Swavalamban Pran Card

Issuing PRAN Card For National Pension System For India

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Govt. of India’s Swavalamban Scheme

Special focus towards Economically Disadvantaged and Unorganized Sector

PRAN Card – Permanent Retirement Account Number

A Pension provides people with a Monthly Income when they are no longer Earning.

Tuesday, 16 April 2013

Change in NPS payout to tailor it to your needs


The National Pension Scheme (NPS) has made several changes in its various operational parameters in recent times, but there is one significant change that needs attention of all investors. This relates to the manner in which withdrawals can be made from the scheme once the pension age has been reached. The new norms will make it easier for individuals to actually ensure that they are able to get the required amount of money in the manner in which they see fit rather than being forced to follow the conditions laid out in the scheme. Here is a look at the change that will now be visible.

Current situation: There are two phases in the entire process of pension for individuals. The first stage, which is important for wealth accumulation point of view, deals with investments that will be made in the scheme. This can take place over a number of years and the goal of investors should be to contribute as much as possible so that a higher amount is available in the latter years. The other stage comes at the time of reaching the age for receiving pension. When a person turns 60, it is mandatory to use 40 per cent of the accumulated amount to generate pension, while the remaining amount can be withdrawn.

With respect to the remaining 60 per cent of the accumulated amount that is present in the account, investors can choose the phased withdrawal system, whereby, they can choose a certain percentage that they would withdraw each year including the year in which they are exiting the system. This is often found to be a problem for several people who have need for funds at a specific point of time and with the phased withdrawal undertaken, the needs and the flow of fund might not match. This is the reason that there have been lots of representations to the pension authorities regarding this issue.

There has been a change initiated with respect to withdrawals following the representations made on the issue. There will now be an option for subscribers to defer, or time, the entire lumpsum withdrawal as per their convenience. The new system would be called the deferred withdrawal system. Under this system, there is the ability to take the entire 60 per cent of the withdrawal at a single point of time. The other factor is that investors can decide the time period. So, this could be right at the time of reaching the pension age or later. This will help a lot of people who actually need funds at the time of their retirement for a specific purpose and they will be able to take the money to the extent allowed as per the workings of the scheme.

The availability of the route of withdrawal also means an additional bit of work as far as individuals are concerned. Since they have the responsibility of making the required decision on their own, this will require an element of homework on their part. It has to be noted that they can defer the withdrawal only up to a period of 70 years of age and take it at any time before they reach this age. Meanwhile, no new contributions will be possible. If there is no intimation given till the time they reach 70, then the amount would be redeemed at that specific point of time.

Investors now have to make the decision in advance and they have to go about the process by looking ahead and then planning for this particular situation.

(The writer is a CA and certified financial planner)


Training on new pension scheme

The Corporate Relations Institute will organise an introductory training on the New Pension Scheme being introduced for appointments made from April 1, 2013, at Hotel Residency Towers on April 17.

 The State Government has made the New Pension Scheme (NPS) applicable for all appointments made from April 1, 2013. It would deposit 10 per cent and the employee another 10 per cent of his or her monthly salary as per provisions of the new scheme.

 The new system would also have the family pension component. This will be the maiden training programme being held in Kerala, after the scheme came into being. The scheme will apply to all employees to whom Part III of Kerala Service Rules (KSR) is applicable.

 It will also apply to public sector undertakings where pensionary benefits as per Part III of KSR are granted. Guidelines and detailed accounting procedure to be followed under the scheme in accordance with the latest amendments to KSR will be discussed during the training programme.

 The training will empower the participants on the particulars, provisions, processes and procedures of the new pension scheme. It will also be of specific advantage to officials looking after the pension affairs of existing employees as well as new recruits in their respective organisations.

 Admissions will be against pre-registrations. More details can be had from trainingrelations@gmail.com or corelations@sify.com. Phone no: 09961217555.


Confusion over pension scheme coverage

A mix-up by the Directorate of Treasuries while allotting the Permanent Retirement Account Number (PRAN) under the New Pension Scheme (NPS) to the Department of Public Instruction (DPI) employees has led to confusion among the staff.

Under the NPS, only the DPI employees who joined service after April 1, 2006, are eligible. However, according to sources, PRAN numbers have been generated even for those who joined before April 2006, causing a considerable loss to the state exchequer.

“We estimate that the problem is being faced by 1,602 employees of the DPI,” said a senior official at the human resource management system (HRMS) cell of the DPI. The mistake that the NPS made was to randomly generate PRANs for wrong employees. One such case is that of an assistant master from government composite high school in Karaya, Belthangady, who joined government service before April 2006. She received a letter from NPS requesting her to furnish details of her employment as she had already received PRAN.

Explaining the mix-up, some NPS staff said that in November they had written to the Education Department seeking a list of employees who had joined government service after April 1, 2006. As there was no response, the Directorate of Treasuries issued letters to employees randomly.

The problem that the NPS now faces is that all the employees they approached have started sending their employment documents directly to them.  “We have a whole bunch of documents that we cannot accept. They are verified by the drawing officers (block education officers for primary teachers and headmasters for high schools). We want them verified by the Commissioner for Public Instruction,” an NPS employee said.

Amidst this confusion, the DPI issued directions to DDPIs in February asking them to take steps to collate all the documents of employees in their jurisdiction.

“This has not happened, even as the BEOs and headmasters continue to upload wrong details of employees in our HRMS, which is adding to the confusion,” the official said.


National Pension System Vs PPF: Which is better?

In an interview to CNBC-TV18, personal finance expert, Sumeet Vaid of Ffreedom Financial Planners discussed about various aspects of National Pension System and Public Provident Fund.

Below is the verbatim transcript of Vaid's interview with CNBC-TV18.

Q: The National Pension System (NPS) is fetching near double-digit returns, which is at least a percentage point higher than what Employees' Provident Fund (EPF) or Public Provident Fund (PPF) offer. Will this trend continue and is it a one year wonder because of the stock market is doing well. How should investors approach the NPS vis-à-vis PPF and EPF?
A: I think NPS is going in a great direction; it is the right direction in which it is going. However, still early days for NPS. They are building their track record in terms of fund management. The basic unique selling point (USP), which NPS provides vis-à-vis other investment options -- accumulation stage of retirement fund, cost of fund management is very low and one do not have that option of accessing that kind of cost anywhere else and those are the advantages, which is reflecting in the performance of underlying NPS. However, when comes the question of comparing EPF, PPF with NPS, it is no-brainer as of now.

Also Read: UK Sinha Warns Investors Of Fraudulent Schemes

Go in for PPF and EPF but keep a watch on NPS and environment will become much clearer in terms of action once the new tax regime, which has been talked about comes out in which the exempt-exempt-tax regime, which one has been looking forward to, comes then the situation becomes slightly different. However, as of now it’s in favour of EPF, PPF but keep a watch on NPS.

Q: Should you compare the NPS to some of the mutual funds because that is where the tax treatment seems to be more aligned?
A: That is right; NPS should be compared with mutual funds because money is being managed by some of the same fund managers under the asset management company structure itself. As I mentioned earlier, the cost is one big advantage in favour of NPS. The cost being paid is very low, it is one of the lowest cost of managing retirement point in the world is in India and that is they have done very well.

 One more thing, which one need to keep a watch on is the pension bill. It needs to get approved in the parliament because Pensions Fund Regulatory and Development Authority (PFRDA) getting a statutory status will pickup pension industry in terms of product development in times of companies coming in with specific product. However, as a starting point NPS is good compared to mutual fund but what one does not get in NPS is intermediation available; there are very few advisors or planners who are able to advice that.

Q: If you have to advice someone on asset allocation for retirement, would NPS have a place?

A: No. I will still wait for some more time because for me it is still early stages and the biggest challenge in NPS is servicing. The client servicing is a big challenge. They are still not clear how to do it because the intermediation costs are not built into that.

Caller Q: I have invested in three ULIP schemes, should I switch to mutual funds?

A: I would say that always buy insurance do not invest in insurance and if you have to invest, invest in mutual funds or other investment products. Insurance is an expense and investment has to be in non-insurance product over a longer period of time. In this current scenario because you have been paying premium for four year, you have to evaluate each and every policy and see the impact on the surrender value. There is no point incurring cost, there is no point incurring losses at this point of time.

If the losses are high or the surrender charges are very high then our advice is be to stay Put, do not redeem, do not stop, go on for two-three-four year more cycle, make sure you are able to take decent returns out of the policy and then switch. Having said that the basic thumb rule, which we always advice people is investing in mutual fund for long-term is much better, much less costly than investing in long-term for insurance provided you understand.


Friday, 12 April 2013

National Pension System Trust : As on 31st March 2012 NPS has 31,33,835 subscribers

The National Pension System Trust (NPS Trust) was established by PFRDA on 27th February, 2008 with the execution of the NPS Trust Deed. The NPS Trust has been set up and constituted for taking care of the assets and funds under the National Pension System (NPS) in the interest of the beneficiaries (subscribers). Individual NPS subscribers shall be the beneficiaries of the NPS Trust. The NPS fund are managed by the Board of Trustees to realize and fulfill the objectives of the NPS Trust in the exclusive interest of the Subscribers.

The Trust is managed by a Board of Trustees appointed by PFRDA (settlor of NPS Trust) from time to time. One of the Trustees from the Board is designated by PFRDA as Chairperson of the Board. PFRDA appoints a suitable person as Chief Executive Officer of the Trust (CEO) who shall be responsible for day to day administration and Management of the Trust subject to the superintendence, control and direction of the Board of NPS Trust. The Board shall meet once every three calendar months.

The current Board of Trustee of NPS Trust consists of Five Members as under:-
1. Sh. G. N. Bajpai- Chairman
2. Sh.Nagendra Bhatnagar-Chief Executive Officer & Trustee
3. Sh. Syed Shahabuddin – Trustee
4. Sh. Deepak M Satwalekar – Trustee
5. Dr. Rajan Saxena – Trustee

In fulfillment of its objectives, as broadly mentioned in the Deed, the NPS Trust supervises the Pension Fund Managers (PFM’S) and interacts with other intermediaries like Trustee Bank (Bank of India), Central Record Agency (NSDL), Stock Holding Corporation of India Ltd, etc. The Trust is empowered to enter into agreements with other intermediaries and operating agencies to discharge its obligations.

As part of its obligations, the NPS Trust ensures that,

The PFM’s have been diligent in empanelling the brokers, in monitoring securities transactions with brokers and avoiding undue concentration of business with any broker.

The PFM’s has not given any undue or unfair advantage to any associates or dealt with any of the associates of the Pension Fund in any manner detrimental to interest of the beneficiaries

The PFM’s has been managing the Fund Schemes independently of other activities and has taken adequate steps to ensure that the interests of the beneficiaries are not compromised.

All the activities and the transactions of the PFM’s are in accordance with the provisions of the PFRDA guidelines/directions.

A memorandum of Understanding was signed between PFRDA and the NPS Trust highlighting the rights and obligations of both the parties on 1st July 2009.

To begin with the NPS was operational for the Central Government Employees (except defense forces) joining the service on after 1.1.2004. Subsequently the State Governments have also started joining the NPS. Three Fund managers have been appointed to manage the Funds of the Government employees from 1.1.2008.

SBI Pension Funds Private Limited
UTI Retirement Solutions Limited
LIC Pension Fund Limited

The NPS was opened up for all citizens of India with effect from 1st May 2009.  PFRDA appointed six Pension Fund Managers to manage the funds of the new subscribers.

SBI Pension Funds Private Limited
UTI Retirement Solutions Limited
ICICI Prudential Pension Funds Management Company limited
Kotak Mahindra Pension Fund Limited
IDFC Pension Fund Management Company Limited
Reliance Capital Pension Fund Limited

Agreements with all the Pension Fund Managers have been signed. Agreement has also been signed with the Stock Holding Corporation of India who acts as custodian of investment Instruments. So far Twenty Six State Governments /UT have joined the NPS by signing the agreement with the NPS Trust. More State Governments have shown their inclination to join the NPS Architecture.

A quarterly review of the Pension Fund managers is carried out by the NPS Trust to review and evaluate the performance of the Fund Managers and make suggestions for improvement.

As on 31st March 2012 NPS has 31,33,835 subscribers with 15163 Crores of Assets under Management.

Source: www.pfrda.org.in

Union Bank starts selling New Pension Scheme

The Public sector Union Bank of India has started selling of the New Pension Scheme (NPS) through over 3,000 branches across the country, giving an impetus to the scheme.

The objective of the NPS is to promote old age income security to all sections of the society. Union Bank will act as a point of presence-service provider (POP-SP) of this scheme. The branches will be able to facilitate opening of NPS account, receiving contribution from time to time and switching of investment option.

“Only 4,000 of the 50,000 bank branches in the country are selling NPS, as many banks are reluctant to distribute the product. They account for just eight per cent of the branches,” said Yogesh Agarwal, chairman of Pension Fund Regulatory and Development Authority (PFRDA), which manages pension fund under NPS, on Saturday.

Envisaging that investors in insurance and mutual fund products for securing the post-retirement would eventually shift to NPS, Agarwal added, “The fund has been giving about 30 per cent more return than the existing insurance and mutual fund schemes. NPS is giving return of 12-14 per cent.”

The contributory NPS was launched by the Centre for its employees in January 2004, instead of the government assuring pension for its employees. In May 2009, it was extended to other people in the age bracket of 18-55 years. However, investor has to choose the investment options available, which is a difficult task even for seasoned investors.

“Though both public and private sector banks can participate in the scheme, many banks are not coming forward,” PFRDA chief said. “Due to poor distribution and very low commission, NPS did not make much inroads into nongovernment pension segment,” he added.

NPS has around 20 lakh members, including around 6 lakh corporate accounts, 12 lakh Central government employees and six lakh of state government ones. Still, it has a small corpus small at around Rs 9,000 crore.

About 27 out of 30 states have joined the scheme. “States of West Bengal, Tripura and Kerala have not joined the scheme citing ideological differences,” Agarwal said. As a part of financial inclusion programme, the Centre also launched a rural pension scheme – NPS Swavalamban in September 2010, with a 1,000 annual contribution from the Centre.


Wednesday, 10 April 2013

How to make changes in your NPS subscriber data

Subscribers to the National Pension Scheme (NPS) must submit their name, date of birth, contact information, bank account details and other personal details while opening an NPS account.

This information is noted by the CRA and a Permanent Retirement Account Number (PRAN) is allotted to the investor. The subscriber can change or carry out corrections in the details provided, including nomination. If the change necessitates the reissue of a fresh PRAN card, the same will be issued by the CRA.

A request for reissue of new PRAN card with updated details can be made at the point of presence (POP) which services the subscriber.


A standard Form UOS-S2 needs to be filled by the NPS subscriber. This form can be downloaded from http://tinyurl.com/cse6g7e. Only those fields that need to be modified should be filled in the form.


The subscriber needs to furnish a copy of the existing PRAN card along with two self-attested photocopies of supporting documents mentioned in the form in case of change or correction in personal details. In case of a change in the bank details, the form needs to be supported with a cancelled cheque bearing the new bank account number.


The form UOS-S2 along with supporting documents should be submitted to the POP. The subscriber also needs to bring original documents, which will be returned to him after verification by the POP.

Points to note

  • A new PRAN card will be sent to the subscriber only if the change pertains to the name of the subscriber, his date of birth or the father's name.
  • Subscribers should retain the acknowledgement slip signed/stamped by the POP where they submit the application.
  •  For issuing a new card, a processing fees of Rs 20 (plus applicable taxes) will be deducted from the subscriber's account.

Swavalamban Scheme

The Scheme and its applicability : Swavalamban Yojana will be applicable to all citizens in the unorganized sector who join the New Pension System (NPS) administered by the Interim Pension Fund Regulatory and Development Authority (PFRDA).

Benefits under the Scheme : Under the scheme, Government will contribute Rs. 1000 per year to each NPS account opened in the year 2010-11 and for the next five years, that is, 2011-12, 2012-13 and 2013-14, 2014 to 2017. The benefit will be available only to persons who join the NPS with a minimum contribution of Rs. 1,000 and maximum contribution of Rs. 12,000 per annum.

Architects of the National Pension System

Point of Presence (POP):

Points of Presence (POPs) are the first points of interaction of the NPS subscriber with the NPS architecture. The authorized branches of a POP, called Point of Presence Service Providers (POP-SPs), will act as collection points and extend a number of customer services to NPS subscribers.

Central Recordkeeping Agency (CRA):

The recordkeeping, administration and customer service functions for all subscribers of the NPS are being handled by the National Securities Depository Limited (NSDL), which is acting as the Central Recordkeeper for the NPS.

Pension Funds (PFs)/Pension Fund Managers (PFMs):

The six Pension Funds (PFs) appointed by PFRDA would manage your retirement savings under the NPS.

Trustee Bank:

The Trustee Bank appointed under NPS shall facilitate fund transfers across various entities of the NPS system viz. PFMs, ASPs, Subscribers, etc. Bank of India (BoI) has been appointed as the Trustee Bank.

Annuity Service Providers (ASPs):

ASPs would be responsible for delivering a regular monthly pension to you after your exit from the NPS.

NPS Trust:

A Trust, appointed under the Indian Trusts Act, 1882 is responsible for taking care of the funds under the NPS in the best interests of subscribers.

Pension Fund Regulatory and Development Authority (PFRDA):

An autonomous body set up by the Government of India to develop and regulate the pension market in India.

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