The Pension Fund Regulatory Development Authority (PFRDA) is taking ing various measures to increase the number of subscribers under its New Pension Scheme (NPS). It is in discussions with the General Insurance Council, various industry bodies and companies to offer the plan to their employees. Under the recent deal between the Indian Banks’ Association (IBA) and the pension regulator, all new recruits of banks will join the defined contribution system from April 1, 2010. Already 20 nationalised and 12 private sector banks have joined the new system.
National Aluminium Co (Nalco) was the first public sector entity to join NPS. While 24 per cent of Nalco employees’ salary will go towards Employees Provident Fund, 6 per cent will be invested in NPS. PFRDA has written to the department of public enterprises to enable all central public sector undertakings (PSUs) to bring their 1.5 million workers into the NPS fold. Sources said BHEL, NTPC and DVC are next in line to join NPS.
Currently, the scheme has 6.7 lakh subscribers, of which close to 3,000 investors are from the unorganised sector. It has Rs 3,500 crore as assets under management from these subscribers, of which the contribution of the unorganised sector is at Rs 5 crore.
In yet another move, post offices will now be able to sell NPS. Recently the Department of Posts was given recognition as one of the points of presence (PoPs).
PFRDA will soon invite bids from other agencies for record-keeping. Currently, National Securities Depository (NSDL) is the central record-keeping agency and charges Rs 470 per account. Inspite of keeping other charges such as fund management and PoP quite low, the present CRA charges are quite high, a reason why the regulator seeks to bring competition and reduce costs.
SBI Pension Fund, one of the fund managers under NPS posted the highest net asset value (NAV), followed by UTI Retirement Solutions and LIC Pension Fund. PFRDA had asked the pension fund managers to disclose NAVs on a daily basis from December 1 this year. Of the total Rs 3,700 crore corpus under NPS for government employees, SBI PF manages around Rs 1,700 crore. At present, the allocation of funds among the three fund managers is decided by PFRDA.
However, this may change once the PFRDA Bill gets passed in Parliament after which each government employee will have the option of selecting his own pension fund manager.
PFRDA is also launching a small-ticket pension scheme called CRA Lite. The new scheme is mainly aimed at helping self-help groups invest their money in NPS. Under CRA Lite, the minimum annual investment limit would be Rs 2,000, which is lower than the Rs 6,000 per annum for the unorganised sector. The annual record-keeping charges have been brought down to Rs 65-70 for CRA Lite.
It recently introduced a savings account — Tier-II account— where investors can enter and exit at will. The account will be available only to those who have subscribed to Tier-I, which an investor cannot exit till the age of 60.
source:business-standard
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The employees must think twice before they opt for NPS
In nut shell the employee under the provisions of NPS
Receives 2% less from the government as contribution
Pays 33% more taxes year after year till retirement
Gets 7% less in his hands after throughout his life
Gets 39% less after tax as lumpsum on retirement
Gets 31% less pension income if both the employees invest all retirement funds in the same pension scheme
Has facility to take any loan to meet exigencies during the period of his service
Has no freedom to decide what he wants to do with his own savings
As per the details of performance posted on pfrda website www.pfrda.org the returns have been mere 12.5% and the employees will have to pay 0.25% as fund management fee and 30% tax. Hence no way they are going to get more that what they are getting on EPF.
Instead to EET, this is going to be TTT i.e. Tax Tax and Tax