Difference of NPS from the old pension scheme

The old pension scheme of the Government of India is based on the last pay drawn of the employee and is paid after certain minimum service. NPS is referred as Defined Contribution Pension System (DCPS) in which the employer and employee both contribute for building a pension wealth payable at the time of retirement/ premature exit/ death by way of annuity and lump sum withdrawal as per norms.

PRAN

PRAN is an acronym for Permanent Retirement Account Number- a unique number provided to each subscriber under NPS which is portable across locations and employments.

Mandatory declarations for opening an NPS account.

As per the current Common Subscriber Registration Form (CSRF), you mandatorily need:

• Bank details
• Mobile number
• PAN
• FATCA declaration

However, CKYC identifier (if available with the subscriber) and Aadhar details are optional information with regards to opening an NPS account.

KYC documents required for the generation of PRAN

Identity and address proof are the key KYC documents. Details of the KYC documents required are available with Composite Subscriber Registration Form (CSRF).

Can a subscriber use the same PRAN if he shifts from Govt sector to Private or vice-versa/Central Govt to State Govt or vice-versa?

Yes, as PRAN is unique and portable across employment & location, NPS contributions can be uploaded by the current employer in the same PRAN allotted by previous employer, after completion of Inter-Sector Shifting (ISS).

Process for Inter Sector Shifting (ISS)

A subscriber can shift from his current sector to any other sector like Central Government, State Governments, All Citizens of India sector (UOS) and Corporates through 'Inter Sector Shifting' functionality. With the help of this feature, a subscriber can continue with the same PRAN irrespective of his geographical location and employment status till he/she exits from NPS.

For shifting PRAN from Government sector to UOS, the Subscriber can approach any of the PoP rendering services under NPS and submit Form ISS-1 (Inter Sector Shifting form). Form ISS-1 is available on the CRA website - www.npscra.nsdl.co.in. The target PoP will facilitate the shifting of PRAN along with accumulated NPS contributions.

While shifting from UOS to Corporate/Govt. sector employer, the subscriber may submit his ISS-1 form to such current employer for completing ISS.

Can a subscriber obtain/use more than one PRAN?

No, an individual is permitted to have only one PRAN which is unique, permanent, and portable across jobs/ employments and locations.

In case a subscriber possesses more than one PRAN by any chance, the concerned Nodal office can deactivate the duplicated PRAN by initiating a request with CRA.

Nomination in NPS

A subscriber, at the time of joining the National Pension System is required to make a nomination mandatorily, in the prescribed form, conferring on one or more persons the right to receive the amount. For the purpose of nomination referred above, the 'family' means:

• In the case of a male subscriber, his legally wedded wife, his children, whether married or unmarried, his dependent parents and his deceased son's widow and children
• In the case of a female subscriber, her legally wedded husband, her children, whether married or unmarried, her dependent parents, her husband's dependent parents and her deceased son's widow and children.

Only an individual can become a nominee. Subscriber can nominate a maximum of three nominees and a subscriber cannot fill the same nominee details more than once. Decimals/fractional values for allocation of shares are not accepted in the nomination(s). Sum of percentage share across all the nominees must be equal to 100. If sum of percentage is not equal to 100, entire nomination will be rejected. If a nominee is a minor, then nominee’s date of birth and guardian details shall be mandatory. The registration of nominee details will not be done unless all details are duly filled up in the form.

Non-IRA PRANs and benefits of IRA compliance

Non-IRA subscribers are those whose PRANs were generated on request of their government entity, based on limited personal data. In that case, Common Subscriber Registration Form (CSRF) get missed, due to which their addresses, photographs, and signatures (i.e., complete KYC details) are not maintained in the CRA system.

This is why you should opt for IRA Compliance (Advantages & Benefits):

• PRAN cards are issued to all IRA compliant subscribers.
• You can check your account balance online using I-PIN
• You can lodge a complaint against any entity using I-PIN.
• You can access CRA toll free helpline using T-PIN.
• No proof of identity and address is required during activation of a Tier Il account.
• You get Value Added Services like online email alerts, SMS alerts etc.

Changes to PRAN data

The Subscriber can update their details in Tier I in CRA system by submitting a change request Form S2 to the concerned office to which the subscriber is linked. They may make some changes in their personal information online using I-PIN or through NPS mobile application available on Google Android Play Store and App store.

Roles of Principal Account Office (for CG) & Directorate of Treasury & Accounts (for SG) under NPS

The Principal Accounts Office (PrAO) / Directorate of Treasury & Accounts (DTA), act as the oversight authority in NPS monitoring. As per the standard operating procedure for NPS, the PrAO/ DTA is required to discharge several functions, most of which are monitoring performance of the registered nodal offices under its jurisdiction. The nature of activities required to be carried out by the PrAO/ DA may be summarized as under:

• Consolidate PAO/ DTO/ Nodal Office registration forms and forward it to CRA for registration.
• Monitor the performance of PAO (Pay and Accounts Office) / DDO (Drawing & Disbursing Office) / DTO (District Treasury Offices) / Nodal offices in discharging their responsibilities in the CRA system.
• Monitor the resolution of grievances raised against PAO/ DTO/ Nodal office.
• Take necessary action to ensure compliance of PAO/ DDO/ DTO with the operational procedure of CRA system and adherence to various circulars/ guidelines/ regulations issued by the PFRDA.

NPS for employees of Central Autonomous Bodies

In line with the decision of GOI to introduce NPS for new entrants joining central government services on or after 1/1/2004, it has been decided vide OM 1(13)/EV/2001 Dt 13/11/2003 Department of Expenditure, Ministry of Finance that all new entrants in all Autonomous Bodies under various Central Ministries/ Departments recruited on or after 1/1/2004 will also be governed by the NPS.

Is transition from contributory Provident Fund to Defined Contribution Pension Scheme (NPS) permitted for the employees of Autonomous Bodies, who have joined prior to 01-01-2004? What will be the date of effect in case of transition from CPF to NPS in case of employees who joined prior to 01.01.2004? What are the salient features of this scheme?

Yes. The organizations are permitted to shift to NPS in respect of employees who have joined before 1/1/2004 vide OM No 1(2)/EV/2007 dated 30-06-2009 issued by Department of Expenditure, Ministry of Finance. Date of effect will be the date when such option is exercised by the concerned employee. The other detailed operational features are as follows:

• The existing corpus of CPF (both employees and employer's) would be transferred to his NPS account / PRAN.
• In order to facilitate the transition from CPF to NPS, the autonomous body would make in addition one time ex gratia payment of 10% of the employee's contribution for each of the employees opting to switch over to NPS.
• Recurring monthly contribution by employee @ 14% of basic Pay + DA and a matching contribution by the autonomous body would be payable.
• The employer's contribution would be payable from the month the organization/ employee shifts over to NPS and would be limited to 14% of Basic Pay + DA

NPS for employees of State Autonomous Bodies

Many State Governments have adopted NPS architecture and implemented NPS for the employees of State Government as well as for the employees of Autonomous bodies, State PSUS, Corporations, Boards, if notified in their respective gazette notifications.

NPS for members of All India Service joining the All India Services on or after 1/1/2004?

Contribution to NPS is mandatory for all members of All India Services joining the service on or after 1/1/2004 as specified in No 25014/14/2001-AIS II Dt 8/9/2009 issued by Ministry of Personnel, Public Grievances and Pensions.

Tier-I and Tier-Il account

Under NPS, two types of account are available to subscribers i.e., Tier I & Tier II.

Tier I account is a pension account where a subscriber contributes their savings for retirement and in this account partial withdrawals are permitted subject to fulfilment of certain requirements.

While Tier II account is a voluntary investments account in which subscribers are free to deposit or withdraw the contributions whenever they wish, an active Tier I account along with PRAN is a prerequisite for opening of a Tier II.

Furthermore, since Tier Il is a voluntary investment account, the government does not contribute any amount into a Tier II account.