The Pension Fund Regulatory and Development Authority (PFRDA) has by an amendment overhauled the Regulations governing Pension Funds . An overview of the changes been brought in is as under:
1. ๐๐๐ฃ๐๐๐ญ๐ข๐ฏ๐ โ The objective of the Regulations has been streamlined to make them more in sync with the objective of the PFRDA Act, 2013.
2. ๐๐ฅ๐ข๐ ๐ข๐๐ข๐ฅ๐ข๐ญ๐ฒ ๐๐ซ๐ข๐ญ๐๐ซ๐ข๐ โ The Eligibility Criteria for a sponsor to a Pension Fund has been amended keeping in view ease of doing business. The earlier regulations provided that any violation of securities laws by the sponsor / principal officer would make the applicant ineligible. The scope of this has been reduced to limit it to an order of restraint, prohibition or debarment leaving out ineligibility arising out of imposition of monetary penalty. Further, a timeline of three years from expiry of such restraint / prohibition has been included post which the applicant may potentially fall back within the eligibility criteria.
3. ๐๐๐ซ๐ฆ๐ฌ ๐๐ง๐ ๐๐จ๐ง๐๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐จ๐ ๐๐๐ ๐ข๐ฌ๐ญ๐ซ๐๐ญ๐ข๐จ๐ง โ The timeline to intimate PFRDA regarding any change in shareholding of less than 5% has been reduced from 15 days to 7 days. Further, several of the conditions for eligibility regarding prohibition on a pension fund holding equity stake in another pension fund, shareholding caps in other regulated entities have also explicitly added to the Terms and Conditions of Registration.
4. ๐๐๐ญ ๐๐ฌ๐ฌ๐๐ญ ๐๐๐ฅ๐ฎ๐ (๐๐๐) ๐๐จ๐ซ ๐๐๐ก๐๐ฆ๐๐ฌ โ The amended regulations have provided greater clarity on the computation of NAV which includes a new Schedule XII which provides an illustration for calculation of NAV.
5. ๐๐ง๐ง๐ฎ๐๐ฅ ๐๐๐ฉ๐จ๐ซ๐ญ โ Under the amended regulations, the annual report shall include a Directors responsibility statement and certificate by CEO / Head of Operations on (i) correctness of the state of affairs and NAV of the schemes, (ii) adequacy and effectiveness of internal financial processes and digital architecture controls and (iii) compliance / adherence to various applicable laws.
6. ๐๐ฎ๐ญ๐ข๐๐ฌ ๐จ๐ ๐ญ๐ก๐ ๐๐๐ง๐ฌ๐ข๐จ๐ง ๐ ๐ฎ๐ง๐ โ The amended regulations direct Pension Funds to take all measures necessary for prevention of fraud, develop and follow a fraud prevention and mitigation policy. Further, the Pension Fund shall indemnify the subscriber for any loss on account of fraud or negligence on the part of the pension fund.
While the effect and impact of the amended regulations will be assessed by industry participants in due course, it is certainly a welcome step in relation to effective legislative drafting.
A copy of the Gazette Notification which amended the regulations is enclosed herewith.
Readers are welcome to share their views with Regstreet Law Advisors on info@regstreetlaw.com.