Ordinance issued to set up pension regulator

The government on Thursday issued an ordinance for setting up a full-fledged Pension Fund Regulatory and Development Authority akin to Insurance Regulatory and Development Authority and Securities Exchange Board of India.

PFRDA, which is now an interim body under Finance Ministry, will become a statutory body once the ordinance comes into effect.

The ordinance would subsequently be replaced by a legislation hopefully in budget session. The Cabinet on November 11 cleared a proposal to bring in a legislation for setting up a separate pension regulator.

The new legislation would empower PFRDA to regulate pension fund managers. Once the ordinance is promulgated, PFRDA is expected to spell out the extent of foreign direct investment cap in the pension sector.

PFRDA would also lay down guidelines on the number of players, prudential norms, investment criteria and capital requirement for pension fund managers.

Almost a dozen global financial powerhouses, including Principal, Merrill Lynch, Templeton, Prudential, Aviva and Standard Life have evinced interest in entering the long-term savings business, apart from the insurance ventures some of them already have in the country.