135-PAGE NANDRI-ENGELS
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.
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
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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
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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
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