Tuesday, July 23, 2024

Minimum assured return scheme in works; to be launched soon: PFRDA Chairman


NEW DELHI, June 7: Pension Fund Regulatory and Development Authority (PFRDA) chairman Deepak Mohanty on Wednesday said the regulator is working on a pension scheme which could provide minimum assured return and something in this respect would come soon.
He also said that there are about 5.3 crore subscribers of Atal Pension Yojana (APY). This year the target for enrolment is 1.3 crore as against 1.2 crore last year.
“That is very much in the works… there we have to balance risk and return… somebody gives assurance and it will come with a cost. Like in APY, the government gives assurance and they bear the cost,” he said.
In a case of assured return, he said, the pension fund has to provide more capital because it is taking more risk.
“We are considering that product. We have made some progress. We will come out with that product and at the same time that one would have to see that the return should be attractive,” he said.
With regard to APY, he said, PFRDA aims to increase enrolment under the scheme and Regional Rural Bank is doing well on this count.
Atal Pension Yojana has generated 9 per cent return and the government has assured gap funding for the scheme.
Asked about progress made by the finance secretary-headed panel to review the pension system for government employees, Mohanty, who is a member of the panel, said, it is too pre-mature to comment on it.
As per its terms of reference, the committee would suggest measures to modify the same with a view to improving upon the pensionary benefits of government employees covered under the NPS, keeping in view the fiscal implications and impact on overall budgetary space, so that fiscal prudence is maintained to protect the common citizens.
The committee was set up in the backdrop of several non-BJP states deciding to revert to the DA-linked Old Pension Scheme (OPS) and also employee organisations in some other states raising demand for the same.
To a question on states’ demand to return the NPS corpus, he said, there is no provision in statute to return the pension amount as it belongs to contributors.
The central government in March had said there is no provision in the PFRDA Act for a refund of the accumulated NPS corpus which is being sought by the five non-BJP states that want to restart the Old Pension Scheme.
The state governments of Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh have informed the Centre about their decision to revert to the OPS and have requested a refund of corpus accumulated under the National Pension System (NPS).
The NPS was introduced by the central government in December 2003 to replace the defined benefit pension system with defined contribution pension scheme in order to provide old age income security in a fiscally sustainable manner and also to channelise small savings into productive sectors of the economy through prudential investments.
It was made mandatory for all new recruits to the government service (except armed forces) with effect from January 1, 2004, and has also been rolled out for all citizens with effect from May 1,2009, on voluntary basis. (PTI)