National Pension System 2004 - mcrhrdi.gov.in

National Pension System

V.JagadishwerSenior Faculty (Retd)

Dr MCR HRD Institute, Hyderabad


•OPS Vs NPS?


•Started by GoI for all its employees ( except forarmed forces)who joined after 1 January 2004

• Initially designed for government employees

• Opened up for all citizens of India in 2009.


•All state Governments accepted between 2005 and2010 except the states of Kerala, Tripura and WestBengal.

•Kerala Joined in 2013 and Tripura joined in 2018.

•West Bengal is the only state following oldpension scheme in the country

CPS Introduced with anExecutive Order

Issued in 2003 by GoI

PFRDAConstituted with an

Executive OrderConstituted with an

Executive Order

Issued in 2007 by GoI

IndianParliament

Pension Fund Regulatory andDevelopment Authority Act 2013

After 10 years of Intensive Debate and Discussion over the Pension Reforms

Regulatory MechanismRegulatory Mechanism

Came into force from 01.02.2014Came into force from 01.02.2014

National Pension System (NPS)

National Pension System-Regulator And Entities

•Pension Fund Regulatory and DevelopmentAuthority (PFRDA) is an autonomous body set upby the Government of India to develop andregulate the pension market in India


•Pension Fund Regulatory and DevelopmentAuthority (PFRDA) is an autonomous body set upby the Government of India to develop andregulate the pension market in India


•Point of Presence (POP) : Points of Presence(POPs) are the first points of interaction ofthe NPS subscriber with the NPS architecture.

• The authorized branches of a POP, called Pointof Presence Service Providers (POP-SPs), will actas collection points and extend a number ofcustomer services to NPS subscribers.


•Point of Presence (POP) : PFRDA has authorized58 institutions including public sector banks,private banks , private financial institutions andthe Department of Posts as Points of Presence(POPs) for opening the National Pension System(NPS) accounts of the citizens.


•Central Record keeping Agency (CRA) : Therecord keeping, administration and customerservice functions for all subscribers of the NPS arebeing handled by the National Securities DepositoryLimited (NSDL) which is acting as the CentralRecord keeper for the NPS.


• National Securities Depository Limited (NSDL)Services offered by CRA to the Subscribers:

•CRA registers the Subscribers and allot uniquePermanent Retirement Account Number (PRAN) tothem.

•CRA issues a PRAN card and User-ID, I-PIN andT-PIN to access CRA website and CRA call centre.



•CRA maintains the Permanent RetirementAccount of the Subscribers

•CRA sends a physical Transaction Statement to theSubscriber containing the details of the transactionsin Subscribers Permanent Account.



•CRA registers grievances (received through CRAsystem or through G1 form) and send the resolutiondetails to the Subscribers by e-mail.

•CRA provides I-PIN based login to CRA websitefor subscribers to view their account details.


•Annuity Service Providers (ASPs) : AnnuityService Providers (ASPs) would be responsible fordelivering a regular monthly pension to thesubscriber after exit from the NPS.

•NPS Trust

•Trustee Bank

•Pension Fund Managers

National Pension System•State Government Employees

•NPS is applicable to all the employees of StateGovernments, State Autonomous Bodies joiningservices after the date of notification by therespective State Governments.

•Any other government employee who is notmandatorily covered under NPS can also subscribeto NPS under "All Citizen Model" through a POP-SP.


•The State Government employees can registerfor NPS (Tier-I) through following process:

•Submit S1 form to the Drawing and DisbursingOfficer (DDO) or equivalent offices.

•The DDO shall provide and certify the employmentdetails.


•Subsequently, the DDO shall forward the form to therespective Pay and Accounts Office (PAO) / DistrictTreasury officer (DTO).

•The form should be submitted to CentralRecordkeeping Agency (CRA)-

•.

National Pension System•State Government Employees-Contribution to NPS

•For the State Government employees contributionthrough their nodal office to National Pension Systemis mandatory.

•Every month 10% of his/ her salary (basic + DA)and equivalent government's contribution will beinvested in NPS.

National Pension System•State Government Employees- Withdrawal

•The subscribers can withdraw from NPS on his/ herretirement, resignation or death.

•On retirement a subscriber would be required toinvest minimum 40% of his / her accumulatedsavings to purchase a life annuityfrom PFRDA empanelled and Insurance Regulatoryand Development Authority (IRDA)- Annuity ServiceProviders (ASPs)

National Pension System•State Government Employees- Withdrawals

•Around 80% of amount has to be annuitized andremaining can be withdrawn by the subscriber onresignation.

•In case of death of the subscriber, entire amount willbe handed over to the nominee.


•Withdrawal application form

•Original PRAN Card / notarized affidavit in case ifthe original is not submitted.

• Photo ID proof

•Residence proof

•Cancelled cheque /bank certificate/copy of the bankpassbook with photograph


•Annuity application form duly filled and signed bysubscriber

• Death certificate in original

•Legal heir certificate wherever applicable

• Relieving letter and NOC, if applicable.

•.

National Pension System•State Government Employees- Benefits of NPS

•It is transparent - NPS is transparent and costeffective system wherein the pension contributionsare invested in the pension fund schemes and theemployee will be able to know the value of theinvestment on day to day basis.

•It is simple - Open an account with his/her nodaloffice and get a Permanent Retirement AccountNumber (PRAN).

National Pension System•State Government Employees- Benefits of NPS

•It is portable - Each employee is identified by aseparate PRAN which is portable

•It is regulated - NPS is regulated by Pension FundRegulatory and Development Authority- withtransparent investment norms & regular monitoringand performance review of fund managersby NPS Trust

National Pension System•State Government Employees- Tax Benefits of NPS

•Tier I account is Exempted-Exempted-Taxed (EET)i.e., the amount contributed is entitled for deductionfrom gross total income upto Rs.1.50 lakh u/s 80C

•The appreciation accrued on the contribution andthe amount used by the subscriber to buy the annuityis not taxable.

•The amount withdrawn by the subscriber after theage of 60 is taxable.

National Pension System•State Government Employees-CHARGES

•All the charges associated to Tier I account includingAnnual PRA Maintenance charge are paid by theemployer.

•In case of Tier II account, activation charge andtransaction charges are paid by the subscriber.

National Pension System-Charges for Tier-II Account

Intermediary Charge head Service charges* Method ofDeduction

CRA PRA Opening charges Rs.50 Throughcancellation ofunits at the endof each quarter.

Annual PRA Maintenancecost per account

Rs.190

Charge per transaction Rs.4

Intermediary Charge head Service charges* Method ofDeduction

POP(MaximumPermissiblecharge for eachsubscriber)

Initial subscriberregistration

Rs.100 To becollectedupfrontInitial contribution upload 0.25% of the initial contribution

amount from subscriber subjectto a minimum of Rs.20 and amaximum of Rs.25,000/-

Any subsequent transactioninvolving contributionupload

0.25% of the amountsubscribed bythe NPS subscriber, subject tominimum of Rs.20/- and amaximum of Rs.25000/-.

Any other transaction notinvolving a contributionfrom subscriber

Rs.20

National Pension System-Charges for Tier-II Account

New Pension Scheme basedon Defined Contribution

Pension Reforms including Contributory Pension Scheme

Contributory Pension Scheme

Long-Term Fiscal Interest of the State, CPS should be introduced

CentralGovt

CentralGovt

TS StateGovt

TS StateGovt

01.01.2004

01.09.2004

Government

Employee

Recruited on or after 01.09.2004Recruited on or after 01.09.2004CPS/NPS

Apply for PRAN – Permanent Retirement Account Number

DDOSTO/DTO/PA

O

Send PRAN ApplicationSend PRAN Application

NSDL

Upload PRANUpload PRANAllot & SendPRANAllot & SendPRAN

PRAN Communicated to DDO

PRANCommunicate

d

10% ofBasicPay +

DA

MonthlyDeduction ofContribution

from EmployeeSalary

MonthlyDeduction ofContribution

from EmployeeSalary

PRAN Kit

NPS

GovernmentSector Modal

CorporateModal

All CitizenModal

NPSSwavalamban

Atal PensionYojana

Un-Organized Sector

Subscriber

Pointsof

Presence

CentralRecordkeepin

g Agency

TrustBank

PensionFund

Manager

PFRDA

Collection of Contribution

Transfer of Amount

Transfer of Data

Instructions on Investment

Directionson MoneyTransfer

Instructions on Investments

Transfer of Amount

Returns Transfer

Drawl of Amount

GrievanceRedressal

Updation

GovtEmp

Tier - ITier - I

Tier - IITier - II

Non –Withdrawable

Account

Voluntary &Withdrawable

Accounts

NSDL

Instructionson

Investment

Govt Contribution

No Govt Contribution

Mandatory

Tier - I

SBI PensionFunds Pvt Ltd

UTI RetirementSolutions Ltd

LIC PensionFund Ltd

GovernmentSecurities Debt Securities Equity Money Market

InstrumentsMoney MarketInstruments

50%

Up to

45% 15% 10%

2015 June Notification

Death whilein Service

Death whilein Service

100%100%

Exit onSuperannuation 60%60% 40%40%

Pre-MatureExit 20%

80%80%

70Years

70Years

Deferred Payment

Documents

National Pension System 2004 - mcrhrdi.gov.in