PFRDA BILL 2011

The PFRDA Bill, 2011, seeks to give statutory status to the interim PFRDA, define its powers and duties, and set the broad contours of the NPS (New Pension System).

Highlights of the Bill

•         The Pension Fund Regulatory and Development Authority Bill, 2011 seeks to give statutory powers to the interim authority set up in 2003. It also alters the name of the New Pension System to National Pension System (NPS).

•         NPS is a 'defined contribution' scheme for all central government employees who joined after January 2004. It is implemented through a combination of retailers, pension fund managers, and a record keeper. This scheme is different from the earlier 'defined benefit' scheme.

•         Under the NPS, every subscriber will have an individual pension account, which will be portable across job changes. The subscribers will choose fund managers and schemes to manage their pension wealth. They will also have the option of switching schemes and fund managers.

•         The NPS was extended to all general citizens through central government notification in May 2009.

HEDGE FUNDs

A hedge fund is a fund that can take both long and short positions, use arbitrage, buy and sell undervalued securities, trade options or bonds, and invest in almost any opportunity in any market where it foresees impressive gains at reduced risk. Hedge fund strategies vary enormously — many hedge against downturns in the markets — especially important today with volatility and anticipation of corrections in overheated stock markets. The primary aim of most hedge funds is to reduce volatility and risk while attempting to preserve capital and deliver positive returns under all market conditions.