Pension reforms have quietly begun even as the UPA and the Left parties are busy fighting a battle over the tenability of the new pension scheme (NPS), proposed by the government.

Mutual funds and insurance companies have already launched pension schemes in conformity with the NPS. The passage of the Pension Bill by Parliament would only facilitate the setting up of a regulator to ensure a smooth functioning of the pension sector, D Swarup, PFRDA chairman, told FE.

The Left parties have been opposing the passage of the Bill on the pretext that pension funds should not be diverted into the stock market and a minimum assured return must be offered to the subscribers.

"Already, pension schemes are being offered. Obviously, there is a strong demand for such schemes. The PFRDA, as the regulator, would have to ensure smooth functioning of these schemes," Mr Swarup said. While it is mandatory for the central government employees who have joined the services from January 1, 2004 for other employees from the private and unorganised sector, opting for the new scheme would be voluntary.

He added that subscribers wishing to opt for a totally safe scheme can go in for 100% government securities. Under the new system, there would be four schemes - safe, balanced, growth and 100% government securities.

At present these pension schemes are regulated by the Securities and Exchange Board of India or by the Insurance Regulatory and Development Authority due to the delay in setting up of a pension regulator. There are 16 states which have already joined NPS.

(The Financial Express)