The State Governments were not obliged to join. They joined voluntarily. Only for the Central Government employees, it is mandatory from 1.1.2004.
135-PAGE
THE MINISTER OF FINANCE (SHRI P. CHIDAMBARAM): Mr. Chairman, I am grateful
to the hon. Members, 15 of them, who have participated in this
discussion on the Pension Fund Regulatory and Development Authority Bill.
discussion on the Pension Fund Regulatory and Development Authority Bill.
Sir, this Bill was first introduced in 2005. It was once reported by the
Standing Committee on Finance chaired, at that time, by Maj. Gen.
(Retd.) Khanduri. The Standing Committee favourably reported the Bill.
There were one or two dissent notes, mainly from the Left Parties. That
Bill lapsed with the dissolution of the
Lok Sabha.
The Bill was again re-introduced in 2011 and this is one of the rare
Bills that went through another Standing Committee procedure. This time,
the Standing Committee was chaired by Mr. Yashwant Sinha. This
Committee also favourably reported the Bill. There was only one Member
who dissented to the Standing Committee’s report. The point I wish to
make is that, at least, in the Standing Committee, there was very wide
consensus for the Bill except one dissenting voice to the Bill that is
now under consideration.
Secondly, when my friend, Shri Nishikant Dubey, spoke, I thought he will
take credit for the fact that the interim PFRDA was actually notified
by Shri Vajpayee’s Government in October 2003.
SHRI NISHIKANT DUBEY : I said that.
SHRI P. CHIDAMBARAM: That may have been lost in translation. The
notification was made on 22.12.2003 and the New Pension Scheme came into
force from 1.1.2004. So, when the UPA Government took office, the
Scheme had come into force and all Government servants recruited after
1.1.2004 are covered by the New Pension Scheme. Every Government servant
in service prior to 1.1.2004 is under the old scheme. Nobody is
affected, nobody is complaining and they are not aggrieved.
The Government servants who were recruited after 2004 have been
recruited with the clear stipulation that pension will be under the New
Pension Scheme. To the best of my knowledge – I have been in the Finance
Ministry
04.09.2013
136-PAGE
earlier for some time and now again – I think by and large the
Government servants have come to accept the fact that the New Pension
Scheme is, in the long run, a beneficial Scheme. They may begin to earn
pension only 28 or 29 years after they join service. There are one or
two other developments on which I thought I should comment. I know Shri
T.K.S. Elangovan and Dr. Raghuvansh Prasad Singh have some reservations.
But the point is, the 2005 Cabinet which approved the Bill, had Dr.
Raghuvansh Prasad Singh as a member. He was the member of the Cabinet
which approved this Bill. Shri Elangovan’s Party had many members in the
Cabinet which approved this Bill. Therefore, I suppose that memories
are short. I acknowledge and I respect their right to express their
concerns. But when it comes to supporting the Bill finally, I have no
doubt in my mind that our colleagues will support us in this Bill.
Actually, what you must remember is that you cannot turn back the clock.
Twenty-six States have already joined the NPS. For example, Shri
Semmalai opposed the Bill. But I want to remind him that Tamil Nadu
also, by a Notification made on 6th of August, 2003, joined the New
Pension Scheme with effect from 1.4.2003. It is hardly necessary for me
to point out who was in Government in Tamil Nadu in 2003. Therefore, 26
States have already joined the NPS.
I will give you presently the number of employees who have joined the
NPS. Today, the States have 17,76,973 subscribers. The cumulative
contribution of the Central Government, the State Government and other
NPS-like subscribers runs to Rs. 34,965 crore. … (Interruptions) All I
am pointing out is, I assume that the State Governments take a decision
after a most careful consideration, after considering it in their State
Cabinet. The
State Governments were not obliged to join. They joined voluntarily.
Only for the Central Government employees, it is mandatory from
1.1.2004.Twenty-six State Governments have joined.
Total number of subscribers of the Central Government is 12,01,636; of
State Governments, as on 14th of August, it is 17,76,973; of the private
sector, it is 04.09.2013
137-PAGE
2,57, 754; in NPS-lite Schemes, like Swalamban and similar Schemes, it
is 20,46,849. The total is 52,83,212. The total asset under the
management is Rs. 34,965 crore.
Now, the Standing Committee made a number of recommendations. I have
accepted all except one. I think some one here quoted the wrong
recommendation and alleged that we have not accepted that. That is not
correct. The only recommendation that we are not able to accept is the
Standing Committee said that we must allow a re-payable advance; now,
that would convert the NPS into a current account or even a over-draft
account. That is not the purpose of the NPS. The purpose of the NPS is,
at the end of his or her career, a man or a woman must have a large
amount of money, a cumulative amount, so that forty per cent of that is
mandatory annuitisation so that they will get an annuity as pension and
the remaining sixty per cent can be taken as lump-sum. This 40 per cent
mandatory annuitization is also a minimum. If you want, the entire
accumulation can be used for annuitization. We have accepted all the
recommendations. In my opening Statement which I made, which many
Members may not have heard because of an extra decibel level at that
time, I had made it clear. I think all the recommendations of the
Standing Committee have been accepted but for one. Only this one
recommendation we have not been able to accept and I have given you the
reasons.
The NPS actually offers a wide choice, as Shri Mahtab has pointed out.
In fact, he was even advancing the other argument: “Why are you placing
restrictions? Why do you not allow full freedom of choice?” Now, we
think that at the current stage of development of the pension market and
the current stage of development of the bond market, the equity market
and the other instruments of investment, we should strike a balance. We
have, therefore, struck a balance. There are clear restrictions on how
much can be invested in the equity market, the e-market; how much can be
invested in the Government bond market, the G-market; and how much can
be invested in the C-market, the corporate bond
04.09.2013
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The bond market is relatively under-developed in India. Therefore, we
have to have this balance. But we have allowed the employees to have a
choice that they would like all their money to be invested only in
Government bonds. That has been allowed. We have also said that if you
want an assured return, then the Authority will notify which are the
schemes which are promising an assured return and you can then choose
saying : “my money shall be invested only in the assured returns.” So,
every single recommendation of the Standing Committee which has a
bearing on risk, which has a bearing on capacity to take risk, has been
accepted. I think this is the way the legislation should be made.
Government indeed makes legislation but Government is not the repository
of all the wisdom. When it goes to a Standing Committee with opposition
parties members on it, which Committee is chaired by a Member of the
Opposition party, when Government receives their advice, when we find
that there is merit in what they are saying, we accept it. After all, we
represent the different shades of opinion of about 130 crore people.
So, when we get these recommendations, we are willing to accept. That is
how, I believe, legislation should be made. This is a good example of
how legislation should be made. It was notified by a previous
Government; the Bill was introduced by a new Government; again
re-introduced by the second UPA Government; it went to two Standing
Committees chaired by two distinguished Members of the Opposition. Then,
we have accepted suggestions and now we have reached a very broad
consensus.
04.09.2013
139-PAGE
I think while I have heard all of you, I take your advice seriously for
future guidance. The PFRD Authority is sitting in the Gallery. He must
have listened to you very carefully; he must have noted your views. We
will ensure that the NPS is improved; made more secure and made more
attractive for the subscribers.
Sir, I do not wish to make a long speech. The point I am trying to say
is that the NPS has been there with us for nine years. We have a
non-statutory Authority today and that is not good. A sum of Rs.35,000
crore should not be managed by a non-statutory Authority. It must be
managed by a statutory Authority. All that this Bill does is to make the
non-statutory Authority a statutory Authority. Now, he has legal
powers. He can take action; he can pull up people, he can punish people,
he can fine people and he can impose penalties. That power was not
available so far. Now, we have got a statutory Authority.
So, with these words, I commend this Bill. I am grateful to all the hon. Members.… (Interruptions)
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SHRI P. CHIDAMBARAM: Sir,
many suggestions have been made which are outside the scope of this
Bill. We have got this Swavalamban Scheme introduced by my distinguished
predecessor.… (Interruptions) The Swavalamban Scheme has been
introduced. The Swavalamban Scheme is attracting a large number of
people. The Government makes a contribution. As they make a contribution
of Rs.1000, the Government makes a contribution. It has to still gain
currency. It has to be popularized more. We will do so. But the Old Age
Pension is not under this Scheme. That is a separate Scheme. That is a
very different Scheme. This is a Scheme which is now accepted
world-wide, namely, “ a Defined Contribution”. “Save for your pension as
earn during your career.” That is the motto under which all the Schemes
around the world are converging. You save as you earn. So, as you earn,
you save, not for the current period but you save for your retirement.
04.09.2013
140-PAGE
So you save, accumulate over a period of time; the accumulation is
managed by pyou rofessionals; the accumulation adds to the total of your
total wealth. At the time of retirement, that wealth is available for
an annuity which will give you an assured pension every month for the
rest of your life. That is the principle under which this has been
formed. I am grateful to hon. Members. All other pension schemes which
are there – old age pension, or some other pension scheme – they are
outside this Act. They will be dealt with by the Ministry or Department
concerned; we can make improvements there. For example, there are many
other schemes. This is about people who have got a regular income, who
can earn. As they earn today, they have got Current Account; they have
got Savings Bank Account; some of them have got the Fixed Deposit
Account. But they have no saving which actually matures at the time of
retirement. Therefore, accumulation for pension is the way to save for
retirement. That is what this scheme has introduced – on the day of
retirement, there is a lump sum. Forty per cent of it is mandatory
annuitisation but you can annuitise the entire 100 per cent, it will
give you a larger annuity. You can also take a lump sum out of that.
With these words, Sir, I commend the Bill. I am grateful to the hon.
Members for the support, and I request that all hon. Members,
irrespective of the reservations they may have expressed, which I
respect, I acknowledge, please move this Bill so that this Bill is
passed.
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