SAP_CRA_approved(1.0)_POP

New Pension System

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Introduction • Why NPS • Features of NPS• Entities in the System• Investment Options• Subscriber Charge Structure

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Why NPS • Old age income security

• Longer life spans due to improvements in medical science

• Geographical mobility and change in social values

• Higher expectations of accepted minimum level of

consumption

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Main events• Appointment of Pension Fund Regulatory and Development

Authority (PFRDA) by Government of India in 2003• Implementation of NPS from January 01, 2004• Designing of NPS architecture• Appointment of entities for the NPS such as Central

Recordkeeping Agency, Pension Funds, Trustee Bank and NPS Trust etc.

• Adoption of the NPS architecture by various State Governments• NPS subscribers in CRA system exceeds 10 lakhs (approx.)• NPS made available for all citizens of India from May 01, 2009

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About PFRDA

• Regulatory Authority for NPS

• Architect of NPS features

• Appointment of entities of NPS architecture

• Formation of NPS Trust

– Regulate and monitor the performances of the entities

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PFRDA

ASPSubscribers

PFMTrustee Bank

Central record keeping Agency

Entities in the System

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Features of NPS• Issuance of a Portable Permanent Retirement

Account Number (PRAN)

• Tier I (long term) & Tier II (short term)

• Multiple contributions with no upper limit

• Choice of multiple pension funds

• Option of changing the funds and schemes

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Features of NPS cont…

• Select withdrawals

• Exit between the age of 60 to 70 and purchase of

insurance (Annuity) schemes

• Tax treatment – EET

Tax will not be levied on the amount which is transferred for purchase of Annuity

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Investment Options• The Subscriber has

– Choice of six Pension Funds– Choice of three Schemes – E, C & G– Active Choice

• Selection of any one Pension Fund• Any or all three schemes can be chosen

– Auto Choice• Selection of any one Pension Fund

• Default scheme with a life cycle fund option

• ICICI Prudential Pension Funds Management Company Limited

• IDFC Pension Fund Management

Company Limited • Kotak Mahindra Pension Fund Limited• Reliance Capital Pension Fund Limited• SBI Pension Funds Private Limited• UTI Retirement Solutions Limited

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Age Asset Class E Asset Class C Asset Class GUp to 35 years 50% 30% 20%

36 years 48% 29% 23%37 years 46% 28% 26%38 years 44% 27% 29%39 years 42% 26% 32%40 years 40% 25% 35%41 years 38% 24% 38%42 years 36% 23% 41%43 years 34% 22% 44%44 years 32% 21% 47%45 years 30% 20% 50%46 years 28% 19% 53%47 years 26% 18% 56%48 years 24% 17% 59%49 years 22% 16% 62%50 years 20% 15% 65%51 years 18% 14% 68%52 years 16% 13% 71%53 years 14% 12% 74%54 years 12% 11% 77%55 years 10% 10% 80%

The Auto Choice Option

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CRA – Roles and Responsibilities• Issuance of unique PRAN to the Subscribers

• Provision of I-Pin/T-Pin to access CRA system/CRA Call Centre

• Maintenance of the subscriber accounts

• Provision to change details of the Subscriber

• Issuance of annual PRAN Transaction Statement

• Central system for Grievance raising and resolution

• Account opening forms to be held in the custody of CRA

SMS & Email Alert for PRAN generation and Credit of contribution amount

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How to open a Permanent Retirement Account?• Approach the nearest POP-SP (SHCIL) and procure your

PRAN application form

• Fill up the mandatory fields

• Submit documents supporting Proof of identity, address

and date of birth

• Contribution with a minimum amount of Rs. 50013

How to open a Permanent Retirement Account cont…• Select one of the six Pension Funds

• Select your choice of scheme either as “Auto Choice” or “Active Choice”

• If “Active Choice” scheme is selected– appropriate percentages to be allocated to each of the asset classes

viz Asset class “E”, “C” and “G”

– percentage allocated to Asset class “E” can not be greater than 50%

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How to open a Permanent Retirement Account cont…• If “Auto Choice” scheme is selected

– The scheme preference columns to be left blank

– Investment under “Auto Choice” will be done based on a life cycle

fund option

• If no scheme is selected i.e. Active/Auto, investment will be

made under the “Auto Choice” category

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Snapshot of Subscriber Registration

• Submission of PRAN application form to the POP-SP

• Issuance of receipt number by POP-SP as

acknowledgement to track the status of application

• Generation of PRAN by CRA

• Dispatch of PRAN kit and I-Pin/T-Pin to the

Subscriber by CRA16

Initial Contribution• First contribution (cash/cheque/DD/PO) with NPS

instruction slip (NCIS) at the time of Registration• Minimum contribution amount is Rs. 500 • Intimation about generation of PRAN to POP by CRA• Submission of contribution details to CRA and fund

transfer to Trustee Bank by POP• Credit of units in the Subscriber’s account can be

viewed over the internet(www.cra-nsdl.co.in)17

Usage of I-Pin and T-Pin• You can use the I-Pin for the following:

– Checking the status of your application for registration and change of details submitted to POP-SP

– View your statement of transactions online– Logging of grievances against the POP-SP/CRA and track its

status

• You can use your T-Pin for the following:– Status of application for change of details submitted to POP-SP– Logging of grievances against the POP-SP/CRA and track its

status18

Subsequent Contributions

• Procure and submit duly filled up NPS instruction slip (NCIS) to any POP-SP with the contribution amount

• Contribution by way of cash/cheque/DD/PO• No outstation cheque• Minimum yearly investment required

– Minimum amount per contribution – Rs 500– Minimum contributions per year – Four– Minimum contribution amount per year – Rs 6000

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Subscriber Maintenance• Changes in Subscriber Details

– Personal, Nomination

– Shifting of POP-SP

• Transactions– Request for Statement of Transaction

– Request for Scheme preference change/Switch

– Request for Withdrawal

– Request for Reissue of T-Pin/I-Pin and PRAN Card

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• Service levels for POPs, CRA & PFMs

• Investment guidelines for PFMs

• Investment through NPS Trust

• Continuous performance monitoring of Investments

• Effective Grievance Redressal

Investor Protection Measures Prescribed by PFRDA

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Subscriber Charge Structure

Intermidiary Charge Head Charges Rs.Method of Deduction

POPRegistration and initial contribution upload 40 (max.) Upfront

collectionAny subsequent transaction 20 (max.)

CRA

Account opening 50

Redemption of Units

AMC 350

Transaction (contribution, change in scheme preference, switch and withdrawal) 10

Re-issue of I-Pin/T-Pin and Re-issue of

PRAN card will be chargeable at

Rs 50

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• Open to Government as well as non–government subscribers

• Separate option with different scheme choice under same PRAN

• Account can be opened with a minimum amount of Rs. 1000

and subsequent contributions with a minimum amount of Rs.

250

• No restrictions on withdrawal

• No additional account opening charge or account maintenance

charge for Tier II account

Tier II Contribution

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Benefits of the New Pension System

• It is simple

• It is flexible

• It is portable

• It is regulated

• The cost structure is TRANSPARENT

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THANK YOU

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