New Delhi: India's pension fund regulator said on Wednesday he would urge the government, fresh from victory in a parliamentary confidence vote, to push forward with legislation to allow foreign investment in the sector.At present, three state-run funds and a handful of domestic insurance companies offer pension schemes to Indian employees, but the returns are low as they mostly invest in debt.
"We have been waiting for it (reforms). We will take it up with the government," D. Swarup, chairman of Pension Fund Regulatory and Development Authority told Reuters.
"I do definitely expect the pension bill to be passed this year. Otherwise, the bill will lapse and the entire process has to be started afresh," he said.
A bill to reform the pension sector was first introduced in parliament in 2005 as a cash-strapped government sought ways to reduce its expenditure and ensure higher returns for employees.
But the move ran into stiff opposition from communist parties which provided the government with a majority. The left withdrew support last month over a controversial nuclear energy deal with the United States, triggering Tuesday's confidence vote which the government won.
After the vote Finance Minister Palaniappan Chidambaram said the result showed the Congress party-led ruling coalition had majority support for reforms and would work with other parties to carry forward pending reforms.
The proposed pensions legislation would allow foreign funds to buy stakes of up to 26 percent in pension joint ventures with Indian firms, same as that for insurance firms, Swarup said.
"The FDI limit in pensions could be raised to 49 percent once it is raised in the insurance sector," he added. New pension funds would be allowed to invest up to 50 percent of subscribers' money in equity or equity-linked mutual fund schemes, he said.
Source: The Hindu Business Line, The Financial Express, Reuteurs
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