New Delhi: In a move to expedite economic reforms, the Centre has approved up to 26 percent Foreign Direct Investment (FDI) in the pension sector.

The Union Cabinet has agreed to include some recommendations of the Standing Committee on Finance in the Pension Fund Regulatory and Development Authority (PFRDA) Bill 2011. The amended PFRDA Bill will be introduced in the coming winter session of the parliament.

The government had decided not to mention FDI cap in the legislation. Instead it will figure in the notification of the legislation. It clearly reflects the government’s intention that whenever it wants to increase the FDI limit, the parliamentary approval will not be mandatory.

Earlier, the Centre had decided to increase the FDI limit in insurance sector from 26 percent to 49 percent. But the move had fallen flat as the bill has to be approved in the Parliament.

As per the Amendment Bill, it will not be mandatory for the government to get the bill passed in the parliament while increasing the FDI limit in pension sector.

However, the Centre did not accept the proposal of the Standing Committee on Finance that the pension fund investors should get assured minimum return.

Sources said the Government will monitor the pension fund and the amendment bill to safeguard the interests of the investors. But no promise has been made for assured return to investors who will get the return as per the market rate.

The Centre has made some stern provisions regarding withdrawal of immature Pension Fund. No amount can be withdrawn before the stipulated time except in case of fatal disease. Investors cannot withdraw the amount on the occasion of the marriage ceremony of their kith and kin.

JPN/Bureau