PFRDA Bill shelved; FDI in pension won't impact funds: E&Y

Ashvin Parekh, partner, national leader-global financial services, Ernst & Young spoke to CNBC-TV18 about what the PFRDA Bill contains and what it must contain.

Below is the edited transcript of the interview. Also watch the accompanying video. Q: First up I would assume that the contentious point raised by the BJP that the bill should give assured returns is something as an industry expert would be a clear no-no for you. Can you tell us how deleterious it is and why is it so seriously being opposed?
A: To begin, with any part of some assured offered by either insurance or a pension provider has a certain element of cost. Two things happen when you start assuring something. One is the investment and nature of investments behind the debt liability changes. In that case, the pension providers are forced to invest in government security and other less risky kind of investments. So the capital is assured and the return is assured, in which case, the entire benefit of getting onto a pension plan is removed.
As a beneficiary, for example, I could have gone and invested my money in a bank deposit and kept it there. that