Govt mulls 26% FDI in pension sector

The bill may allow fund managers to attract FDI


The government is considering allowing 26 per cent foreign direct investment (FDI) in pension sector as part of reforms in the area.

The FDI in pension sector would move in tandem with the insurance sector, official sources said, adding that the revised norms would be incorporated in the Pension Fund Regulatory Authority (PFRDA) Bill expected to be introduced in Parliament during the upcoming budget session.

Under the norms, being worked out by the Finance Ministry, Pension Fund Managers (PFMs) could be allowed to bring in 26 per cent FDI under the New Pension Scheme.

At present, 26 per cent FDI is permitted in the insurance sector and an amendment bill is pending in the Rajya Sabha to raise the cap to 49 per cent.

Sources said, to begin with the Bill would allow Pension Fund Managers (PFMs) to attract 26 per cent FDI, sources said. As and when FDI ceiling for the insurance companies would be increased to 49 per cent, even PFMs cap would be raised to similar percentage.
The Parliamentary Standing Committee on Finance, which looked at the pension sector reforms, too has recommended FDI in the pension sector as is allowed in the insurance sector. The recommendation came way back in 2006. PFRDA Bill needs to be re-introduced in the Parliament as it lapsed with the termination of the 14th Lok Sabha.

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