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Before exiting a firm, PFRDA instructs NPS subscribers to apply for Inter Sector Shifting

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Before switching organisations, NPS subscribers must change their Point of Presence (PoP) by submitting an application to the Central Record Keeping Agency (CRA) System in the specified format. That being said, despite leaving their employer, some individuals have yet to update their National Pension System (NPS) account to the PoP of their preference. And to prevent this, the PFRDA has advised employers to make Inter Sector Shifting (ISS) a part of the exit process by allowing employees to transfer their NPS account to a preferred Point of Presence. On a recent circular the Pension Fund Regulatory and Development Authority has stated that "It has been observed that there are instances wherein the NPS Subscribers under Corporate Sector have not exercised Inter Sector Shifting (ISS) before leaving their employers due to various reasons viz Resignation, Retirement etc and those employees are still tagged with their erstwhile employers in Central Record Keeping Agency (CRA) system even though they no longer work with those employers."

 

Before exiting firms, PFRDA asks NPS holders to apply for Inter Sector Shifting

As per the guideline, employers should provide a record of those employees, as well as their Permanent Retirement Account Numbers (PRANs), to the CRA/ POP for labelling, with the intention of de-tagging those PRANs from the employer, as per the rules listed below:

Employees of corporate sectors

Following the flagging of such employees' PRANs in the CRA system, the Subscriber must choose a POP within three months, otherwise the PRANs will be labeled to the respective POP of the Corporate employer under the voluntary system. This category includes companies that serve as POPs while still offering NPS to their own employees (most specifically banks).

Employees of direct corporate sectors

Following the CRA system's flagging of those employees' PRANs, the subscriber must practise his or her preference of PoPs within three months, or the PRANs will be labeled to eNPS under the voluntary system. The subscriber has the option of continuing with eNPS or switching to another POP.

Employees under Corporate CG pattern of investment

Employees whose PRANs are in the Corporate CG pattern of investment but have been flagged in the CRA system must practise their option of investment and POP as applicable to their present role.

Intermediary charges

If intermediary charges were charged by the respective employer before the PRANs were flagged in the CRA system, the subscriber is liable for it. According to the PFRDA circular, CRAs are urged to establish adequate technology features in order to conform with the guidelines, and subscribers are to be continuously communicated with by CRAs in order to exercise their individual preference listed under multiple situations.

Read more about: pfrda nps national pension system
Story first published: Tuesday, March 30, 2021, 14:46 [IST]
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