Bring pensions under one authority to boost coverage: Regulator

Making a case for consolidating all the pension products under its umbrella, a top official of the Pension Fund Regulatory and Development Authority (PFRDA) has said this would help bring at least 20 per cent of India’s population under its cover by 2021-22.
Bring pensions under one authority to boost coverage: Regulator
Hemant Contractor, Chairman, PFRDA

New Delhi

“Currently the pension coverage of all the schemes, including the Employees’ Pension Fund (EPF), is only 13-14 per cent of the country’s population. We are hopeful that by 2021-22, we should be able to take it to 20 per cent, including EPF and other pension funds like the one for coal miners,” PFRDA Chairman Hemant Contractor said.
“Consolidation will open the roads for faster growth of subscribers for pension products. We have the infrastructure in place,” he added. Pension funds, including the National Pension Scheme (NPS) and the Atal Pension Yojana (APY) are regulated by PFRDA, but pension schemes floated by insurance companies are regulated by IRDAI and the ones offered by mutual funds are regulated by SEBI.
Contractor also reiterated that bringing about tax parity between the NPS and the EPF scheme would provide a boost to the subscriber base of pension products. “The stumbling block is tax, because EPF is tax free. In case of NPS, only 40 per cent is tax free. The suggestion to make NPS completely tax free has been made to the government,” Contractor said.
Instead of making NPS tax free, the government had in the budget earlier this year announced that EPF would be partly taxed. This had led to an uproar from political parties and trade unions. The government was forced to rescind its decision within two weeks. The PFRDA Act, 2013, states that the pension fund regulator will regulate all schemes other than the EPF and some other statutory funds like the Coal Mines Provident Fund Organisation.
The Finance Ministry has assured the regulator that a committee would be set up soon to study the issue. “We have drawn the attention of the government and told them that all the pension schemes floated by mutual fund and insurance companies should be regulated by us. The government has said it will form a committee to look into it,” Contractor said.
Saying that it was pursuing the matter “vigorously” with the government, Contractor said there would be some issues about the existing pension products of insurance companies and mutual funds, but the committee being set up would look into these. The Chairman agreed it would be a challenge to get all the information about all the existing pension products and the quantum managed.
PFRDA, which alone manages Rs 147,000 crore in pension products held by 13.7 million subscribers, said its infrastructure and manpower are fully equipped to handle the increased amount after consolidation. The pension fund regulator is looking to expand, with a branch in Mumbai in this fiscal and one or two more branches in other parts of the country later, to better cater to the expected increase in the subscriber base, Contractor said.
“In terms of subscribers, we grew by 40 per cent last year. In quantum, we grew by 50 per cent in 2015-16. This year too we are looking at a similar increase. We are on track. The bulk of the quantum comes towards the last two months of the year-end because of the tax benefits,” he said. 

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