The Pension Fund Regulatory and Development Authority (PFRDA) has said that it will allow the National Pension System (NPS) subscribers to continue with their investment model even after they exercise inter-sector shifting (ISS) on resignation or retirement from government and corporate sectors.
In a circular on September 29, 2022, PFRDA said that many corporate and government sector subscribers do not exercise ISS as it may entail changes in the provident fund (PF) or investment options.
It noted that they are reluctant to shift to the all-citizen sector because the scheme or the investment option they opted for during their employment may not be available.
Therefore, to address their concerns, PFRDA has permitted such subscribers to continue with their existing investment pattern or PF choice as an option for shifting to the all-citizen sector.
PFRDA said, "Their legacy contributions would continue to be invested as per the existing investment pattern/PF, which was prevailing during their employment." Such subscribers would also be free to choose any other investment scheme, PF option, post the inter-sector shifting.
It will allow the government sector subscribers to continue contributing to their NPS account even after superannuation without needing to submit any request. Earlier, they were not allowed to contribute to their NPS account post-retirement until they chose to continue their account.
Additionally, PFRDA said subscribers' annual maintenance and transaction charges post their retirement would be recovered from their respective Permanent Retirement Account Number (PRAN) from the subsequent quarter of their resignation.
PFRDA has unveiled a slew of proposals for the benefit of NPS subscribers of late. Last month, it announced allowing systematic lumpsum withdrawals (SLW) for NPS subscribers.
It said it would modify the guidelines to allow for SLW periodically as part of a proposed "smart withdrawal facility." NPS subscribers could withdraw the amount either monthly, quarterly, half-yearly, or annually for up to 75 years if they avail of the facility with a one-time request.
Currently, the amount can be withdrawn in a single tranche or on an annual basis, with the option to defer the withdrawal in any combination post 60 years or superannuation till 75 years. PFRDA said the changes aim to make the SLW process easy. It also called for public feedback on its proposed changes.
