The Pension Fund Regulatory and Development Authority Act, 2013

Summary of the Pension Fund Regulatory and Development Authority Act, 2013
Key Provisions
I. Establishment, Governance, and Transition
1. Establishment & Structure: Pension Fund Regulatory and Development Authority (PFRDA) established as a body corporate with a Chairperson, whole-time, and part-time members.
2. Transition from Interim Authority: - Assets, liabilities, and obligations of the Interim PFRDA transfer to the new Authority (Section 13).
• Continuity for intermediaries with a 6-month registration grace period (Section 27).
II. Regulatory Powers and Functions
1. Core Responsibilities: - Regulate and promote the National Pension System (NPS).
• Protect subscriber interests.
• Approve and regulate pension schemes and intermediaries.
2. Audit and Financial Oversight: - Authority's accounts audited by the Comptroller and Auditor-General of India with broad audit powers.
• Annual submission of audited accounts to the Central Government and Parliament.
III. Operational and Enforcement Provisions
1. Registration of Intermediaries: - Mandatory registration for central recordkeeping agencies, pension funds, points of presence, etc., with specified conditions (Section 27).
2. Investigative and Enforcement Powers: - Investigation, search, seizure, and interim protection measures.
• Suspension or cancellation of registration with due process (Section 27(4)).

IV. Financial and Beneficiary Protection Provisions
1. Funding and Utilisation: - Grants, fees, and other sources for operational and subscriber protection funds.
• Specific utilisation guidelines for each fund (Sections 40 & 41).
2. Subscriber Education and Protection Fund: - Composition and utilisation for subscriber interests (Section 41).
V. Legislative, Judicial, and Miscellaneous Provisions
1. Legislative Oversight: - Rules and regulations to be laid before Parliament (Section 53).
• Power to remove difficulties within 5 years of commencement (Section 54).
2. Judicial and Penalty Provisions: - Appeals to the Securities Appellate Tribunal.
• Significant penalties for contraventions, including imprisonment and fines.
1. Savings and Continuity: - Validation of actions by the Interim PFRDA (Section 56).
• Non-derogation of other laws (Section 55).

Legislative History:

The Pension Fund Regulatory and Development Authority Act, 2013

Short Title The Pension Fund Regulatory and Development Authority Act, 2013 (PFRDA Act)

Act Number / Year Act No. 23 of 2013

India Code Act ID 201323

Presidential Assent Date September 18, 2013

Enforcement Date February 1, 2014

Nodal Ministry Ministry of Finance

Precedent & Statutory Rationale

1. Transition from Executive Body to Statutory Regulator:

o Prior to 2014, the regulation of the National Pension System (NPS) was managed by an interim executive body set up via a government resolution in August 2003. This lacked explicit legislative powers, institutional autonomy, and the formal statutory backing required to regulate complex financial intermediaries and enforce compliance.

2. Promoting Old Age Income Security:

o Grounded in national policy frameworks and recommendations targeting long-term social security, the legislation was enacted to promote old age income security, establish a stable, regulated pension market, and provide robust legal protection to subscriber contributions across government, corporate, and unorganized sectors.

Parliamentary Trajectory & Enactment

• Formulation: Developed and piloted by the Department of Financial Services under the Ministry of Finance to establish a permanent regulatory authority for the pension sector.

• Parliamentary Passage: Introduced and reviewed across successive parliamentary sessions, undergoing extensive scrutiny by legislative committees before securing final passage in September 2013.

• Presidential Assent: Received formal Presidential Assent on September 18, 2013, entering the statute book as Act No. 23 of 2013.

• Enforcement: Enforced on February 1, 2014.

• Source: India Code Official Repository and Ministry of Finance Official Records