Last month, the Pension Fund Regulatory and Development Authority (PFRDA) issued revised guidelines for the registration of the Pension Fund Managers (PFMs). These guidelines are for the PFMs to manage the National Pension System (NPS) in the non-governmental and private sector. See here. The NPS was implemented in 2004 for all government employees and later extended to the private sector in 2009. The guidelines bring about the following changes in the NPS:
Although NPS was made accessible on a voluntary basis to non-government employees and those working in the private sector since 2009, the subscription to the schemes under NPS was lower than expected. In August 2010, a committee was set up under the chairmanship of Mr. G.N. Bajpai to review the implementation of NPS in the informal sector. The Committee noted that since NPS was opened to the general public there were only 50,000 private sector subscribers until May 2011. According to the Committee, the low subscription was due to the low-to-negligible distribution incentive to the PFMs to distribute the different schemes to the subscribers to invest their funds. The Committee thus recommended that PFRDA should consider revising the structure of the NPS so as to increase subscription. It suggested making the fee structure dynamic for PFMs. The Committee had also suggested that there should be some revision in the bidding as well as the selection process for the PFMs to increase competition and thereby incentivise them to distribute the schemes. These changes, as suggested by the Bajpai Committee and now notified by the PFRDA, are different from the original design of the NPS. The Old Age Social and Income Security (OASIS) Report of 2000, which had initially suggested the establishment of pension system for the unorganised sector in the country, had recommended a low-cost structure for the pension system. The Report had stated that the choice of PFMs should be based on a bidding process where the lowest bidder should be made a PFM under the NPS. The rationale for the auction base for the PFMs was that it would provide a system to the subscribers whereby they could make investments for their old age by paying a minimal fee. A set uniform fee was meant to eliminate the large marketing expenses which would ultimately get passed on to the subscibers. In addition, the intent behind keeping the fund managers from the distribution and marketing of the schemes was to prevent any mis-selling (misleading an investor about the characteristics of a product) that may happen. Recent newspaper reports have raised doubt if these new rules would help in increasing the penetration of the NPS in the markets. However, the chairman of PFRDA, Mr. Yogesh Agarwal, in a recent interview explained that it was important to bring about changes in the structure of the NPS. According to him a scheme which was mandatory for the government sector could not be expected to perform as well in the private sector (where it is voluntary) without any changes made to its structure. He also stated that the NPS should be able to compete with other financial products such as insurance and mutual funds in the market. See here for the PRS Legislative Brief on the PFRDA Bill, 2011. Notes: The seven PFMs are LIC Pension Fund Ltd., UTI Retirement Solutions Ltd., SBI Pension Funds Pvt. Ltd., IDFC Pension Fund Management Co. Ltd., ICICI Prudential Pension Funds Management Co. Ltd., Kotak Mahindra Pension funds Ltd., and Reliance Capital Pension Fund Ltd..
Elections to the 13th Legislative Assembly of Gujarat are scheduled to be held in two phases on the 13th and 17th of December. The BJP has been the dominant majority party in the Assembly since 1995. The 2002 elections saw the largest victory for the party, winning 127 seats. The Congress last held power in Gujarat in 1985. In the Assembly elections held for the the seventh Assembly, the Congress had a clear majority of 149 seats. In 1990, the Janata Dal emerged as the largest party with 70 seats. The BJP registered major gains in 1990, improving their tally of 11 seats in 1985 to 67 seats. The Congress came third with 33 seats. The electoral trends over the last 22 years may be viewed here. In the current Assembly, 117 of the 182 seats are held by the BJP. It is useful to look at the work done by the 12th Gujarat Assembly during its term from 2008 to 2012. Here we look at key metrics like the number of days the assembly was in session, members’ attendance, and legislative business. Performance of the Assembly During its five year term, the assembly sat for a total of 157 days – an average of 31 days each year. In comparison, the Lok Sabha sat for an average of 66 days each year during the period 2008 to 2011. In the same period the Kerala Assembly sat for an average of 50 days – highest among states - followed by Maharashtra (44). However, the Gujarat Assembly sat for more number of days than the Haryana Assembly which sat for an average of 13 days and Rajasthan (24). The average attendance among Gujarat MLAs stood at 83% for the whole term, with two members registering 100% attendance. 87 Bills were passed by the Assembly since the beginning of its term in 2008 till September 2011. Of these, 80 Bills i.e. over 90% of all Bills were passed on the same day as they were introduced. None of the Bills were referred to any Committee. In the Budget Session of 2011, 31 Bills were passed of which 21 were introduced and passed within three sitting days Amendments sought by the President and the Governor One of the significant laws passed by the 12th Assembly was the Gujarat Control of Terrorism and Organised Crime Bill, 2003 which was introduced and passed in July 2009. However the Bill did not receive the Presidents Assent and was sent back to the Gujarat Assembly for amendments. In December 2009, the assembly passed the Gujarat Local Authorities Laws (Amendment) Bill 2009 which sought to make voting compulsory in elections to local self-government bodies like municipal corporations and Panchayats. The Gujarat governor returned the Bill for reconsideration in 2010. It was re-introduced in the house in September 2010 without changes. Another Bill that was returned by the Governor was the Gujarat Regularisation of Unauthorised Development Bill which sought to regularise unauthorised construction on payment of an Impact Fee. The Bill was passed by the Assembly in March 2011. The Governor returned the Bill with a suggestion to include a provision to bar the regularisation of unauthorised construction beyond a specified date. The Bill was re-introduced and passed with amendments by the Assembly in September 2011.
