Online BusinessPension regulator seeks funds from Finance Ministry
The interim pension regulator, Pension Fund Regulatory and Development Authority (PFRDA), today said it has sought funds from the Finance Ministry for spreading awareness about retirement savings and a provision for the same is expected in the upcoming Budget.
"We have sought funds from the Ministry of Finance to promote financial literacy especially retirement savings," PFRDA Chairman D Sawrup said.
In addition, the Finance Ministry is also likely to provide a booster to the New Pension System (NPS) in the forthcoming Budget by exempting initial contribution to it from income tax.
Faced with the lukewarm response to the new scheme from subscribers, interim regulator PFRDA has urged the Finance Ministry to provide tax exemption on contribution at entry level.
This would encourage people to opt for the scheme. The NPS, which has recently been extended to all citizens, has evoked lukewarm response from subscribers.
Ernst and Young senior partner Satya Poddar added that the government "should encourage the NPS as it can provide a pool of long-term funds for developing infrastructure".
The NPS, he said, should be based on the exempt tax structure, which means that the contribution and accrual of interest be tax-exempt. The tax should be imposed at the time of withdrawing funds.
Many countries like Singapore have successfully experimented with the pension scheme to raise long-term resources to develop infrastructure.
Besides, the government may also come out with some budgetary allocations to bear the cost of maintenance of accounts of policy holders under the New Pension System.