NEW DELHI: The pension fund regulator said on Wednesday he will urge the government, fresh from a confidence vote win, to push forward with legislation to allow foreign investment in the sector when parliament reconvenes.

At present, three state-run funds and a handful of domestic insurance companies offer pension schemes to Indian employees, but the returns are low as they mostly invest in debt.

"We have been waiting for it (reforms). We will take it up with the government," D Swarup, chairman of Pension Fund Regulatory and Development Authority (PFRDA) told Reuters in an interview. Parliament is due to meet again in August.

The proposed legislation would allow foreign funds to buy stakes of up to 26% in pension joint ventures with Indian firms, Swarup said.

These new funds would be allowed to invest up to 50% of subscribers' money in equity or equity-linked mutual fund schemes, he added.

A bill to reform the pension sector was first introduced in parliament in 2005 but ran into stiff opposition from communist parties which provided the government with a majority.

The left withdrew support last month, triggering a confidence vote on Tuesday which the government won. It is now expected to push ahead with a series of financial sector reforms.