NPS regulated by Pension Fund Regulatory & Development Authority (PFRDA) has been designed to enable the subscribers to make optimum decision regarding their future and provide financial security through systematic savings for the post retirement life.
The Central Government Employees The Central Government had introduced the New Pension System (NPS) with effect from January 1, 2004 (except for armed forces). NPS has been made mandatory for new entrant in government job sector.All employees of Central Govt. or autonomous departments ( financed by Central Govt.) who have joined on or after January 1, 2004 will be covered by new pension scheme. These employees are not permitted to contribute in General Provident Fund (GPF). Monthly contribution (10% of basic +DA+DP) from the salary of the employee will be transferred to this account from the next month from joining Govt. services. This amount will be matched equally by the Govt. and contributed. As per the present guidelines of Pension Fund Regulatory and Development Authority(PFRDA), contribution towards pension will be invested in the default schemes of three Pension Fund Managers (PFMs), viz, LIC Pension Fund Limited, SBI Pension Funds Pvt. Limited and UTI Retirement Solutions Limited in a predefined proportion, which is mentioned in the Statement of Transaction. Each of the PFMs will invest the funds in the proportion of 85% in fixed income instruments and 15% in equity and equity linked mutual funds. Hence, the employees of Central Government and Central Autonomous Bodies need not mention the details of the schemes while filling up the application form.
The State Government Employees The Central Government had introduced the New Pension System (NPS) with effect from January 01, 2004 (except for armed forces). Pension Fund Regulatory and Development Authority (PFRDA), the regulatory body for NPS, finalised the architecture and appointed NSDL as Central Record keeping Agency (CRA) and other entities for New Pension System. Subsequently, various State Governments adopted this architecture and implemented NPS with effect from different dates.
In NPS, a government employee contributes towards pension from monthly salary along with matching contribution from the employer. The funds are then invested in earmarked investment schemes through Pension Fund Managers.
As per the present guidelines of Pension Fund Regulatory and Development Authority(PFRDA), contribution towards pension will be invested in the default schemes for State Government of three Pension Fund Managers (PFMs), viz, LIC Pension Fund Limited, SBI Pension Funds Pvt. Limited and UTI Retirement Solutions Limited. The proportion in which contributions are allocated among these three PFMs is decided by each of the state government, which in mentioned in the Statement of Transaction. Each of the PFMs will invest the funds in the proportion of 85% in fixed income instruments and 15% in equity and equity related instruments. Hence, in the application form for PRAN, the employees of State Government and State Autonomous Bodies need not mention the details of the schemes.
Corporate Sector Employees A corporate can either define the scheme for all their subscriber or can allow all the subscriber to select their own scheme. If the corporate defines the scheme, then they can have two options. In option 1, the can go for the three PFMs, viz. SBI Pension Funds Private Limited, UTI Retirement Solutions Limited and LIC Pension Fund Limited, where allocation is done in a defined proportion and each of the PFMs will invest the funds in the proportion of 85% in fixed income instruments and 15% in equity and equity related instruments. In option 2, the corporate can also choose one out of six Pension Fund Managers(PFMs) and also the percentage in which the selected PFM will invest the funds.
The six PFMs are ICICI Prudential Pension Funds Management Company Limited, IDFC Pension Fund Management Company Limited, Kotak Mahindra Pension Fund Limited, Reliance Capital Pension Fund Limited, SBI Pension Funds Private Limited, UTI Retirement Solutions Limited.
In the Banking Industry In terms of Bank Wage Settlement dated 27.04.2010 the employees who join the services of Banks on or after 01.04.2010; and they shall be covered by a Defined Contributory Pension Scheme, which shall be governed by the provision of the Contributory Pension Scheme introduced for employees of the Central Government w.e.f. 01.01.2004, and as modified from time to time.
More Indian PSU are joining to provide NPS to their employees.
To enroll in the NPS, the subscribers need to submit the duly filled Registration form (UOS-S1) along with KYC document to the POP SP of their choice.
You will be allotted a unique Permanent Retirement Account Number (PRAN). This unique account number will remain the same for the rest of your life. You will be able to use this account and this unique PRAN from any location in India.
The New Pension System consists of two types of accounts :
Tier II accumulations can be switched to Tier I account but not vice versa
Minimum Contributions (For Tier-I) Minimum amount per contribution - Rs 500 Minimum contribution per year - Rs 6,000. Minimum number of contributions -01 per year
Minimum Contributions (For Tier-II) Minimum amount per contribution - Rs 250 Minimum balance of Rs. 2000/- at the end of each financial year. Minimum number of contributions -01 per year
Voluntary : NPS is open to every Indian citizen. Subscribers can choose the amount which they want to set aside and save every year.
Simple : All one has to do is open an account with any one of the POP and gets a PRAN.
Flexible : Subscribers can choose their own investment option and pension fund and see their money grow.
Portable : Subscribers can operate their account from anywhere in the country, even if they change their city, job or pension fund manager.
Regulated : NPS is regulated by PFRDA, with the transparent investment norms, regular monitoring and performance review of fund management by NPS Trust.
Tax Benefits : It would yield Tax benefits as per the Income Taax Act,1961 as amended from time to time.
NPS is the lowest cost pension system in India and probably in the world. No where in the world fund management charges are as low as in NPS which have been determined through competitive bidding in a very transparent manner
On attaining normal Retirement Age (NRA) of 60 years subscribers will be required to Compulsorily annuitize at least 40% of their pension wealth and remaining 60% can be withdrawn as a lump sum or in a phased manner, in case they opt for a phased withdrawal.In case of phased manner subscriber has to withdraw minimum 10% of the pension wealth (lump sum amount). Any amount lying to the credit at the age of 70 should be Compulsorily Compulsorily withdrawn in lump sum.
At any point in time before 60 years of Age : In such case, the subscribers will have to Compulsorily annutize at least 80% of the pension wealth to purchase a life annuity from any IRDA regulated life insurance company. The remaining 20% can be withdrawn as lump-sum.
Death due to any cause :In such an unfortunate event, option will be available to the nominee to receive 100% of the NPS pension wealth in lump sum.
NPS is a technology driven low-cost, highly transparent system. A very lean team of regulator PFRDA in charges the system in order to keep the regulator cost low.
Selection of Fund Managers, CRA, POPs has been done under highly transparent manner through competitive bidding.
Regulation of Assets Allocation aimed at reducing the risk content in the fund by keeping the equity exposure upto 50%.
Pay out is very flexible with in built provision of lump sum withdrawal, Phased withdrawal and mandatory annuity.
Mandatory Annuitization in order to ensure that retirement savings provide regular flow of post retirement income.
Subscribers can avail the following services from POP/POP-SP :
Points of Presence (POPs) are the first points of interaction of the NPS subscriber with the NPS architecture. The authorized branches of a POP, called Point of Presence Service Providers (POP-SPs), will act as collection points and extend a number of customer services to NPS subscribers.
The record keeping, administration and customer service functions for all subscribers of the NPS are being handled by the National Securities Depository Limited (NSDL), which is acting as the Central Record keeper for the NPS.
The six Pension Funds (PFs) appointed by PFRDA would manage your retirement savings under the NPS.
The Trustee Bank appointed under NPS shall facilitate fund transfers across various entities of the NPS system viz. PFMs, ASPs, Subscribers, etc. Bank of India (BoI) has been appointed as the Trustee Bank.
ASPs would be responsible for delivering a regular monthly pension to you after your exit from the NPS.
A Trust, appointed under the Indian Trusts Act, 1882 is responsible for taking care of the funds under the NPS in the best interests of subscribers.
Pension Fund Regulatory and Development Authority (PFRDA) has put in place the institutional framework and infrastructure required for administering the National Pension System (NPS) for government employees & all citizens of India. The Unorganized sector model of the NPS, prescribes certain norms related to minimum amount of investment per contribution, during the year and no of contributions per year. The associated charge structure makes such small investments unviable. To facilitate the economically disadvantaged sections of society with limited investment potential also to take advantage of NPS, PFRDA now makes available a unique platform at ultra low cost with optimized features. The individuals would be able to join NPS as groups through aggregators.
NPS Lite model broadly has similar functionalities as the regular NPS model. However, some of the services would not be available at individual subscriber level; instead these services would be provided at Aggregator level and the individual can avail of those features through aggregators
Under NPS Lite, Permanent Retirement Account would be available to subscribers. This will be non-withdrawable account, in which an NPS Lite subscriber shall contribute his/her savings for obtaining an annuity at the time of retirement.
The Scheme and its applicability : Swavalamban Yojana will be applicable to all citizens in the unorganized sector who join the New Pension System (NPS) administered by the Interim Pension Fund Regulatory and Development Authority (PFRDA).
Benefits under the Scheme : Under the scheme, Government will contribute Rs. 1000 per year to each NPS account opened in the year 2010-11 and for the next three years, that is, 2011-12, 2012-13 and 2013-14. The benefit will be available only to persons who join the NPS with a minimum contribution of Rs. 1,000 and maximum contribution of Rs. 12,000 per annum.
Unorganised sector : For the purpose of this scheme, a person will be deemed to belong to the unorganised sector if that person:
The scheme will be applicable to all persons in the unorganized sector subject to the condition that the benefit of Central Government contribution will be available only to those persons whose contribution to NPS is minimum Rs.1,000 and maximum Rs. 12,000 per annum, for both Tier I and II taken together, provided that the person makes a minimum contribution of Rs. 1000 per annum to his Tier I NPS account.
As a special case and in recognition of their faith in the NPS, all NPS accounts opened in 2009-10 will be entitled to the benefit of Government contribution under this scheme as if they were opened as new accounts in 2010-11 subject to the condition that they fulfill all the eligibility criteria prescribed under these guidelines.
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NPS Lite subscribers only
NPS Lite subscribers opting for Swavalamban Scheme Benefit
APPLICATION FORM FOR SUBSCRIBER REGISTRATION - CS-S1 (Corporate Employee)
Request For Change/Correction in Subscriber Master details And/Or Reissue of I-Pin/T-Pin/PRAN Card - CS-S2 Coporate Registration Form
Aggregator Aggregator shall be the point of interface between its underlying subscriber and the NPS Lite architecture.
Applicable NAV Unless stated otherwise in the Offer Document, 'Applicable NAV' is the Net Asset Value at the close of a Working Day.
Collection Center The office registered in NPS Lite architecture to facilitate collection of registration form,contribution, other relevant instructions and forward it to the Aggregator.
Custodian Agency responsible for holding assets of the NPS Trust. Refers to the Stockholding Corporation of India Limited (SCHIL)
IMA Investment Management Agreement, entered into between NPS Trust and the Pension Funds.
NABARD NABARD is set up as an apex Development Bank with a mandate for facilitating credit flow for promotion and development of agriculture, small-scale industries, cottage and village industries, handicrafts and other rural crafts. It also has the mandate to support all other allied economic activities in rural areas, promote integrated and sustainable rural development and secure prosperity of rural areas.
Offer Document This document, issued by PFRDA, making an offer to potential aggregators/applicants to subscribe to NPS Lite.
Oversight Office The office registered in NPS Lite to monitor overall performance of its underlying Aggregator and also to monitor resolution of subscriber grievances against its Aggregators
RBI Reserve Bank of India, established under the Reserve Bank of India Act, 1934.
SHG SHG is a small group of rural poor, who have voluntarily come forward to form a group for improvement of the social and economic status of the members.
Subscriber An individual who has become a member of the NPS Lite Trust Deed The Trust Deed entered into between the NPS Trust and PFRDA, as amended up to date, or as may be amended from time to time.
Trust Fund The corpus of the Trust and all property belonging to and/or vested in the Trustees.
Working Day A day other than any of the following (i) Saturday or Sunday; (ii) a day on which banks including the Reserve Bank of India are closed for business or clearing and (iii) a day on which the Purchase and Redemption of Units is suspended.