Hail Pension Bill; hopeful of other bills passing: Experts

Commenting on the passage of Pension Bill in Lok Sabha today, Ashvin Parekh, Senior Expert, E&Y says, "Parliament has really approved of a very important bill. This will recognise the authority which has been under existence by way of ordinance." It does give the new authority a lot more powers to put things together particularly in the voluntary pension area, he adds.

The Lok Sabha on Wednesday passed the crucial Pension Fund Regulatory and Development Authority Bill. The bill allows subscribers to invest in stock market with a cap. The Pension Bill also provides old age income security for government employees.
On being asked whether more foreign direct investment (FDI) will start to come in with passage of the bill he says, it will but the size of FDI may not be substantial.
Rajiv Lall, Executive Chairman, IDFC too thinks passage of Pension Bill is very good news and is hopeful of Insurance Bill too coming and also a break through on Goods and Services Tax (GST). Below is the verbatim transcript of the experts interview on CNBC-TV18 Q: Pension Bill being cleared by the Lok Sabha  - the Bharatiya Janata Party (BJP) had its way – 26 percent is where the foreign direct investment (FDI) cap is. We heard Samajwadi Party, the Trinamool Congress (TMC) and so on and so forth opposing. But this will mean good news not just for the financial sector but also for the infrastructure sector? Parekh: Very true. I must say the floor was managed extremely well and the parliament has really approved of a very important bill. This will recognize the authority which has been under existence by way of ordinance and it has been hanging there for almost eight years.
It certainly gives the new authority a lot of more powers to put things together particularly in the voluntary pension area. Mandatory pension was doing well on account of the fact that the acquisition happens on its own but voluntary pension and National Pension System (NPS) particularly in the voluntary is something which is very welcome I should say. Q: What this is actually going to mean for fund flows because we have the finance minister speak a short while ago after the bill was passed in parliament saying that he is hopeful that FDI will start to come in with the passage of pension bill by the Lok Sabha? Parekh: It will. To the extent that it is now tied up to the insurance FDI limit but at the same time in as much as we have got good investments in the insurance sector. The only challenge is that the proposed bill only empowers Pension Fund Regulatory and Development Authority (PFRDA) to do the accumulation part of the pension - the annuities are still with the life insurance companies. Life insurance companies need capital but asset management and accumulation does not require much capital. So the size of FDI that we are talking about or we could be looking at may not be very substantial I should say. Q: Your thoughts on pension bill because this is something that should have happened at the start of the week but finally it has gone through – it is linked to the insurance bill, insurance currently capped at about at 26 percent as far as FDI is concerned but good news nevertheless? Lall: Yes, very good news. I think the last week has been excellent. We started with the food security bill - one can debate whether it was good or bad thing but at least we did that. It was important piece of legislation that went through the business of parliamentary approval where the land acquisition bill which is very important piece of legislation and now the pension bill. Tomorrow we will get the insurance bill and a break through on the GST, I think we can start feeling pretty good.