Assets under Management (AUM) of National Pension System (NPS) crosses Rs. 1 lac crore: PFRDA Press Release

PRESS RELEASE

Assets under Management (AUM) of National Pension System (NPS) crosses Rs. 1 lac crore

NPS has been implemented for all Government Employees (except armed forces) joining Central Govt. on or after 01 January 2004. Most of the State/UT Governments have also notified the National Pension System (NPS) for their new employees. NPS has been made available to every Indian Citizen from 01st May 2009 on a voluntary basis.

Further, from 1st June 2015, the Atal Pension Yojana, has been launched which has given the much required impetus to the social security schemes Currently, NPS and APY together have more than One Crore subscribers with total Asset Under Management (AUM) of Rs.1,00,275 crores. The segment wise status of the NPS and APY as on 03.10.2015 is as under:

Segment	No. of Subscribers	Asset Under Management (Rs. Cr.)
Central Government	15,71,136	32,381
State Governments	27,74,459	49,974
NPS-Private Sector	5,24,143	7,943
NPS-Lite/Swavalamban	44,67,733	1,865
Atal Pension Yojana (APY)	7,94,467	112
Total	1,01,31,938	1,00,275

PFRDA has taken various steps at the policy as well as operational level to make NPS more subscriber friendly. In addition to this additional tax benefits made available exclusively to NPS has given a fillip to the scheme. This is further expected to result into a substantial increase in the subscriber base by end March 2016.

The following steps have been taken in the recent past for the convenience of the subscriber:

•  The investment guidelines for NPS have been revised to expand the investment avenues for optimisation of the returns.
•  Partial withdrawal upto 25% of subscriber’s own contribution for specific purposes like higher education of children, marriage of children, construction of house and specified illness have been allowed to the NPS subscribers after completion of 10 years in NPS.
• NPS Private Sector subscribers can continue contributing beyond 60 years upto 70 years of age.
• NPS Subscriber can defer the withdrawal of lumpsum amount upto the age of 70 years and also have the option to defer purchase of annuity upto 3 years from the date of superannuation or 60 years. The funds during this period remain invested in the system.
• The Statement of Transactions (SOT) being sent by CRA to the existing subscribers has been modified to reflect the returns of the individual subscriber since the date of account opening and also the return generated during the last
  financial year.
•  To facilitate and operationalize the deposit of additional contribution of Rs.50,000/- to avail of the additional tax benefit under Section 80 CCD(1B), Government Subscribers already covered under NPS have been provided the
  facility to deposit voluntary contributions in their Tier I account through any POPSP. Government employee covered under old pension scheme can also avail this tax benefit by opening individual Tier I account through any POP-SP and contributing to the same.
•  Online reset of password and facility to change mobile no. and email Id have been provided to all the NPS subscribers.

PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY

1st Floor, ICADR Building, Plot No. 6.

Vasant Kunj Institutional Area,

Phase – II, New Delhi – 110070

19th May, 2015

As Banks are expected to engage the Banking Correspondents (BCs) / Micro Finance Institutions (MFIs) / Non-bank aggregators to mobilize the subscribers, they can Share the incentives with such BCs / MFIs / Non-bank aggregators etc. in the ratio 50:50 :: Banks : BCs/MFIs/ Non-bank aggregators.

3. Banks are advised to contact aggregators for shifting of existing eligible Swavalamban subscribers to APY as per the scheme.

4. Payment of incentives to banks each year will be made after the completion of the financial year on receipt of funds from the government.

Yours sincerely,

(Purnima Sharma)

Dy. General Manager

PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY

25 th February, 2015

Currently, the following documents are required to be submitted by the subscribers for processing a withdrawal request by CRA / NPS Trust for various types of withdrawals and which are common across all the sectors of National Pension System.

 

1. Original PRAN Card or In the absence of PRAN card, notarized affidavit

 

2. Photo ID proof*

 

3. Address proof of the Claimant*

 

4. Cancelled cheque (containing claimant’s Name, Bank Account Number and IFS  Code) or Bank Certificate

* If a document contains both identification and address for compliance with KYC requirements, it would be sufficient for processing the withdrawals. Ex: Passport,Aadhar, Driving license, Ration card etc.

Additionally, the following documents are asked for exits arising out of death of the subscriber

 

5. Death certificate in original issued by local authorities

 

6. Legal Heir Certificate/Succession Certificate as applicable in case if nominationis not registered by the subscriber

 

However, feedback has been received at various meetings conducted by PFRDA with Government officials, subscribers and other stakeholders that the burden of documentation is too heavy and needs to be reduced for a smooth operation of the system. The Authority based on the feedback and also upon reexamination of the procedural requirements at various levels and has decided to simplify the documentary requirements for the Government subscriber sector to begin with. However, the long run goal is to minimise the documentary requirements for all sectors.

 

The following are the revised requirements for the Government sector subscriber for the Exit and withdrawal requests submitted to CRA / NPS Trust:

 

3. Original PRAN card or In the absence of PRAN card, notarized affidavit: Not required to be submitted henceforth.

4. Death certificate – Copy of the death certificate duly attested by the concerned PAO/PrAO/DDO/DTO with a specific certification that it is a true copy of the original death certificate and such certificate shall be dated and subscribed by such officer with his name, title and seal of office would be accepted as adequate for the purpose of establishing the death of the subscriber.

Yours faithfully,

Sd/-

Venkateswarlu Peri

General Manager

ANNEXURE I

Certified that Shri/Smt …………. Son/Wife of Shri …………………, who is an employee of (office address) ……………. from (date) ……. and is at present holding the post of ……………….. and his/her identity is certified as provided in the NPS withdrawal application form along with the address as provided.

Mr. Sumit Kumar

Dy. General Manager

Pension Fund Regulatory & Development Authority

1st Floor, ICADR Building, Vasant Kunj Institutional Area Phase – II

Vasant Kunj, New Delhi – 110070

INTRODUCTION
As per Chapter VI, Sec 20 (2b) of the PFRDA act, 2013 it has been provided that withdrawals, not exceeding twenty-five percent (25%) of the contribution made by the subscriber, may be permitted from the individual pension account subject to the conditions, such as purpose, frequency and limits as may be specified by the regulations. In order to finalise the regulations for withdrawals, it becomes imperative to develop the formal aspects of the permitted withdrawals allowed under the Act for the benefit of NPS subscribers.

EXISTING EXIT / WITHDRAWAL GUIDELINES UNDER NATIONAL PENSION SYSTEM (NPS)

The current exit / withdrawal guidelines under NPS are framed in such a manner that the subscriber has a long period of accumulation of corpus for providing him with a decent accumulated pension wealth when he retires or he moves out of the regular work routine due to age. Also, it lets the subscriber have the freedom to move out of the scheme at any point of time, irrespective of cause or reason which determines the complete exit from the scheme.

The following are the current rules/guidelines for withdrawals under NPS as approved by PFRDA:

a) Exit from NPS upon attaining the age of Normal superannuation (for govt. employees only) or upon attaining the age of 60 years (for all subscribers other than govt. employees): At least 40% of the accumulated pension wealth of the subscriber needs to be mandatorily utilized for purchase of an annuity providing for the monthly pension of the subscriber and the balance is paid as a lump sum payment to the subscriber.

b) Exit from NPS before attaining the age of Normal superannuation (for govt. employees only) or before attaining the age of 60 years (for all subscribers other than govt. employees): At least 80% of the accumulated pension wealth of the subscriber needs to be utilized for purchase of an annuity providing for the monthly pension of the subscriber and the balance is paid as a lump sum payment to the subscriber.

c) Upon Death: The entire accumulated pension wealth (100%) would be paid to the nominee / legal heir of the subscriber.

For Swavalamban withdrawals under (a) & (b) in the previous page, there is an overriding condition on the lump sum payment payable due to which the entire accumulated pension wealth would be annuitised in case if the monthly pension obtained by using the 40%/80% of the pension wealth is below Rs.1000/- per month. Also, these exit/withdrawal rules as applicable to NPS can be modified/altered from time to time by the Authority as the NPS progresses.

BACKGROUND
The withdrawal of 25% of accumulated contributions under NPS is in addition to the withdrawal permitted at the time of exiting from NPS by the subscriber as specified above. The subscriber can continue to contribute in the scheme while using such withdrawal facility. These guidelines shall determine the circumstances under which the NPS subscriber can avail such withdrawal functionality under different time frames and thereby putting certain limits to which shall be adhered by him/her.

The guidelines are framed taking into the purpose and object of NPS i.e., to ensure a decent accumulated pension wealth in the accounts of the subscribers at the time of exit.

FEEDBACK /COMMENT PERIOD
The Feedback /Comments on this exposure draft received till 15th February, 2014 would be considered for evaluation by PFRDA. The decision of PFRDA on all and any matters related to the subject matter is final and binding on all stakeholders.

PROPOSED GUIDELINES FOR WITHDRAWAL OF 25 % OF ACCUMULATED CONTRIBUTIONS BY NPS SUBSCRIBERS

As per Chapter VI, Sec 20 (2b) of the PFRDA act, 2013 it has been provided that withdrawals, not exceeding twenty-five percent (25%) of the contribution made by the subscriber, may be permitted from the individual pension account subject to the conditions, such as purpose, frequency and limits as may be specified by the regulations. As the decision in this regard has to form part of the regulations to be made
under Sec 52 of PFRDA Act, we need to arrive at a decision on the matter purpose, frequency and limits of such withdrawals which would be allowed.

Posts examining the various aspects of the probable needs and duration, following aspects have been proposed in respect of the aforesaid guidelines:

(a) Purpose:

This withdrawal may be treated as partial withdrawal and whereby the subscriber can withdraw not exceeding twenty-five percent (25%) of the contribution made by the subscriber, may be permitted from the individual pension account for any of the following purposes only:

i) For Higher education of his/her children including a legally adopted child.

ii) For the marriage of his/her children, including a legally adopted child.

iii) For the purchase/construction of residential house or flat. However, if the subscriber already owns a residential house or flat, the same is not allowed as a ground for the withdrawal.

iv) Treatment for prescribed illnesses – suffered by subscriber or his legally wedded spouse and children. For this purpose, the prescribed illness referred above consists of hospitalization and treatment for the following diseases/illnesses:

1. Cancer
2. Kidney Failure (End Stage Renal Failure)
3. Primary Pulmonary Arterial Hypertension
4. Multiple Sclerosis
5. Major Organ Transplant
6. Coronary Artery Bypass Graft
7. Aorta Graft Surgery
8. Heart Valve Surgery
9. Stroke
10. Myocardial Infarction (First Heart Attack)
11. Coma
12. Total blindness
13. Paralysis

b) Limits:

It has been proposed that there should be limitation on eligibility as well as the maximum limit for each withdrawal that can be permitted till the person stays invested in National Pension System. We propose the following eligibility criteria and limit for availing the benefit:

1. The subscriber should have been in NPS for at least ten years and contributing to the scheme.
2. Subscriber can withdraw accumulations not exceeding twenty-five percent (25%) of the contributions made by him and standing to his credit in his NPS account, as on the date of application for withdrawal.

c) Frequency:
It is recommended that the subscriber may be allowed to withdraw at the most three (3) times from the scheme during the tenure and should have a gap of at least 5 years before availing the withdrawal facility for the next time. However, the mandatory requirement of 5 years gap between two successive permitted withdrawals would not be applicable in case of “treatment for above prescribed illnesses”.

We are proposing the above frequency in order to make sure that the subscriber should be left with a decent and considerable accumulated pension wealth at the time of superannuation/age of 60 years enabling him to purchase sustainable annuity.

The request for withdrawal should be sent along with relevant document through the Nodal Office/POP/Aggregator to Central Record Keeping Agency for processing of the withdrawal claim.

Source:  www.pfrda.org.in

[http://www.pfrda.org.in/writereaddata/linkimages/Exposure%20Draft%20withdrawal.pdf]