If you are a National Pension Scheme (NPS) investor or you are about to retire, here are the latest changes in its rules that you must know.
The Pension Fund Regulatory Authority (PFRDA) has introduced several changes in the National Pension Scheme (NPS) rules. NPS is a voluntary, defined contribution pension system that provides pension in retirement through market-linked returns. Any Indian citizen between 18 and 65 years of age can open a NPS account. Non-resident Indians can also open NPS accounts.
Here are the latest NPS changes you need to know:
1) Trail Commission Payment Through Points of Presence (PoP): The PFRDA has allowed trail commission payment through PoPs for the NPS account holders. The rule is effective from September 1, 2022. However, the pension fund regulator made it clear that trail commission on NPS contributions made through D-Remit, an electronic system that directly transfers money from your bank account to the trustee bank so that you get the net asset value (NAV) the same day for your NPS investments, would be similar to eNPS (online contribution) by subscribers who were on-boarded by the respective PoPs.
"The trail commission to PoPs for D-Remit contributions of the associated subscribers shall be @ 0.20 per cent of the contribution amount (minimum Rs 15 and maximum Rs 10,000) similar to eNPS. The applicable charges would be recovered by unit deduction on periodical basis," PFRDA said.
2) NPSE-Nomination Process Flow: The PFRDA has also modified the process of e-nomination for government and corporate sector employees. According to the new process, the nodal office will have an option to either accept or reject the e-nomination request once it is initiated. In case, the nodal office
does not initiate any action against the request within 30 days of its allotment, the e-nomination request will be accepted in the Central Recordkeeping Agencies (CRA) system. This change will be effective from October 1, 2022.
3) No Separate Form To Buy An Annuity Plan: In a move to relax the onboarding process for NPS investors, the Insurance Regulatory and Development Authority (IRDAI) has relaxed the need for submitting a separate proposal for buying annuity products at maturity. Earlier, NPS investors had to submit an exit form to PFRDA and a detailed proposal form to the life insurance company for buying an annuity plan to receive pension. Henceforth, the exit form of the NPS will be treated as the proposal form for purchasing annuities from life insurance companies.
4) Digital Life Certificate Submission: The IRDAI has advised insurance companies to simplify the life certificate submission process. It has asked companies to adopt Aadhar-based authentication for verification of life certificates such as Jeevan Bima.
5) Credit Card Payment Not Allowed For NPS Tier-2 Account Holders: The PFRDA has decided to stop the facility of credit card payment for NPS contribution in Tier-2 accounts. The PFRDA made its decision public through an official notification on August 3, 2022. Henceforth, payment through credit cards are not allowed for Tier-2 account for NPS account holders.