The New Pension System reflects Government's effort to find sustainable solutions to the problem of providing adequate retirement income. Since 1st April, 2008, the pension contributions of all the citizens of India by the New Pension System (NPS) are being invested by professional Pension Fund Managers in line with investment guidelines of Government applicable to Non-Government Provident Funds.
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1. |
Each member of the New Pension Scheme will be allotted a unique Permanent Retirement Account (PRA) Number. This Pension System will initially be based on two types of sub-accounts created by individual members:
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(a) |
Tier-I non-withdraw able and tax deferred pension account (for all individuals), and
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(b) |
Tier-II withdraw able savings account with no tax advantages (for all individuals subject to minimum deposits per year in the Tier-I account).
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2. |
This PRA will stay with the member regardless of where he stays or works - including spells of unemployment, self-employment , change in job or location. The member will be able to use Pension Service Providers (POPs) to access this system for opening a PRA, accreting new contributions, receiving accounts or system information and for obtaining retirement benefits.
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3 |
A member will have complete control on how his contributions and savings in his PRA are managed by selecting a professional Pension Fund Manager (PFM) from a pool of PFM's.
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On retirement, the member will be able to use a part of the savings accumulated over the years in his PRA to buy an annuity as a way to obtain consumption for the rest of his life.
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This scheme will target two categories of participants ( members ):
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a) |
It will be applicable to all employees of the Central Government (excluding Armed Forces) who have joined service after 01 January 2004 .
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Every employee may voluntarily invest either in Tier-I or in Tier-II. The fees and charges levied by POPs /CRA /PFMs for all transactions on Tier-II will be borne by the employee. If a government employee decides to resign from service, his pension wealth and his PRA will be unaffected.
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b) |
The second category of members will include all other Citizens of India including Non-Resident Indians (NRIs) who will participate in this scheme on a voluntary basis. These members will be free to decide the amount and periodicity of contributions into these accounts.
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