The government has also increased the foreign direct investment (FDI) limit in pension funds from 49 per cent to 74 per cent. In the notification issued by the government, it has been named as PFRDA Regulation 2021. To increase the scope of pension in the country, new On-tap Pension Fund Managers’ licenses are going to be issued and with the new announcement, big companies will have a chance to enter the pension business. Earlier, the government had reduced Foreign Direct Investment (FDI) in insurance from 49 per cent to 74 per cent.
Existing fund managers will be able to sell stake
According to the notification issued by the government, the limit of FDI in pension funds has been increased from 49 per cent to 74 per cent. Now existing fund managers will also be able to sell their stake to foreign investors. The FDI limit for the new On-tap Pension Fund Managers License will be 74 per cent. After 74 percent FDI in insurance, the limit of FDI in pension funds has also been increased. With the increase in the limit of foreign investment in pension funds, now big companies will be able to enter this business. Let us tell you, the government is continuously improving the sector to develop the pension society in the country. The increase in the FDI limit is a part of this.
What will be the effect of increasing FDI in pension funds
Companies will get capital by increasing the FDI limit in pension funds. Existing funds will be able to sell their excess stake. With this, the capital requirement of many companies for business expansion will be met. When foreign companies enter this business, they will bring new products and technology. At the same time, when the capital increases in this sector, it will help in bringing more and more people under the ambit of pension.
7 Pension Funds Existing in NPS
At present, there are 7 pension funds in the National Pension System (NPS). These include HDFC Pension Management, ICICI Pru Pension Fund Management, Mahindra Box Pension Fund Management, LIC Pension Fund, SBI Pension Fund, UTI Retirement Solution and Aditya Birla Sunlife Pension Management.
NPS started in 2004
The government introduced the National Pension System (NPS) for government employees in January 2004. In order to bring more people under its ambit, it was opened to all sections in 2009. There are two types of accounts in NPS – Tier 1 and Tier 2. Additional tax exemption of up to Rs 50,000 is available on investment in Tier-1 account. Currently, the National Pension Scheme is regulated by PFRDA.