Financial Daily from THE HINDU group of publications
Tuesday, Nov 22, 2005
Government - Politics
Money & Banking - Pension Plans
UPA-Left meet helps iron out differences on Pension Bill Consensus on divestment in profit-making non-Navratna PSUs
New Delhi , Nov 21
THE eighth meeting of the UPA-Left parties coordination committee held here today has smoothened the way for introduction of the Pension Bill in the coming session of Parliament.
The Government also seems to have secured a go-ahead for disinvesting small equity stake in profit-making non-Navratna public sector companies, subject to certain parameters.
On the new pension system for newly recruited Government employees, except the armed forces, the Finance Minister, Mr P. Chidambaram, told presspersons after the meeting that the Left parties had been given a note on this subject.
The CPI (M) Polit Bureau member, Mr Sitaram Yechury, added that the Left parties would consult among themselves and get back to the Government.
Similarly, on the disinvestment issue, the Left parties did not oppose the move since the proceeds would be utilised for beefing up the National Investment Fund that would arrange resources for some of the commitments made in the National Common Minimum Programme of the UPA Government.
This matter too had been mentioned at the last meeting of the coordination committee and the Left parties had not objected to it outright.
Today they said the issue would be looked at on a case-by-case basis.
So far, the Government has announced its intention to offload 15 per cent stake in Shipping Corporation of India, a profit-making non-Navratna PSU.
In the note on pension presented today, the Government has addressed some of the concerns of the Left parties and those pointed out by the Parliamentary Standing Committee on Finance.
In short, it has decided to revise the Pension Fund Regulatory and Development Authority (PFRDA) Bill to include clauses to limit foreign direct investment (FDI) in the sector to 26 per cent and to prohibit investment of pension funds in overseas market.
In the note, the Government has said that clauses would be included in the PFRDA Bill to "limit the aggregate holdings of equity shares by a foreign company either by itself or through its subsidiary companies or its nominees, in the central record-keeping agency or a pension fund as may be, to 26 per cent of the paid-up capital of such agency or fund and to prohibit investment of funds of subscribers overseas."
In response to the Left concern that employees' pension funds would be left to the vagaries of the stock markets, the Government has indicated that amendments would be incorporated to provide for an option of a fund that would invest 100 per cent of its corpus in Government securities.
The Government has also agreed to include a Tier-II account as part of the basic feature of the New Pension System (NPS).
While the Tier-I account would be non-withdrawable till maturity, Tier-II accounts would provide mid-course withdrawal facility.
The PFRDA Bill would be further amended to provide for at least one of the pension fund managers to be a public sector entity.
The Bill will provide that "at least one of the pension fund managers shall be a Government company or wholly-owned by a Government company or Government companies," the note handed to the Left parties has said.
The Standing Committee on Finance that had scrutinised the PFRDA Bill had suggested the amendments.
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