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National Pension System

National Pension System. Introduction. Government of India introduced the scheme from 1.1.2004 to all new employees of Central Government except armed forces The scheme was later rolled out to all citizens from 1 st May 2009. Objective.

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National Pension System

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  1. National Pension System

  2. Introduction • Government of India introduced the scheme from 1.1.2004 to all new employees of Central Government except armed forces • The scheme was later rolled out to all citizens from 1st May 2009

  3. Objective • A social security measure of providing regular income in the old age • Reasonable market based returns in the long run • Providing old age security coverage to citizens

  4. What is NPS scheme? • NPS is voluntary, simple, regulated, portable and flexible pension scheme • Investment can be made during employable years and withdrawn on retirement with monthly pension • Open to all citizens of India • Regulated by PFRDA, with transparent investment norms and regular monitoring and performance review • Nomination facility available • Tax benefit available under Income Tax 1961 for the investments

  5. Types of accounts • Tier I Pension account • This is a non withdrawable pension account • Tier II Savings account • A voluntary savings facility. Withdrawals can be made at any time

  6. Tier I Pension account • Builds retirement corpus • Minimum contribution of Rs. 500/- per transaction and Rs. 6000/- in a financial year • No limit on the maximum contribution • At least one transaction in a year • Contribution through cash, DD or local cheques; Outstation cheques not accepted • Contribution can be made at any POP_SP

  7. Tier II savings account • Not a pension account but a savings facility • Minimum contribution – Rs. 1000/- at the time of opening account • Minimum amount per contribution – Rs. 250/- • Minimum no. of contributions in a year – 1 • Minimum account balance at the end of financial year – Rs. 2000/- • Withdrawal permitted at any time • Net asset value added to the fund

  8. Who can join NPS • Citizens of India (Resident or Non resident) • Age limit - 18 years to 60 years, as on the date of submission of application

  9. Who cannot join NPS • Minors (persons under 18 years of age) • Insolvent persons • Persons of unsound mind • Existing subscribers of NPS

  10. Guidelines for NRI investments • Should have an account in a bank in India • Contributions subject to regulatory requirements prescribed by RBI from time to time

  11. Key stakeholders • Point of presence (POP)– First point of interaction between the investor and the NPS • POP_SP – Point of presence service providers – collection points ; also provide other customer services to NPS subscriber – Designated Post Offices act as POP_SPs • Central Record keeping Agency (CRA) – National Securities Depository Limited acts as CRA for NPS; performs record keeping, administration and customer service functions for NPS subscribers • Pension Funds(PFs)/Pension fund managers (PFMs) - Six pension funds appointed by PFRDA manage the retirement savings under NPS • Annuity Service Providers (ASPs) – Responsible for paying regular monthly pension after the subscriber exits from the NPS • Trustee bank – Facilitates fund transfer across various entities (subscribers, PFMs, ASPs); Bank of India is the trustee bank for NPS

  12. How the funds are invested? • In Equity (E), Government Security (G) and Corporate Bonds (C) as per the subscribers choice. • Investments in equity only in those listed in National Stock Exchange or Mumbai Stock Exchange. • 60% of the corpus fund from (Tier I) can be withdrawn at the age of 60 years and 40% invested with Pension Provider Company at the choice of the subscriber.

  13. Choices of investment for subscriber • Six different Pension Managers viz., ICICI Prudential Pension Funds Management Co Ltd, IDFC Pension Fund Mangement Co Ltd., Kotak Mahindra Pension Fund Limited, Reliance Capital Pension Fund Limited, SBI Pension Funds Pvt Ltd., UTI Retirement Solutions Ltd. • Options for deciding the investment plan in “Active choice” • Can also decide to do no option on investment plan by leaving it to “Auto choice”

  14. Forms used • Composite application form (CAF) UOS1 – used by subscribed applying for fresh Tier I and Tier II account • Annexure NCIS – To accompany all applications • Annexure S1 – Application for allotment of PRAN • UOS10 – Form for Tier II activation to be used by subscriber registered for Tier I and issued a PRAN card • UOS 11 – Form for Tier II activation to be used by subscriber registered for Tier I but not issued with PRAN card • UOS SH1 – To be used when PRAN is required in Hindi

  15. Options for activation • Tier I and II – For all Indian citizens (except those Government servants appointed after 1.1.2004 and existing NPS subscribers) • Tier I – For all Indian citizens (except those Government servants appointed after 1.1.2004 and existing NPS subscribers) • Tier II - For Tier I subscribers. (Govt servants appointed after 01 Jan 2004 are eligible only for Tier II activation )

  16. Permanent retirement account number (PRAN) • A unique number allotted to NPS subscriber • Allotted by CRA • Common to both Tier I and Tier II

  17. Specimen PRAN card

  18. Exit from NPS • When the subscriber attains the age of 60 years • At any time before attaining the age of 60 years • Due to the death of the subscriber

  19. Benefits on exit

  20. Instructions for filling up of forms

  21. Information required for subscriber registration • Subscriber’s Colour Photo of size 3.5 X 2.5 cm • Subscriber’s Signature/Thumb impression (left thumb impression for Male and Right thumb impression for female) • Subscriber’s personal Details • First name • Gender • Father’s First Name • Date of Birth • Complete Present and Permanent address with PIN code.

  22. Information… cont’d 4.Subscriber Scheme Preference • PFM Selection (only one) • Asset Allocation (in case of Active Choice) • Total should be equal to 100% • Equity should not exceed 50% 5. KYC Documents • Identity Proof • Address Proof • Date of Birth Proof • Initial contribution plus registration fee to be paid Registration fee Rs. 100/- + applicable service tax and education cess Minimum initial contribution Rs. 500/- plus Service charge @0.25% of contribution subject to min Rs. 20/- and max Rs.25000/- plus applicable service tax and EC should be accepted

  23. KYC norms • Know Your Customer Norms (KYC) mandatory. • KYC Documents are identity Proof, Address Proof and age proof. • Passport or other govt. issued document reflecting current or permanent address can be accepted as address proof & identity proof • Bank statement/electricity bills (for address proof) should not be dated beyond last six months from the date of application. • In case of non IRA compliant applicant, identity proof & address proof has to be taken in the form of certificate from head of office only

  24. Tier II activation • Tier II Activation will be accepted at Post Office. • Subscriber Bank details (ECS) are mandatory. • UOS-s10 application, One cancelled cheque leaf & PRAN copy should be given. • Service charge @0.25% of contribution subject to min Rs. 20/- and max Rs.25000/- plus applicable service tax and EC should be accepted.* • Initial contribution Rs.1000/- is must. • Post offices(POP-SP) scan the Tier-II activation form and sent through email/Fax to NPS nodal office for activation. • *vide dop memo Fno.3-16/09NPS(p) Part II dt. 2.2.12

  25. Subscriber servicing

  26. Subscriber servicing • PO to accept • 1. Switch request for change in PFM/or investment option for Tier-I and Tier-II • 2. Withdrawal request • 3.Print Subscriber’s account statement • 4.Re-issue of I-PIN/T-PIN/PRAN card • PO to collect Service charge Rs. 20/- plus applicable service tax and EC* for these services *vide dop memo Fno.3-16/09NPS(p) Part II dt. 2.2.12

  27. Grievance handling • Receiving of grievances against any PO or any other NPS intermediary in the format prescribed and forward them to Nodal PO for uploading in Central Grievance Management System(CGMS) • The grievance shall be resolved within 7 days

  28. Important information • The scheme is subject to market risks • Advise the investor to read the offer document carefully before investing • No fixed / guaranteed returns • The investments will be calculated on NAV basis. • Subscriber can view their Investment details & other details through internet.

  29. Contact details India Post NPS Nodal office, PTC, Mysore: Phone: 0821+2441010 Fax : 0821+2441010 Email : nps@indiapost.gov.in CRA , Mumbai:- National Securities Depository Limited4thfloor,'A’Wing,Trade World, Kamala Mills Compound, SenapatiBapatMarg,Lower Parel, Mumbai-400013.Tel:(022)24994200(60lines)Fax:(022)24952594/24994974Tollfreenumber:1800222080email : info.cra@nsdl.co.in CRA web site www.npscra.nsdl.co.in

  30. NPS Transaction through ePayment • NPS transactions are carried out in point of sale using ePayment option

  31. Subscriber registration

  32. Acceptance of initial contribution

  33. Acceptance of subsequent contribution

  34. Daily Report of NPS transactions

  35. Practice • Exercise 5.2.1 and 5.2.2

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