PFRDA India National Pension Scheme

New National Pension Scheme of India (NPS) introduced by PFRDA -

Govt. of India has introduced the new pension scheme for all citizens including private sector from May 1, 2009.

The New Pension Scheme (NPS) is open to every Indian citizen and is regulated by the Pension Fund Regulatory and Development Authority (PFRDA) India. All you have to do is open an account with any one of Points of Presence (POP) and get a Permanent Retirement Account Number (PRAN).

You choose from one of the Pension Fund Manager appointed by PFRDA. The pension account can be operated from anywhere in the country, event if you change your city, job or fund manager.

For more information, application form & offer document, visit www.pfrda.org.in

The Main features & Architecture of the New Pension System -

• The new pension system would be based on defined contributions. It will use the existing network of bank branches and post offices etc. to collect contributions. There will be seamless transfer of accumulations in case of change of employment and/or location. It will also offer a basket of investment choices and Fund managers. The new pension system will be voluntary.

• The system would, however, be mandatory for new recruits to the Central Government service (except the armed forces). The monthly contribution would be 10 percent of the salary and DA to be paid by the employee and matched by the Central Government. However, there will be no contribution from the Government in respect of individuals who are not Government employees. The contributions and returns thereon would be deposited in a non-withdrawable pension account. The existing provisions of defined benefit pension and GPF would not be available to the new recruits in the central Government service.

§ In addition to the above pension account, each individual can have a voluntary tier-II withdrawable account at his option. Government will make no contribution into this account. These assets would be managed in the same manner as the pension. The accumulations in this account can be withdrawn anytime without assigning any reason.

• Individuals can normally exit at or after age 60 years from the pension system. At exit, the individual would be required to invest at least 40 percent of pension wealth to purchase an annuity. In case of Government employees, the annuity should provide for pension for the lifetime of the employee and his dependent parents and his spouse at the time of retirement. The individual would receive a lump-sum of the remaining pension wealth, which she would be free to utilize in any manner. Individuals would have the flexibility to leave the pension system prior to age 60. However, in this case, the mandatory annuitisation would be 80% of the pension wealth.

• There will be one or more central record keeping agency (CRA), several pension fund managers (PFMs) to choose from which will offer different categories of schemes.

• The participating entities (PFMs, CRA etc.) would give out easily understood information about past performance & regular NAVs, so that the individual would able to make informed choices about which scheme to choose

Advantages of NPS -

- The National Pension Scheme of India (NPS) is more or less exactly same like that of other Pension Plans offered by Private banks such as ICICI Pru Life & HDFC.

But here the main advantage is low Administrative charges and high level of Transparency. As this is a scheme offered by Government, various Administrative charges will be very less in comparison to other Pension Plans offered by Private Banks.

So What are you waiting for? NPS will launch very soon all over the India…. Start savings for your Retirement Now…….!!!!!