With the Employees Provident Fund out of the purview of the new pensions regulator, most private sector employees will not be in its ambit.

The notification for setting up the Pension Fund Regulatory and Development Authority is expected to be issued soon after the Budget session of Parliament is over.

Government officials said the body would be established by an executive order followed by legislation, the process followed in setting up other regulators like the Securities and Exchange Board of India and the Insurance Regulatory and Development Authority.

The officials said the process should not take long because the Budget for 2003-04 had made a provision of about Rs 25 crore (Rs 250 million) for the pensions regulator.

The Employees Provident Fund, which handles the provident and pension funds of more than 24.5 million private sector employees, will not come into the ambit of the new regulator for some years.

Government officials said this was largely because of turf battles, but hoped that the provident fund authorities would fall in line once the regulator started functioning. In its absence, the authority will regulate only the new government employees' pension funds.

While proposing a pensions regulator in the Budget, Finance Minister Jaswant Singh said the new schemes would also be available to all employers for their employees.

Since private sector employees contribute a compulsory 10 per cent of their basic salary as provident fund contribution, they will have to pay extra to a new fund for pension benefits.

New government employees will, however, be expected to contribute only towards their pension liabilities without having to contribute to their provident fund.

The pension fund regulator is expected to have seven members. It will decide on the investment patterns for the pension funds, which are currently guided by IRDA norms.

The officials also said the government would set a cut-off date for its new employees to opt for a defined contribution-based pension plan only after the regulator was in place, instead of the current unfunded pension system.

It will also decide on the percentage of the monthly salary that has to be contributed. Each government employee will have the option to join more than one fund, but the government will only contribute to the basic pension scheme.