PFRDA Current Affairs - 2019
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Former SBI Managing Director, Hemant Contractor, has been chosen to head the Pension Fund Regulatory and Development Authority (PFRDA). The position of Chairman has been vacant for almost a year after the previous Chairman Yogesh Aggarwal resigned over differences with the Finance Ministry regarding the appointment of a member to PFRDA. R.V.Verma, the Finance member, was filling in as Acting Chairman.
Interim PFRDA was established by the government through a bill for the same introduced in Parliament in 2003. Its goal was to promote, develop and regulate pension sector in India. The Pension Fund Regulatory & Development Authority Act was passed in 2013. PFRDA is authorized by Ministry of Finance, Department of Financial Services.
PFRDA must consist of a Chairperson and maximum of five members, out of which a maximum of three can be full time members. Members are appointed by the central government.
One of the major roles of the PFRDA today is to oversee NPS (National Pension System). NPS is a pension scheme run by the Government of India. It has been mandatory for central government employees from 2004 and voluntary for unorganized sector workers since 2009.
As per the report jointly prepared by the Confederation of Indian Industry (CII) and global professional services firm Ernst & Young (EY), after the passage of the Pension Fund Regulatory and Development Authority (PFRDA) Act 2013, investment corpus in the Indian pensions sector is likely to cross $1 trillion by 2025 as the sector moves forward to realize its full growth potential.
As per CII-CY report:
- Pensions business offers a promising opportunity because of India’s changing demographics, an insufficient government-funded pensions system and the presence of a vivacious insurance and funds management sector.
- By 2030, 180 million Indians or 12% of the population will be in the age bracket of 60-plus.
- Pensions systems play a major role for the infrastructure sector, providing stability in capital markets.
- The government has set a funding target of $1 trillion for the infrastructure sector for the 12th Plan (2012-16) period, while it expects the private sector to contribute 45% of the targeted investment.
- Private pension funds are likely to provide 24% of the total corpus by 2025, while pensions and annuity products offered by life insurance companies are expected to contribute around 16%.
At present, the retirement funds corpus is in range of Rs.12-15 trillion, of which the Employees Provident Fund (EPF) holds one-third of the total, while the Public Provident Fund (PPF) and NPS account for about 2.5% each.