You are here: Home » PF » Features » Others
Business Standard

Regulator plans e-payment, online application for NPS

Vandana  |  Mumbai 

The Pension Fund Regulatory and Development Authority (PFRDA) is working on a slew of measures to make the New Pension Scheme (NPS) more attractive for investors.

According to senior PFRDA officials, the regulator is putting in place an online application system and e-payment facility for the internet-savvy investors.

The software is being developed in association with the Central Record-keeping Agency (CRA). It is expected to debut by the end of this year. PFRDA is also looking to have an ombudsman for redressal of investor grievances.

To increase liquidity of the scheme, there could also be Tier-II accounts by the end of this year, which would allow investors to withdraw money at any given point of time. However, sources said that investors, who have Tier-I accounts, would be allowed to have Tier-II accounts.

“By allowing Tier-II accounts, we want to offer liquidity to the investors unlike Tier-I. This is next on the priority list,” said a PFRDA official.

At present, investors are allowed to withdraw anytime before the age of 60 years. However, there is a condition that 80 per cent of the money will have to be used to buy an annuity plan. The rest 20 per cent can be paid in lumpsum.

PFRDA has also recommended to the Centre that NPS be given the exempt-exempt-exempt (EEE) status. At present, NPS has the exempt-exempt-taxed (EET) status, whereby contributions and returns are tax-free, but withdrawals attract tax.

Earlier, PFRDA had recommended that the annual maintenance charges be borne by the government for the initial few years. The move was aimed at promoting the product.

Currently, annual maintenance charges form a major part of the total charges that an investor has to pay. The CRA charges Rs 350 per customer as annual maintenance charge. The basic functions of a CRA include record-keeping, administration and customer service functions for all subscribers of NPS.

The initial response to NPS has not been too impressive. “We have registered 384 investors in one month. We would be looking at rationalising costs provided volumes increase,” said a senior PFRDA official.

Sources said that PFRDA has spent around Rs 1 crore till now on various media-marketing campaigns for creating awareness about NPS.

It has sought additional funds from the government to step up spending on advertising.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Wed, June 10 2009. 00:46 IST