Duties, Powers and Functions of the Authority (Section 14)

Section 14 is the core of the PFRDA Act. It tells the Authority what it exists to do, lists the powers it may use to do it, gives it the powers of a civil court for inspections and inquiries, and allows it to take urgent protective measures while an investigation is pending. Every other regulatory power in the Act, from registration to penalties, is best understood as a means of carrying out the duty laid down in this section.

1. The Statutory Duty (Section 14(1))

Section 14(1), PFRDA Act, 2013

Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the National Pension System and pension schemes to which this Act applies and to protect the interests of subscribers of such System and schemes.

The duty has four elements, and each shapes how the Authority's powers are read:

Regulate: to lay down binding norms for the National Pension System (NPS), the schemes under the Act and the intermediaries who run them, and to enforce those norms.
Promote: to expand pension coverage, which is why PFRDA also runs awareness campaigns and administers schemes such as the Atal Pension Yojana. Unlike a purely supervisory body, it is charged with development of the sector, as its name indicates.
Ensure orderly growth: growth must be sound and sustainable, not merely fast. Expansion of coverage cannot come at the cost of mis-selling or imprudent investment.
Protect subscribers: the interests of subscribers are the overriding purpose. Where promotion of the industry and protection of subscribers pull in different directions, the scheme of the Act gives priority to the subscriber.

⚠ Note

The words "subject to the provisions of this Act and any other law" mean that the duty does not override other statutes. PFRDA cannot, for example, regulate an employees' provident fund governed by the EPF Act, or a pension scheme that is outside the Act's application under Section 12. Its duty is confined to the NPS and the schemes to which the Act applies.

2. Powers and Functions (Section 14(2))

Without prejudice to the generality of the duty, the powers and functions of the Authority include the following:

Regulating the system and its schemes

(a) regulating the National Pension System and the pension schemes to which the Act applies;
(b) approving the schemes, their terms and conditions, and laying down norms for the management of the corpus of the pension funds, including investment guidelines;
(l) regulating regulated assets, that is, the assets and rights of the central recordkeeping agency defined in Section 2(1)(p), which form the core infrastructure of the system.

Controlling entry and conduct of intermediaries

(c) registering and regulating intermediaries, such as the central recordkeeping agency, pension funds, points of presence, the trustee bank, custodians and retirement advisers;
(d) issuing, renewing, modifying, withdrawing, suspending or cancelling certificates of registration;
(o) calling for information, undertaking inspections, conducting inquiries and investigations, including audit of intermediaries and other entities connected with the system.

Protecting and serving subscribers

(e) protecting the interests of subscribers by ensuring the safety of contributions and keeping the costs of operating the system reasonable;
(f) establishing a grievance redressal mechanism for subscribers, in the manner specified by regulations;
(h) adjudicating disputes between intermediaries and subscribers;
(j) educating subscribers and the public on pension, retirement savings and related matters, and training intermediaries;
(k) standardising the information given to subscribers on the performance of pension funds and the benchmarks used to judge them.

Developmental, financial and residuary functions

(g) promoting professional organisations connected with the pension system;
(i) collecting data, and undertaking or commissioning studies and research;
(m) levying fees and other charges for carrying out the purposes of the Act;
(n) specifying the form and manner of books of account and accounting statements to be maintained by intermediaries;
(p) exercising such other powers and performing such other functions as may be prescribed by Central Government rules.

⚠ Key point

The list in Section 14(2) is inclusive, not exhaustive. The Authority may act on any matter reasonably necessary to discharge its duty under Section 14(1), provided it stays within the Act and does not encroach on matters governed by other laws. The residuary clause (p) allows the Central Government to add functions by rules.

3. Powers of a Civil Court (Section 14(3))

Notwithstanding anything in any other law, while exercising its power to call for information, inspect, inquire, investigate and audit under clause (o), the Authority has the same powers as a civil court trying a suit under the Code of Civil Procedure, 1908, in respect of:

(i) the discovery and production of books of account and other documents, at the place and time the Authority specifies;
(ii) summoning and enforcing the attendance of persons and examining them on oath;
(iii) inspection of any book, register or other document of any person or intermediary, at any place;
(iv) issuing commissions for the examination of witnesses or documents.

These powers make the Authority's inspections effective. Without them, an intermediary could simply decline to produce records or to appear. With them, refusal exposes the person to the consequences that attach to disobeying a civil court's process, in addition to penalties under the Act.

4. Interim Protective Measures (Section 14(4))

In the interests of subscribers, the Authority may, by order and for reasons to be recorded in writing, take any of the following measures, pending or on completion of an investigation or inquiry:

Restraint from participation: restrain persons from accessing or participating in any scheme;
Restraint from office: restrain any person from holding a position as an office bearer of an intermediary or associated entity;
Impounding: impound and retain the proceeds in respect of any transaction under investigation;
Attachment of bank accounts: attach bank accounts, but only after an application for approval is made to and approved by the Judicial Magistrate of the first class having jurisdiction, for a period not exceeding one month, and only to the extent of the proceeds actually involved in the violation;
Freezing of assets: direct an intermediary or associated person not to dispose of or alienate assets forming part of a transaction under investigation.

Hearing: the Authority must give the intermediaries or persons concerned an opportunity of being heard, either before or after passing such orders. The option of a post-decisional hearing recognises that some measures, such as freezing assets, would be defeated if prior notice were given.

⚠ Note

Section 14(4) closely follows the interim powers given to SEBI under Section 11(4) of the SEBI Act, 1992. The safeguards are significant: written reasons, judicial approval for attaching bank accounts, a time limit of one month for attachment, and a hearing at some stage. An order that fails any of these requirements is open to challenge before the Securities Appellate Tribunal under Section 36.

5. How Section 14 Fits the Rest of the Act

Directions: Section 15 lets the Authority issue binding directions to intermediaries after an inquiry.
Investigation and search: Sections 16 and 17 provide formal investigation and search and seizure, supplementing the inspection powers in Section 14(2)(o) and 14(3).
Compliance and administrators: Section 18 provides cease and desist orders, and Section 19 allows an Administrator to take over a failing CRA or pension fund.
Registration and penalties: Sections 27 and 28 turn the registration and enforcement functions into concrete powers to license and penalise.
Regulations: Section 52 gives the Authority power to make regulations, through which most of the functions in Section 14(2) are carried out.

6. Questions Arising

Can PFRDA act on a matter not listed in Section 14(2)?

Yes, provided the action is within its duty under Section 14(1) and consistent with the Act. The list in Section 14(2) is introduced by the word "include", which signals that it is illustrative. Courts have consistently read similar provisions in the SEBI Act as conferring wide powers to protect investors, while insisting that the regulator act fairly and within the statute.

Does the duty to promote conflict with the duty to regulate?

It can. A regulator that is also charged with growing the market may be tempted to go easy on intermediaries who bring in subscribers. The Act manages this tension by making subscriber protection an express part of the duty, by subjecting the Authority's orders to appeal, and by requiring it to report annually to Parliament.

⚠ Key point

Under Section 14(1), PFRDA's duty is to regulate, promote and ensure orderly growth of the NPS and pension schemes under the Act, and to protect subscribers. Section 14(2) lists, inclusively, its powers: regulating the NPS and schemes, approving schemes and investment norms, registering and regulating intermediaries, protecting contributions and keeping costs reasonable, grievance redressal, adjudicating disputes, research, subscriber education, standardising performance information, regulating regulated assets, levying fees, prescribing accounts, and inspection, inquiry, investigation and audit. Section 14(3) gives civil court powers for inspection. Section 14(4) allows interim measures: restraint, impounding, attachment of bank accounts with a Magistrate's approval for up to one month, and freezing of assets, with a hearing before or after the order.

7. Related Topics and Provisions

Power to issue directions (Section 15)
Investigation, search and seizure (Sections 16 and 17)
Cease and desist orders and management by Administrator (Sections 18 and 19)
Registration of intermediaries (Section 27)
Rule-making, regulation-making and delegation (Sections 49 and 51 to 54)
Appeal to the Securities Appellate Tribunal (Section 36)