The Pension Fund Regulatory and Development Authority (PFRDA) has allowed some changes in National Pension System (NPS) rules. NPS is a government-sponsored pension program open to all employees from the public, private and unorganised sectors (except for the armed forces).
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Here's a list of the top 6 changes that account holders should know:
One less form under new NPS rule
The insurance regulator has done away with filling out a separate proposal form for NPS subscribers to choose the annuity after exiting. The new rule provides relief to senior citizens.
Under the NPS, the subscriber who superannuates is required to purchase an immediate annuity (excluding the commuted value) from any life insurance company. At the time of purchasing immediate annuities, a separate application form was collected by life insurance companies.
Since the information required in the application form is already available under NPS, to avoid duplication, IRDAI advised life insurance companies to treat the exit form as the proposal form for NPS retirees purchasing annuities — instead of again collecting information from customers.
New e-nomination rule
The PFRDA has introduced changes in the process flow for making e-nominations to the NPS for government and corporate sector subscribers.
According to this, the CRA system would accept the nomination request from existing subscribers of the NPS if the nodal office did not act against it within the given 30 days. The changes in the e-nomination process flow will come into effect from October 1.
The process flow changes shall apply to the existing e-nomination, which is still unauthorised.
Contributions from credit card to NPS tier-2 accounts no longer allowed
PFRDA has stopped accepting payments of subscriptions through credit cards in tier-2 accounts of the NPS. While using credit cards for payments in investment schemes like mutual funds or stocks is discouraged, NPS was the only saving instrument that continued to allow account holders to invest through the eNPS portal using credit cards.
New norms on trail commission
PFRDA has allowed trail commission payments through Points of Presence (POPs) towards the NPS by account holders. However, the pension fund regulator made it clear that trail commission on NPS contributions made through D-Remit will be similar to eNPS (other modes of Online contribution) by those subscribers who were on-boarded by the respective PoPs. The rule has become effective from September 1, 2022.
NPS withdrawal timeline reduced
The PFRDA reduced the timeline for execution of withdrawal requests under the NPS account to a T+2 basis from a T+4 basis.
The letter 'T' is the day of authorisation of withdrawal request by the Nodal office/PoP/subscriber, and the number '+2' is the settlement days.
For subscribers associated with Protean eGov Technologies Ltd, requests authorised up to 10.30 am will be settled on a T+2 basis. For subscribers associated with KFin Technologies Ltd & CAMS CRAs, the requests authorised up to 11 am will be settled on a T+2 basis.
Contributions to NPS via UPI
Subscribers of NPS can now contribute to their accounts through Unified Payments Interface (UPI). The PFRDA has launched a UPI handle for depositing contributions through D-Remit for the benefit of subscribers. Before this, the contributions were carried out through a net banking account using IMPS/NEFT/RTGS.
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