The National Pension System (NPS) governed by the PFRDA (Pension Fund Regulatory and Development Authority), is a retirement pension scheme established by the Government of India to provide the subscribers with a regular income after retirement. The minimum contribution and higher returns for retirement planning can make it a good pick for you. However, taxation on annuity income makes NPS unappealing when compared to other instruments such as EPF and PPF. To make NPS more appealing for the eligible subscribers, PRRDA has recently made some changes in NPS rules, that you need to know:
Launch of NACH mandate for NPS subscribers
Regarding the launch of NACH mandate for the benefit of Nodal Officers/PoP/Corporate, PFRDA on its recent circular dated June 04, 2021, has stated that "At present, the nodal offices of Government Sector deposit NPS contributions of associated Subscribers by preparing Subscriber Contribution File (SCF) and uploading the same in "NPSCAN system" after validating it. Thereafter, the Nodal Office visits its Bank (accredited bank) in order to transfer the funds (equivalent to the amount uploaded in the SCF) to the Trustee Bank (TB) appointed by PFRDA." PFRDA has observed instances where in the transferred contributions are returned due to certain errors as mentioned below:
- Non-mentioning of Transaction id in the inward message while transferring the funds
- which is a mandatory field.
- Invalid 7-digit A/c no.
- Remittance made by Offices for expired Tran id.
- Amount mismatch between the file and actual amount remitted.
- FRC completed previously.
- Non-existence of Tran id provided in CRA system.
- Duplicate fund received on same day.
- Different PAO id in beneficiary a/c.
To counter the above-said errors, PFRDA has clarified in its circular that "In order to overcome the above challenges and to ease the process of contribution upload by Nodal officers, PFRDA is pleased to introduce a NACH mandate jointly hosted by Trustee Bank (TB) and Central Record Keeping (CRA) through National Automated Clearing House (NACH) operated by National Payments Corporation of India (NPCI)." The circular further added that "The NACH mandate is technology enabled which offers end to end solution and is a secured mode of contribution fund transfer. Under NACH Mandate, all the nodal offices have to provide the 'one-time mandate registration' for auto debiting their bank accounts with the amount based on the SCF uploaded in NPSCAN. The facility can also be availed by POPs/Corporate which prepares SCF and transfer contributions on a regular basis. There is no additional cost to avail the facility from CRA and TB."
Withdrawal of pension corpus of Rs 5 lakh without purchasing annuity
Recently PFRDA has also enabled subscribers to withdraw the whole accumulated pension amount without acquiring an annuity if the pension corpus is less than Rs 5 lakhs. The Pension Regulator has said in a gazette notification that "where the accumulated pension wealth in the Permanent Retirement Account of the subscriber is equal to or less than a sum of Rs 5 lakh, or a limit as specified by the Authority, the subscriber shall have the option to withdraw the entire accumulated pension wealth without purchasing an annuity and upon such exercise of this option, the right of such subscriber to receive any pension or other amount under the National Pension System or from the government or employer, shall extinguish."
Extension of timelines for activities under National Pension System (NPS) and NPS Lite- Swavalamban scheme
PFRDA has also recently modified certain timeframes for activities in the context of the second wave of the pandemic under the National Pension System (NPS) and NPS Lite- Swavalamban. "Point of Presence (POPs) are advised to undertake NPS related activities within prescribed Turn Around Time (TAT) under the Pension Fund Regulatory and Development Authority (Point of Presence) Regulations, 2018, and guidelines issued there-under, in order to ensure timely and efficient service to subscribers, PFRDA said in a circular.
Partial withdrawal of NPS subscribers through self-declaration
Recently, PFRDA has allowed NPSsubscribers to partially withdraw the amount by self-declaration. In its recent circular dated January 14, 2021, PFRDA has stated that "on Ease of Partial withdrawal of NPS Subscribers through self - declaration, the Partial Withdrawal Requests will be processed on the basis of Self-declaration provided by Subscriber for reason of partial withdrawal." The circular has also clarified that "No supporting documents (w.r.t. stated withdrawal reason) are required to be submitted by the Subscriber for availing Partial Withdrawal. The Subscriber is required to accept the ''Self-declaration'' for Partial Withdrawal which is provided in Withdrawal Form as part of - Declaration by the Subscriber. In addition, the Subscriber is required to provide Bank Proof of the details of Bank Account registered in CRA system. If the Bank Account details given in the application are different from the Bank Account details registered in CRA system, then partial withdrawal request shall be rejected by POP. " According to PFRDA, after three years of continuous subscription, NPS subscribers would be allowed to make up to 25% partial withdrawal of their own contribution.
Contributions under D-Remit via IMPS
NPS users are now allowed to deposit their contributions using a Direct Remittance System (D Remit) through IMPS (Immediate Payment System). The circular published on 10 March by the Pension Fund Regulatory and Development Authority (PFRDA) has clarified that "The functionality of accepting IMPS has been released from 1 March 2021. However, unlike the contributions received through NEFT/RTGS which are returned on the same day in case of a return, the IMPS contributions in case of a return shall be effected on T + 1 through the 'credit adjustment process' as per the guidelines of NPCI and based on D Remit process guidelines issued by the PFRDA." Existing NPS subscribers under the government, non-government, or all citizens model can make their voluntary contributions through Direct Remittance using their savings bank account by generating a virtual ID linked to their Permanent Retirement Account Number (PRAN). In both tier I and tier II accounts, the minimum D-Remit transaction amount is limited to Rs 500. By generating a Virtual ID, one can use the D- Remit facility without any additional charges.
Premature exit rules for NPS Lite Swavalamban Subscribers
PFRDA has stated in Circular No. PFRDA/2021/21/SUP-NPST/1, published on July 2, 2021, that "as per the 6th Amendment of Exit Regulations, the Swavalamban Subscribers whose accumulated pension wealth do not exceed one lakh rupees and if they are not eligible to migrate to Atal Pension Yojana (APY), can opt to prematurely exit with lump sum payment." The circular further added that "those eligible Subscribers as mentioned above are not required to continue in the Swavalamban scheme for minimum period of twenty-five years irrespective of the receipt of Govt of India (GoI) co-contribution under Swavalamban by them. However, if GoI's co-contribution was availed by those eligible Subscribers and the same shall be deducted along with the returns generated from the corpus at the time of their exit."