PFRDA, is the pension regulator for India and works towards its promotion and development. It is a Central autonomous body and is a quasi-government organisation and has executive, legislative and judicial powers similar to other financial sector regulators in India such as Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority (IRDA) and, Insolvency and Bankruptcy Board of India (IBBI). PFRDA administers and regulates the National Pension System (NPS) and also administers Atal Pension Yojana.
- Regulate NPS and pension
schemes to which PFRDA Act applies
- Establish, develop and regulate
pension funds
- Protect the interest of pension
fund subscribers
- Register and regulate
intermediaries
- Approve schemes, terms and
conditions, and laying down norms for management of corpus of pension
funds
- Establish grievance redressal
mechanism for subscribers
- Promote professional
organisation connected with the pension system
- Settle disputes among
intermediaries and also between intermediaries and subscribers
- Train intermediaries and
educate subscribers and the general public with respect to pension,
retirement savings and related issues
- Regulate the regulated assets
- Call for information, conduct
inquiries, investigation and audit of intermediaries and other entities
connected with pension funds
National Pension
Scheme
NPS is a defined
contribution pension system introduced by PFRDA whereby subscribers’
contributions are collected and accumulated in an individual pension account
using various intermediaries. Under NPS, individual contributions are pooled
together into a pension fund and is invested as per approved investment
guidelines. Funds are generally invested in diversified portfolios consisting
of government bonds, bills, corporate debentures, and shares, based on
subscribers choice. Subscribers also have an option, at the time of exit, to
purchase a life annuity by using accumulated pension fund. As already
mentioned,, NPS is governed by PFRDA. PFRDA also established an NPS trust under
Indian Trust Act, 1882 in order to manage assets and funds under NPS in the
best interest of subscribers. NPS Trust is managed by a Board of Trustees
appointed by PFRDA who is the settlor of the trust. Legal ownership of trust
and funds is entrusted to the board of trustees. The Board consists of a
Chairman and up to 5 members including the chairman, and the Board meets once
in 3 calendar months. NPS Trust is responsible for executing individual pension
accounts in its name with the subscriber, protecting the properties of NPS,
safeguarding interest of NPS and its subscribers, approving various documents
and reports including audited financials submitted by various intermediaries of
NPS trust, monitoring and evaluating operations of such intermediaries, exit
the subscriber from NPS etc.
Intermediaries,
stakeholders of PFRDA, NPS Trust
PFRDA
has appointed various intermediaries for the purpose of collection, management,
recordkeeping and distribution of accumulations. Various intermediaries of
PFRDA are as follows:
Pension Fund
Pension
fund is one of the intermediaries which has been granted a certificate of
registration by PFRDA as an authority for receiving contributions, investing
them, and paying the subscribers in a specified manner. Primary functions of
the pension fund are as below:
- Collection of subscribers funds
(subscribers who have given their choice of investment and subscribers who
have chosen auto allocation of funds) from trustee bank for the purpose of
investment
- Constitute investment committee
and risk management committee
- Maintain proper books of
accounts for pension fund schemes
- Declaration of Scheme NAV (Net
Asset Value) at the end of each working day and communicating to Central
Record Keeping Agency (CRA) for unitization in subscriber’s Permanent
Retirement Account Number (PRAN)
- Reporting operational
activities to NPS trust at regular intervals
Central Record Keeping
Agency (CRA)
CRA
is an agency registered under PFRDA to perform functions of record-keeping,
accounting, administration, and customer service to Pension scheme subscribers.
National Securities Depository Limited e-governance infrastructure Ltd (CRA1)
is the first CRA appointed by PFRDA and Karvy Computershare Private Limited
(CRA2) is the second CRA. In case of private sector employee pension
subscribers, an option is given to the employer to choose between either CRA1
or CRA2 and in case of non-employee voluntary subscribers, option to choose the
CRA is with the subscribers themselves. In case of government sector
subscribers and subscribers registered with Atal Pension Yojana, the respective
Government will choose the CRA and in case of NPS-Lite subscribers, it is the aggregator
who has to choose the CRA.
Functions
of CRA
- Acts as an operational
interface for all intermediaries under the CRA system and liasons with all
necessary external agencies to accomplish operations and commissioning
- Issuance of PRAN and despatch of PRAN card, digitization and
maintenance of the database of PRANs, and record transaction related to
subscribers
- Unitization of the contribution
made by subscribers to their PRAN account
- Receive instructions from
subscribers and aggregate the instructions and pass it on to other
intermediaries such as Trustee Bank, Annuity Service
- Providers and Pension Fund
Managers
- Facilitate credit subscribers’
account and timely allocation of funds to
- Pension fund managers
- Offer various services directly
to subscribers, including consolidated account statements
- Provide call centre facilities
to subscribers
- Provide centralised grievance
management system
- Process exit or withdrawal
request of subscribers etc
Point of Presence
(PoP)
PoP
is another intermediary registered under PFRDA as a point of presence and has
electronic connectivity with the CRA for the purposes of receiving and
transmitting funds and instructions and pay out of funds.. Functions of
PoP
- Facilitate registration of
subscribers, verify KYC documents
- Initial contribution processing
at the time of registration
- Receive and upload grievance
received from subscribers and other intermediaries in the Central
Grievance Management System (CGMS) of CRA, which in turn routes the
grievance to respective intermediaries
- Perform due diligence in
accepting subsequent contributions and remit the funds to the trustee bank
Trustee Bank
It is
a bank and an intermediary responsible for the day-to-day flow of funds, and
also provides banking facilities, receives NPS funds from all nodal offices,
and transfers the same to intermediaries such as pension fund/annuity service
provider/other intermediaries as per operational guidelines. Axis Bank has been
appointed as Trustee Bank from 1 July 2015 and the appointment is valid for 5
years subject to annual review by PFRDA.. Functions of Trustee Bank
- Collect NPS funds from nodal
offices received through online and physical mode
- Reconcile the amount collected
from nodal offices and amount paid by subscribers
- Consolidate all contribution
records and prepare Fund Receipt confirmation file
- Assist CRA in settlement
process by transferring funds to CRA etc
Custodian
Custodian
is responsible for the safe-keeping of securities or assets held under NPS or
any other pension scheme and providing incidental services including
maintaining accounts of securities or assets, undertaking activities as a
Domestic Depository, collecting the benefits or rights accruing on the
securities or assets, etc. Stock Holding Corporation of India Limited is the
custodian appointed by PFRDA.
Aggregator
Agrregator
is another intermediary registered under PFRDA to perform subscriber interface
functions under NPS-Lite/Swavalamban, such as carry out changes to subscribers
database as requested by subscribers, processing of subscribers contribution to
NPS-Lite/Swavalamban and grievance redressal, etc.
Annuity Service
Provider (ASP)
ASPs
are entrusted with the task of providing annuity payments to subscribers at the
time of exit/periodic annuity payment depending on the annuity contract opted
by subscribers, addressing queries of potential subscribers with respect to
purchase of annuities, facilitate subscriber registration for purchase of
annuity, grievance redressal of subscribers who purchased annuity from it,
etc.
Retirement Advisor
Retirement
adviser can be any person i.e., individual, firm, company, trust, society, etc.
registered under the PFRDA to provide advice on NPS or other pension schemes
regulated by the authority to subscribers or other persons or group of persons.
Online Services
offered by PFRDA
PFRDA
is not behind in making use of digitization and making pension system operation
smooth for its subscribers. PFRDA enables its subscribers to perform the
following activities online:
- Opening of NPS account
- Contribution to PRAN account
except NPS-Swavalamban and Atal Pension Yojana accounts
- Activate Tier-II Account i.e.,
voluntary savings facility which does not have restrictions on withdrawals
and also no tax benefit
- Modification of personal
details on the database
- Modification of investment
pattern
- Change of pension fund except
for government subscribers and subscribers of certain corporates
- Download statement of
transaction at any time, physical copy of which is generally despatched to
subscribers once in a year and soft copy periodically to registered email
id
- Exit/withdrawal requests
- Lodging of complaint
- Print e-PRAN