FICCI has been involved in the promotion of NPS through its membership base to increase the penetration of NPS, which has been tepid, since it opened up for all citizens in 2009. The Bill will provide fresh, and much required, impetus to promoting NPS across all age groups and industry.
Currently, there are around eight pension managers who manage both private and public sector NPS. With the increase in FDI limit to 26%, FICCI expressed hopes that many foreign players will enter the sector at this opportune time when the country is in need of foreign investments.
Tagging the FDI limit in pensions to FDI limit in insurance will ensure an automatic increase in FDI limit to 49% with the passage of the Insurance Bill in the Winter Session. "We sincerely hope that the Insurance Bill too in passed without further delay in the winter session to pave the way for foreign inflows and for mobilizing long term funds to meet infrastructure funding requirements," stated Dr. A. Didar Singh, Secretary General, FICCI.
Industry body CII while welcoming the bill said that among the most crucial reform measures, the PFRDA bill confers statutory powers to PFRDA which would strengthen its promotional, developmental and regulatory functions in respect to pension funds in India while also opening up FDI to the pension sector.
CII believes the reform will go a long way in increasing the coverage of formal pension and social security plans in India where only around 12% of active workforce has any formal pension or social security plan.
“Also considering that India’s vast population of daily-wage workers in sectors including agriculture and construction rarely have any pension cover, the reform measure would help create a favourable environment to enhance the coverage of pension products in a sustainable manner,” said CII in a statement.
With increasing life expectancy and the changing fabric of traditional family structure, a clear roadmap for deepening of pensions and annuity market remains critical for ensuring old age financial security, added CII.