FDI Surge: Pension Sector Poised for 100% Investment Leap

The government is poised to raise the foreign direct investment (FDI) limit in the pension sector to 100%, with a bill expected in the upcoming Parliament session. This effort aims to align regulations with those of the insurance sector.

Previously, Parliament approved an increase in the FDI limit for the insurance sector, hiking it from 74% to 100%. The increase followed changes to the Insurance Act in 2015. The proposed amendment to the Pension Fund Regulatory and Development Authority (PFRDA) Act, 2013, seeks to boost the current 49% FDI limit in the pension sector.

The amendment may also separate the NPS Trust from the PFRDA, placing it under a charitable trust or the Companies Act. The board of the NPS Trust would consist of 15 members, mostly from the government. The National Pension System was introduced to replace the unsustainable defined benefit pension model with a sustainable defined contribution system.