system (NPS), while the insurance regulator deals with annuities sold by life insurers. Mutual funds also sell retirement plans and are regulated by Sebi.

“To regulate superannuation funds that are not under the regulatory control of any financial regulator, we have proposed changes to the PFRDA Act, which is in the consultation phase. We believe that regulatory controls are necessary to ensure that the purpose for which the trust is created is being carried out by the Trustee and that the fund is being managed in the best interests of the beneficiaries. its beneficiaries or employees,” PFRDA President Supratim Bandyopadhyay told TOI.

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Under the current regulatory structure, these funds receive the approval of the income tax department and are required to follow the investment guidelines of the finance ministry. For a member’s superannuation, they can purchase an annuity, which is regulated by the Insurance Development and Regulatory Authority of India.

Under the proposed regulatory framework, funds would need to register with the PFRDA, which would monitor their investments and conduct periodic checks to see if the regulations were being followed. “We want to protect the beneficiaries of such trusts and protect their pensions. If the fund is properly managed according to the investment guidelines announced by the government, they can continue to do so with our approval, and if matters are not managed for the benefit of our employees, we will require those trustees to join the NPS and follow our regulations,” said Bandyopadhyay.

The debate over the regulation of these super funds has been going on for several years with the government – both the UPA and NDA – failed to come up with a framework. Therefore, it is not clear whether the retirement savings of tens of thousands of investors are properly managed. | PFRDA, the government is negotiating to adjust the law to cover pension funds


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