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New Pension System
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New Pension System FAQs

 

 

What is the scheme about ?

New Pension System is India's simplest and perhaps the least cost pension system.

New Pension System (NPS) has been introduced by the Central Government on 01 January 2004, and is being regulated by Pension Fund Regulatory and Development Authority (PFRDA).

With effect from today (1st May 2009) New Pension System has been extended to all citizens of India on a voluntary basis. NRIs can also apply.

Key features of NPS :

  1. Unique & Portable Permanent Retirement Account Number (PRAN)
  2. Pension system is envisaged to be based on two types of sub-accounts created for individual subscribers :
    1. Tier-I non-withdrawable pension account, and
    2. Tier-II withdrawable savings account.
    3. Multiple funds and scheme options.
    4. Annuity at retirement

ICICI Bank has been appointed as one of the Point of Presence (PoP(s)) for registering applicants to the NPS. Designated branches of ICICI Bank have been registered as Service Providers (POP-SP(s)).

On registration to the NPS, the subscriber will be issued a Permanent Retirement Account Number (PRAN) . After receiving the PRAN, customers can deposit monies in their PRAN on a regular basis.

  • He/She should be a resident Indian.
  • The subscriber should be between 18 and 60 years on the date of application.
  • He/she has to provide the KYC documents (Identity AND Address proof as per PFRDA guidelines) for registering to NPS.
  • Subscriber can choose any one Pension Fund Manager (PFM) of the 6 registered (PFM) for managing his deposits.
  • The subscriber can either let the PFM decide in which asset classes to deposit his investments (AUTO CHOICE)
                                                                                   
                                                                                    OR
  • He/She can indicate his investment choices (ACTIVE CHOICE) in the 3 asset classes in percentage
                 EQUITY   (maximum 50 percent in Equities is allowed)
                 CORPORATE BONDS
                 GOVERNMENT BONDS
  • Initial minimum contribution amount along with the Subscription application is Rs.500/- in cash or cheque. If the same is in cheque, it should be drawn in favour of " ICICI BANK Collection a/c- NPS trust"
  • Minimum amount to be deposited in the PRAN annually is Rs.6000/-.
  • Subscriber has to make a minimum of 1 transactions (contribution deposits) in the account each year.
  • An amount of Rs.40 plus service tax applicable (10.30% currently) will be deducted from the initial contribution towards processing fees.
  • Rs.20 plus service tax applicable will be deducted from subsequent contributions deposited by the subscriber.

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How to navigate on the website ?

More detailed information is available on http://pfrda.org.in/. Click on "NPS Architecture".

 

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What is the eligibility Criteria for this scheme ?

  • He/She should be a resident Indian.
  • The subscriber should be between 18 and 60 years on the date of application.
  • He/she has to sprovide the KYC documents (Identity AND Address proof as per PFRDA guidelines) for registering to NPS.

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What is the minimum and maximum amount for this scheme ?

  • Initial minimum contribution amount along with the Subscription application is Rs.500/-. Max deposit in cash is Rs. 25000 per transaction for ICICI bank.
  • Minimum amount to be deposited in the PRAN annually is Rs.6000/-.
  • Subscriber has to make a minimum of 1 transactions (contribution deposits) in the account each year.

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What and How are the returns scheduled for this scheme?

Your contributions will not earn any specified rate of return. The PFM will invest your savings in a scheme of your choice. The returns earned by the PFM on the scheme selected by you will be credited to your account.

For detailed scheme details please refer to the offer document available on http://pfrda.org.in/.

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How to open the new account ?

You can visit any of our designated branches for submit your NPS subscription form along with the NPS Constribution Slip (NCIS) and an Initial contribution amount of Rs.500/-. The subscription Form and Contribution Slip will be available at the branches. The same can also be downloaded from http://pfrda.org.in/.

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Can we have a joint account for this scheme?

No.

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What are the various entities in the NPS architecture ?

       (a) Pension Fund Regulatory and Development Authority (PFRDA)
       (b) Central Record-keeping Agency (CRA)
       (c) Pension Funds (PFs)/Pension Fund Managers
       (d) Annuity Service Provider (ASP)
       (e) Trust & Trustee Bank (TB)
       (f ) Point of Presence (PoP)

       Description of the above entities :

(a) Pension Fund Regulatory and Development Authority (PFRDA)

  • PFRDA is the regulator for the NPS. PFRDA is responsible for registration of various intermediaries in the system such as Central Record Keeping Agency (CRA), Pension Funds, Custodians, NPS Trustee Bank, etc. PFRDA shall also monitor the performance of the various intermediaries and ensure that all stakeholders comply with the guidelines/regulations issued by PFRDA from time to time.

(b) Central Record-keeping Agency (CRA)

  • The record-keeping, administration and customer service functions for all subscribers of the New Pension System will be centralized and performed by the CRA. The CRA shall, on the basis of instructions received from subscribers, transmit such instructions to the appointed Pension Funds on a regular basis. The CRA will also provide periodic, consolidated PRAN statements to each subscriber. National Securities Depository Limited (NSDL) has been appointed as the CRA for NPS by PFRDA.

(c) Pension Funds (PFs)/Pension Fund Managers

  • Appointed PFs would manage the retirement savings of subscribers under the NPS. PFs would use their secure access codes to confirm receipt of netted assets and instructions regarding fund allocation, confirm allocation of funds and communicate the NAV of each scheme to CRA on a regular basis. The PFs will be required to invest strictly in accordance with guidelines issued by the PFRDA. The list of Pension Funds under NPS for all citizens other than Government employees is attached as Annexure 3.

(d) Annuity Service Provider (ASP)

  • ASPs would be responsible for delivering a regular monthly pension to the subscriber for the rest of his/her life. On receipt of personal and banking information details of subscriber from CRA and of specified sum from the trustee bank the ASP would use its access codes to confirm receipt. ASP would then begin payments of annuities to the subscriber.

(e) Trust & Trustee Bank (TB)

  • A Trust would be responsible for taking care of the funds under the NPS. The Trust would be the registered owner of all NPS assets. The trust would hold an account with a bank and this bank has been designated as NPS Trustee Bank. NPS Trustee Bank will facilitate fund transfers across various entities of NPS system viz. PFM, Annuity Service Providers, subscriber, etc. PFRDA has already established NPS Trust under the provisions of the Indian Trusts Act w.e.f. 27th February 2008 and Bank of India is functioning as NPS Trustee Bank. The NPS Trust is being administered by the Board of Trustees, as constituted by the PFRDA.

(f ) Point of Presence (PoP)

  • PoP shall be the first point of interaction between the voluntary subscriber and the NPS architecture. PoP shall perform the functions relating to registration of subscribers, undertaking Know Your Customer (KYC) verification, receiving contributions and instructions from subscribers and transmission of the same to designated NPS intermediaries. The complete list of all PoP(s) shortlisted in this phase is attached as Annexure 2. Detailed functions to be performed by the PoP(s) are given under Key Features. PoP(s) and their authorized branches (PoP-SP(s)) shall also be required to comply with the provisions of the Prevention of Money Laundering (PML) Act , 2002 and the rules framed there under, as may be applicable, from time to time.

 

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Pension Fund Managers (PFM)

  1. ICICI Prudential Life Insurance Company Limited
  2. IDFC Asset Management Asset Management Company Limited
  3. Kotak Mahindra Asset Management Company Limited
  4. Reliance Capital Asset Management Company Limited
  5. SBI Pension Funds Limited
  6. UTI Retirement Solutions Limited

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