PFRDA – Pension Fund Regulatory & Development Authority
It was in 2003 when Pension Fund Regulatory and Development Authority was created. The company was meant to promote, regulate, and develop the pension sector. A big part of their work has been the National Pension Scheme (NPS). They launched the NPS in 2003, which benefited all citizens in turn. The body comes under the jurisdiction of the Ministry of Finance.
In an effort to provide a temporary solution while continued work on the permanent system is underway, IPRDA regulations outline a new pension fund regulatory agency. President’s assent was given to the proposal on 19 September 2013 and made it a permanent act. The President had been acting as guardian of the PFRDA until Financial Year (FY) 2014-2015, at which point the agency became fully autonomous and independent.
Functions of PFRDA
The PFRDA is focused on promoting old age income security by establishing, developing, and regulating pension funds. They want to protect the interests of subscribers to these pension funds and promote a sense of security.
PFRDA is located at New Delhi with various regional offices spread throughout the country.
- The government should build pension schemes for retired people by implementing the mandatory scheme and voluntary schemes.
- Tier 1 and Tier 2 of the National Pension System are under the purview of PFRDA and share identical rules.
- Pension Fund Regulatory Development Authority of India (PFRDA) is in charge of appointing various agencies, such as Pension Fund Managers, Central Record Keeping Agency etc.
- Educating the general public about the importance of pensions.
- Training of intermediaries is needed to help spread the word and educate people on the importance of pension.
- Discussing possible solutions to the issues related to various pension schemes in the country.
- Disputes can arise between various intermediaries, like banks and customers, as well as within these intermediaries.
National Pension Scheme
The National Pension System, abbreviated as NPS, is a savings-based system introduced by the Pension Fund Regulatory and Development Authority that offers a choice of investment and pension options. When you enroll into an NPS account, your contributions are pooled to become your individual pension fund and then invested in various portfolios consisting of government bonds, bills, corporate debents, or shares based on your preference. You also have the option to purchase annuity for life at the time of exit. The National Pension System is governed by the PFRDA.
PFRDA also established an NPS trust under Indian Trust Act, 1882 in order to manage assets and funds under NPS in the best interest of subscribers. NPS Trust is managed by a Board of Trustees appointed by PFRDA who is the settlor of the trust. Legal ownership of trust and funds is entrusted to the board of trustees.
The Board consists of a Chairman and up to 5 members including the chairman, and the Board meets once in 3 calendar months. NPS Trust is responsible for executing individual pension accounts in its name with the subscriber, protecting the properties of NPS, safeguarding interest of NPS and its subscribers, approving various documents and reports including audited financials submitted by various intermediaries of NPS trust, monitoring and evaluating operations of such intermediaries, exit the subscriber from NPS etc.
Conclusion
PFRDA is an important regulatory authority in India that governs pension funds. If you are looking to invest in a pension fund, it is important to be aware of PFRDA and the role it plays. PFRDA ensures that pension funds are well-managed and run smoothly, providing peace of mind for investors.