Amendments simplify provisions related to governance of Pension Funds in line with Companies Act, 2013; enhance disclosure by Pension Funds, and reduce compliance

The Pension Fund Regulatory and Development Authority (PFRDA) has notified the National Pension System Trust (Second Amendment) Regulations 2023 and Pension Fund (Amendment) Regulations 2023 on 05.02.2024 and 09.02.2024 respectively.

The amendments to NPS Trust Regulations simplify the provisions related to appointment of Trustees, their terms and conditions, holding of meetings of Board of Trustees and appointment of CEO - NPS Trust.

Amendments to Pension Fund Regulations simplify the provisions related to governance of Pension Funds in line with Companies Act, 2013 and enhanced disclosure by Pension Funds.

The other notable amendments inter alia include:

1. Clarity of roles of Sponsor of Pension Fund & Pension Fund alongwith compliance to ‘fit and proper person’ criteria.
2. Constitution of additional Board committees by Pension Funds such as Audit Committee and Nomination & Remuneration Committee.
3. Inclusion of name ‘Pension Fund’ in name clause and requirement of existing pension fund(s) to comply with this provisions within a period of 12 months.
4. The annual report of schemes managed by the pension fund to include Directors’ responsibility statement.

The amendments in key areas aim at simplification and reducing compliance. For detailed information on the amended regulations, please visit the PFRDA website:

NPS Trust: https://www.pfrda.org.in/myauth/admin/showimg.cshtml?ID=2883

Pension Fund: https://www.pfrda.org.in/myauth/admin/showimg.cshtml?ID=2891

The above amendments are in line with Union Budget 2023-24 announcement to review regulations to reduce the cost of compliance and enhance the ease of doing business.

Pension fund governance reforms streamline trustee appointments and mandate improved disclosure and board committee structures. Amendments streamline governance and compliance for NPS Trust and pension funds by simplifying Trustee and CEO appointment processes, clarifying Sponsor and Pension Fund roles, enforcing fit and proper criteria, aligning board composition with company law through mandated committees, enhancing disclosure with a Directors' responsibility statement in scheme annual reports, and requiring inclusion of the term pension fund in fund names while providing transitional compliance timeframes.