Pension Fund Regulatory and Development Authority

The Pension Fund Regulatory and Development Authority (PFRDA) is a statutory body established by the Government of India to regulate, promote and ensure the orderly growth of the pension sector in India. It was established on 23 August 2003 through a government resolution and later received statutory status through the Pension Fund Regulatory and Development Authority Act, 2013.

Objectives

The primary objectives of PFRDA are:

• To regulate and develop the pension sector
• To protect the interests of subscribers to pension schemes
• To promote old age income security by establishing, developing and regulating pension funds

Functions

The key functions of PFRDA include:

• Regulating the National Pension System (NPS) and other pension schemes
• Registering and regulating pension funds and other intermediaries
• Issuing guidelines and regulations for the management of pension funds
• Protecting the interests of subscribers by ensuring fair play and transparency
• Promoting awareness about pension planning and old age income security

National Pension System (NPS)

One of the major responsibilities of PFRDA is to regulate and manage the National Pension System (NPS). NPS is a voluntary, defined contribution retirement savings scheme designed to enable systematic savings during the subscriber’s working life. It was launched on 1 January 2004 for government employees and was subsequently opened to all citizens of India on a voluntary basis from 1 May 2009.

NPS offers two types of accounts:

• Tier-I Account: This is a non-withdrawable account meant for retirement savings.
• Tier-II Account: This is a voluntary, withdrawable account that offers liquidity and flexibility.

Subscribers can choose to invest their funds in a mix of asset classes such as equities, corporate bonds, government securities, and alternative investment funds through professional fund managers.

Atal Pension Yojana (APY)

In 2015, the Government of India launched the Atal Pension Yojana (APY) to provide a defined pension to the unorganised sector. APY is administered by PFRDA and is open to all Indian citizens between the ages of 18 and 40 years. Under APY, subscribers receive a guaranteed minimum monthly pension of Rs. 1,000 to Rs. 5,000 after the age of 60, depending on their contributions.

Organisational Structure

PFRDA is governed by a Board of Members consisting of a Chairperson and not more than six members, of whom at least three shall be whole-time members. The Chairperson and members are appointed by the Government of India. The current Chairperson of PFRDA is Supratim Bandyopadhyay, who assumed office on 13 January 2020.

Impact and Growth

Since its establishment, PFRDA has played a crucial role in developing and regulating the pension sector in India. As of 31 March 2023, the total assets under management (AUM) of the pension schemes regulated by PFRDA stood at Rs. 8.81 lakh crore, with over 5.61 crore subscribers. The NPS has emerged as a popular retirement savings option, with a subscriber base of over 5.32 crore as of 31 March 2023.

PFRDA has also taken various initiatives to improve transparency, reduce costs, and enhance the overall efficiency of the pension system. These include the introduction of the e-NPS platform for online subscription and account management, the launch of the NPS Trust for the safe custody of subscriber funds, and the implementation of a grievance redressal mechanism for subscribers.