Is there a possibility for NPS Employees to become a Crorepathi at the time of Retirement?

GConnect has published an article titled, ‘NPS is far beneficial than Government Pension’ – Comparison of New Pension Scheme (National Pension Scheme) and Central Government Pension

A very popular website among Central Government employees, GConnect, which began functioning more than 8 years ago, continues to be a strong line of communication between the Central Government and its employees.

The article that was published yesterday seeks to answer critics who claim that the new pension scheme is outright bad. GConnect has made it very clear that the opinions expressed in the article belong to its writer, Mr. Dorai, Deputy Director, ESIC Model Hospital and that the website doesn’t necessarily subscribe to them.

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PFRDA Circular;Accounting Policy for Inflation Linked Bonds

PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY
 
CIRCULAR

File No.: PFRDA/2013/19/PFM/5

Date: 11th Dec. 2013

To,
 
All Pension Funds

Subject: Accounting Policy for Inflation Linked Bonds
 
   1. Inflation Indexed Bonds (IIB) 2013-14 issued by RBI has a fixed real coupon rate and a nominal principal value that is adjusted against inflation. Coupons will be paid on adjusted principal and on maturity, the adjusted principal or face value (whichever is higher) will be paid. For providing inflation protection, Final Wholesale Price Inflation (WPI) will be used with four months lag.

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Option to defer Annuity purchase under NPS at the time of exit.

CIRCULAR

PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY

PFRDA/ 2013/14/ PDEX /9

September 17, 2013

To,
All Govt depts./PAO’s/DDO/ POP’s, CRA & other stakeholders

Dear Sir/ Madam,

Sub: Option to defer Annuity purchase under NPS at the time of exit

   As per the Exit guidelines of PFRDA for National Pension System (NPS) subscribers, a subscriber on attaining the Normal Retirement Age (applicable to Govt. sector subscribers) or upon attaining 60 years – is required to compulsorily annuitize at least 40% of your pension wealth and the remaining 60% can be withdrawn as a lump sum. Also, a subscriber wishing to exit from NPS before the normal retirement age or before attainment of 60 years is allowed to exit subject to the condition that a minimum of 80% of accumulated pension wealth needs to be mandatorily utilized for purchase of annuity that provides for the monthly pension to the subscriber.

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Subscriber registration under NPS – NPS-Swavalamban

CIRCULAR

PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY

PFRDA/ 2013/15/POP/1

September 17, 2013

To,
All POP’s, Aggregators, CRA & other stakeholders

Dear Sir/ Madam,

Sub: Subscriber registration under NPS – NPS-Swavalamban

   Presently Swavalamban Scheme subscribers can be registered either through Aggregators or through Points of Presence (POPs). In order to streamline the system to cater to the Swavalamban scheme objectives, it has been decided that with effect from 01/10/2013, registration of NPS-Swavalamban subscribers would be allowed only through aggregators on the NPS-Lite platform. In effect, no new NPS- Swavalamban subscriber registration would be allowed through POP’s on the all citizen model (UOS) on or after 01/10/2013.

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Lok Sabha Passes Pension Fund Regulatory and Development Authority(PFRDA) Bill, 2011 with official amendments;

   Lok Sabha Passes Pension Fund Regulatory and Development Authority Bill, 2011 with official amendments; Subscribers Seeking Minimum Assured Returns Allowed to OPT for Investing their Funds in such Scheme Providing Minimum Assured Returns

   The Pension Fund Regulatory and Development Authority Bill (PFRDA), 2011 was passed by the Lok Sabha today with official amendments. It was earlier introduced in Lok Sabha on the 24th March, 2011 to provide for a statutory regulatory body the Pension Fund Regulatory and Development Authority (PFRDA) under the provisions of the Bill. The legislation seeks to empower PFRDA to regulate the New Pension System (NPS).

   The PFRDA Bill, 2011 was referred to the Standing Committee on Finance on the 29th March, 2011 for examination and report thereon. The Standing Committee on Finance gave its Report on 30th August, 2011. Some of the key amendments incorporated in the Bill based on the recommendations of the Standing Committee on Finance are as follows:

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Portability of PRAN – NPS Lite/Swavalamban to NPS – All Citizen Model and other sectors.

Pension Fund Regulatory and
Development Authority

CIRCULAR

PFRDA/2013/13 /PDEX/ 08 

              20th August’2013

Subject: Portability of PRAN – NPS Lite/Swavalamban to NPS – All Citizen Model and other sectors

   There were several requests from NPS Lite/Swavalamban subscribers seeking  porting of their PRANs from NPS Lite/Swavalamban to the All Citizen Model of NPS (UOS). PFRDA after examining the matter has approved the shifting/porting of  NPS/Lite/Swavalamban accounts to NPS-All Citizen model and other Sectors through an Inter platform shift process which is detailed as below:

   1. The subscriber has to submit the following documents to the new nodal office (POP/PAO/DDO etc) who in turn will process the application and forward the document to CRA.

   a. Duly filled in Inter platform shift (IPTR-1) form along with the duly filled in registration form of the sector to which he wishes to migrate.

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Appointment of new Trustee Bank (TB) under National Pension System (NPS)-reg.

Circular

PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY

PFRDA/2013/10/CRTB/1

30th April, 2013

To
All Central Government Ministries & State Governments
All PrAOs / PAOs / DTAs / DTOs
All POPs / POP-SPs / Aggregators / Corporates
All PFMs / ASPs

Dear Sir/ Madam,

Subject: Appointment of new Trustee Bank (TB) under National Pension System (NPS)-reg.

   1. All the offices are hereby informed that Axis Bank has been appointed as a new Trustee Bank in place of Bank of India (the current Trustee Bank) for National Pension System (NPS) with effect from 1st July, 2013.

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INVESTMENT GUIDELINES FOR PRIVATE SECTOR NPS.

INVESTMENT GUIDELINES FOR PRIVATE SECTOR NPS

1. Guidelines

1.1 The PF will manage the following separate schemes, each investing in a different asset class, being:

  1.1.1. Asset class E (equity market instruments) — (a)The investment by an NPS participant in this asset class would be subject to a cap of 50%. This asset class will be invested in shares of the companies which are listed in Bombay Stock Exchange or National Stock Exchange and on which derivatives are available or are part of BSE Sensex or Nifty Fifty Index. subject to restrictions outlined in Clause 2 below

   (b)The permitted cap, as mentioned above, is expected to be maintained at that level at all points in time. However, the amount of funds invested in that asset class can differ from the specified cap by no more than 5% for purposes of portfolio balancing.

   1.1.2 Asset class G (Government Securities) — This asset class will be invested in central government bonds and state government bonds subject to restrictions outlined in Clause 2 below.

   1.1.3 Asset class C (credit risk bearing fixed income instruments) — This asset class contains bonds issued by any entity other than Central and State Government. This asset class will be invested in Fixed deposits and credit rated debt securities. This includes rated bonds/securities of Public Financial Institutions and Public sector companies, rated municipal bodies/infrastructure bonds and bonds of all firms (including PSU/PSE), subject to restrictions outlined in Clause 2 below.

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Default ASP and Annuity Scheme for subscribers exiting from NPS and Seeking withdrawal of Accumulated Pension Wealth.

Pension Fund Regulatory and
      Development Authority
        
CIRCULAR

PFRDA/2013/5/PDEX/4

                                 14th February 2013

To,
All POP’s/Aggregators/CRA/ dealing offices of Central & State Governments,

Subject: Default ASP and Annuity Scheme for subscribers exiting  from NPS and Seeking withdrawal of Accumulated Pension Wealth

   PFRDA has empanelled seven Annuity Service Providers (ASP’s) for providing annuity services to NPS subscribers. As per current National Pension System (NPS) exit norms,the subscriber is mandatorily required to select one of the empanelled ASP’s along with an Annuity scheme from those offered by the chosen ASP at the time of exiting from NPS and seeking withdrawal of accumulated pension wealth (for reasons other than death of the subscriber).

   Based on the feedback received from stakeholders seeking provision of a default option to be exercised by the subscriber at the time of selection of the ASP and choosing of an annuity scheme, PFRDA has examined the matter and decided to assist the subscriber by providing a default option.

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Revision in documentary requirements in case of exits arising from Death of the subscriber under NPS-Swavalamban.

CIRCULAR

PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY

PFRDA/2013/3/PDEX/3 

                                            Date: 06/02/2013

To,
Dear Sir/Madam,

Subject:   Revision in documentary requirements in case of exits arising from Death of the subscriber under NPS-Swavalamban.

   Attention of all stakeholders is invited to the requirement of Death Certificate in original for claiming the benefits of the accumulated pension wealth in the account of a deceased subscriber by the nominee/legal heirs under National Pension System (NPS).

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Withdrawal process/Exit Guidelines for NPS employees.

PROCEEDINGS OF THE GOVERNMENT OF KARNATAKA

              Sub:- Withdrawal process/Exit Guidelines for NPS employees.

             Read:- 1. G.O. No.FD (Spl) 04 PET 2005, dated 31.03.2006
                         2. G.O. No.FD (Spl) 28 PEN 2009, dated 29.03.2010
                         3. G.O. No.FD (Spl) 01 PEN 2010, dated 20.10.2010                                       
                                                            ---
Preamble:- 

         Government of Karnataka has introduced a Defined Contribution Pension System known as New Pension system/scheme for its employees joining Government service on or after 1.4.2006 vide G.O. read at above (1) & (2) above.  This system/scheme is made operational from 1.4.2010 and the NPS is made applicable for the members of the All India Services (Karnataka cadre) joining the All India Service on or after 1.4.2004, in
G.O. read at (3) above.

         This G.O. is issued to detail the procedure for withdrawal of employees from the scheme before  attaining the age of superannuation and settlement of claims of the NPS employees in case of death while in service or on attaining the age of superannuation.

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Implementation of NPS.

   The New Pension System (NPS) has been implemented for various sectors like Central Government, State Government, Private Sector and NPS-Life.  The status of NPS in these sectors as on 10th November, 2012 is as under:-

Sector	No. of Subscribers (Figures in lakhs)	Assets under Management (Rs. In crores)
Central Government	10.62	14,846
State Government	14.67	7,445
Private Sector	1.64	835
NPS-Life	13.05	344
Total	39.98	23,470

   The number of subscribers is increasing every year in all the sectors.

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PFRDA to appoint auditors for pension fund managers.

   To keep a tighter check on investments, the pension regulator has decided to appoint auditors for the pension fund managers (PFMs) and schemes of the National Pension System (NPS). Fund managers will also be expected to make full disclosure of scheme-wise investments on their websites.

   “As the NPS gets more subscribers, there is a need to keep a tighter check on investments being made by the fund managers... That is why we have made the reporting and audit norms more stringent,” said a senior PFRDA official.

   The auditors, for which the Pension Fund Regulatory and Development Authority (PFRDA) has recently issued guidelines, will review the performance of schemes under the NPS as well as investments made by the fund managers. They will also be expected to audit prepare financial and annual reports of schemes managed by each of the fund manager.

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New Pension Scheme : Official amendments to the PFRDA Bill, 2011.

   Official amendments to the Pension Fund Regulatory and Development Authority Bill, 2011

   The Union Cabinet today approved the introduction of certain official amendments to the Pension Fund Regulatory and Development Authority Bill, 2011. These official amendments have been necessitated in view of the recommendations of the Standing Committee on Finance which has examined the Bill. Based on the recommendations of the Standing Committee on Finance, the Government has decided to accept the following:

   1. that the subscriber seeking minimum assured returns shall be allowed to opt for investing his funds in such schemes providing minimum assured returns as may be notified by the Authority;

   2. withdrawals not exceeding 25 per cent of the contribution made by subscriber will be permitted from the individual pension account subject to the conditions, such as, purpose, frequency and limits, as may be specified by regulations by the Pension Fund Regulatory Authority and Development Authority (PFRDA)

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New Pension Scheme for Workers without benefit of Formal Pension.

   There are 6.92 crores members under Employees’ Pension Scheme, 1995 as on 31.03.2012. However, to ensure the welfare of the workers who are not benefited by any formal pension scheme, the Government has announced a co-contributory pension scheme the ‘Swalalamban’ whereby the Central Government would contribute a sum of Rs.1,000 per annum in each New Pension System (NPS) account opened having a savings of Rs.1,000 – Rs.12,000 per annum. The Scheme commenced in 2010-11. The Government will provide contribution for 5 years to the beneficiaries who register in the year 2010-11, 2011-12 and 2012-13 and therefore, the scheme has been extended up to the year 2016-17.

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New Pension Schemes

   The Government has implemented the New Pension System (NPS) for Government employees who join Central Government (except armed forces) on or after 1st January, 2004.

   The NPS and the old defined benefit (DB) pension system are two different pension systems. Therefore, there can not be any comparison between the two in so far as the benefits to employees are concerned. The Pension benefits under the DB system are defined, however, under NPS the amount of pension would depend on the investment returns, the accumulation upto the age of retirement and level of annuitisation and type of annuity chosen.

   Some representations of Employees’ Associations have been received by the Government. The major reasons for its opposition by the Employees’ Associations are minimum pension, safety and returns on investment. Many measures have been taken to protect the interests of the NPS subscribers, like prescribing a flexible investment pattern, establishing a regulator in the form of the Interim Pension Fund Regulatory and Development Authority and creating the modern institutional architecture of NPS, which is low cost.

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Pension to Retired Employees.

   The Government had introduced the New Pension System (NPS) from 1st January, 2004 through a Notification dated 22nd December, 2003 for new entrants to Central Government service, on mandatory basis, except to Armed Forces, joining service on or after 01.01.2004 replacing the existing system of defined benefit pension system. NPS has also been extended to autonomous bodies, State Governments and un-organised sector. The employees working in Central Public Sector Enterprises (CPSEs) are not covered mandatorily under NPS. However, three CPSEs, viz Konkan Railway Corporation Ltd. Manganese Ore (India Ltd. ) and NALCO have adopted NPS on voluntarily basis with effect from 01.01.2004, 01.07.2011 and 01.01.2007 respectively.

   This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question in the Lok Sabha today.

PIB

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Management of Funds Under NPS.

   The investment of pension funds of Government employees, who are covered as subscribers to the New Pension System (NPS), was hitherto being made through a pooling arrangement whereby the funds of such employees were credited to a pool account (pending reconciliation of subscribers’ contribution details) from which such funds were allocated to pension fund managers for immediate investment in the best interest of the subscribers. These funds of the Government employees are being managed based on the investment Pattern prescribed by the Government.

   The pension funds of the Government employees, who are covered by NPS, are managed by three pension fund managers, namely, SBI Pension Funds (Pvt.) Limited, UTI Retirement Solutions Limited and LIC Pension Fund Limited.

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Pension Scheme in Ordnance Factories.

   The new pension scheme has been implemented in all the ordnance factories including Jabalpur based ordnance factories.

   HVF NPS Reformation Association, Avadi filed an OA before CAT Madras Bench challenging the implementation of New Pension Scheme introduced by the Government of India as unconstitutional and violative of Article 14, 16 & 21 of the Constitution of India contending, inter alia, that new pension scheme does not guarantee any minimum return on investment of employees. A strike had been called on 28.2.2012 by All India Defence Employees Federation, Indian National Defence Workers Federation and BharatiyaPratirakshaMazdoorSangh jointly demanding to scrap the new pension scheme.

   No proposal for considering the implementation of old pension scheme in ordnance factories is under consideration

   This information was given by Minister of State for Defence Shri MM PallamRaju in a written reply to Shri Rakesh Singh in Lok Sabha today.

Source: PIB

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New Pension Scheme.

   New Pension Scheme (NPS) is a defined contribution scheme, its pay out depends upon the amount of contribution and the growth on the investment over a period of time for an individual while defined benefit schemes pay out is defined and is based on salary and number of years in service etc. at the time of retirement of an individual.

   At the time of normal retirement after attaining 60 years, the subscriber can withdraw 60% of the accumulated wealth and will be required to invest remaining 40% of the accumulated wealth to buy a life annuity from insurance company approved by Insurance Regulatory and Development Authority (IRDA). The mandatory provision of annuitisation will be invested to buy life annuities as per various options available to him. The amount of annuity varies depending upon the option selected by him. Registration of ASPs (Annuity Service Providers) is under process and as soon as they get registered, other details will be made available.

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