PFRDA expected to provide more tax benefits in NPS

The Pension Fund Regulatory and Development Authority (PFRDA) on Monday said it will change the withdrawal rules and provide more tax incentive to make National Pension System (NPS) more attractive to small investors, according to a media report.

The pension regulator is expected to soon change the rules to allow NPS subscribers who have an accumulated corpus of less than Rs. 2 lakh on retirement to withdraw the complete amount, the report added.

At present, the subscriber can only withdraw a maximum of 60% of corpus, while the remaining has to be used to buy a monthly annuity.

The central government is expected not to tax the lump sum amount the subscriber will receive on retirement. Currently, the Tier-I account under the NPS has an exempt-exempt-taxed (EET) status, that is any contributions to the scheme and its earnings are not taxed but amount received on withdrawal is taxed.

Under the proposed Direct Tax Code (DTC), tax treatment for contribution in Tier I account will have EEE (exempt-exempt-exempt) status. The regulator is also expected not to increase the minimum amount (Rs. 6,000) to be invested in NPS per annum.

Last month, PFRDA allowed the subscribers to stay invested in the scheme till the age of 70.

NPS not popular in private sector

NPS not popular in private sector

Considering that National Pension Scheme (NPS) has not been a successful venture in the private sector, the Pension Fund Regulatory Development Authority (PFRDA) has introduced a registration process for pension fund managers (PFMs), increased the fees of PFMs from 0.0009 per cent to a fixed ceiling at 0.25 per cent along with other significant steps to ensure that pension sector in the private sector takes off, chairperson of the PFRDA said at an ASSOCHAM event held in New Delhi on Tuesday.

 “NPS which started off as a government pension scheme has not been popular in the private sector as there are certain changes that have to be brought about when extending a compulsory product on a voluntary basis,” said PFRDA chief Yogesh Agarwal while addressing a national conference on ‘Pension Funds: The Untapped Opportunities’ organised by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

Fee hike for managers to add more NPS subscribers

Fee hike for managers to add more NPS subscribers

With hike in fees for pension managers and increase in number of distributors, the pension regulator is confident of finding more private enterprises subscribing to the New Pension Scheme (NPS).

Yogesh Agarwal, chairman of Pension Fund Regulatory Development Authority (PFRDA), said, “Something (NPS) that was meant for public sector was simply extended to private sector and that is the reason it failed to pick up. However, with increased fees to 0.25 per cent, it becomes lot more viable for fund managers.”

Pension fund managers’ (PFMs’) fees was increased to 0.25 per cent, from an earlier 0.0009 per cent beginning November.

New Pension System – Status as on 10th November 2012

The New Pension System (NPS) has been implemented for various sectors like Central Government, State Government, Private Sector and NPS-Life.  The status of NPS in these sectors as on 10th November, 2012 is as under:-

Sector	No. of Subscribers (Figures in lakhs)	Assets under Management (Rs. In crores)
Central Government	10.62	14,846
State Government	14.67	7,445
Private Sector	1.64	835
NPS-Life	13.05	344
Total	39.98	23,470

The number of subscribers is increasing every year in all the sectors.

EPFO needs fresh and bold ideas

The 8.8 per cent return by the Employees’ Provident Fund Organisation (EPFO) could have got better. It only needed some investment in equities as funds earning 12 per cent annually in the National Pension System do.

EPFO’s investment adviser Crisil had in April this year said that it must ease norms for investing in private sector bonds where 10 per cent of the Rs 3.5 lakh crore corpus is parked. Only seven companies — HDFC Bank, ICICI Bank and Axis Bank, HDFC, IDFC, LIC Housing Finance and ILFS are eligible as they have dual AAA ratings. So, EPFO’s 10 per cent window is never fully utilised. Officials complain that in 2011-12, of the total amount of Rs 5,760 core permitted to be invested in private sector, only Rs 5,460 crore (94 per cent) was invested.

HDFC Securities gets approval to distribute NPS

HDFC Securities granted permission to distribute National Pension System (NPS) products by sector regulator Pension Fund Regulatory Development Authority (PFRDA).

 

The brokerage firm, a subsidiary of the country's second largest private sector lender HDFC Bank, has been appointed as a point of purchase for the products, it said in a statement issued here.

 

PFRDA allowed citizens to participate in the NPS in 2009 to help individuals plan and prepare for post retirement life, which was restricted to central government employees since its inception. It is available to all Indian citizens between 18 to 55 years of age. Subscribers contribute money periodically while returns on it are market determined.

NPS needs more transparency to inspire customers’ trust

NPS needs more transparency to inspire customers’ trust

For a retail investment product that was designed to offer retirement income to millions of people who lack options to invest for their sunset years, the National Pension System (NPS) has everything going for it: state-of-the-art architecture, lowest-cost model and a regulator entrusted with the job to regulate as well as develop the market for the product.

Sadly, the product hasn’t really gained enough traction in three years since it was launched in 2009. Troubled by the poor uptake of NPS, the Pension Fund Regulatory and Development Authority (PFRDA) has taken a series of measures to increase its footprint, but in doing this it seems to have committed one cardinal error. As a regulator it has failed to uphold its most fundamental role: of making full disclosures and enforcing transparency.

Corporates Told, Take advantage of NPS

Chairperson of the Pension Fund Regulatory and Development Authority Yogesh Agarwal urged corporate entities on Monday to take advantage of tax benefits on contribution made by employees to the National Pension Scheme (NPS).

Speaking at an interactive session with members of the Bangalore Chamber of Industry and Commerce (BCIC), Mr. Agarwal pointed out that the employers’ contribution up to Rs. 10,000, on behalf of their employees, would be eligible for tax breaks.

The NPS, which has been operational since 2004, Mr. Agarwal said, is different from the scheme offered earlier. It is a defined contribution pension, and not a defined pension benefit scheme as was the case earlier.

Mr. Agarwal said the three States, which have not implemented the scheme – Kerala, West Bengal and Tripura – are also likely to join the other States in implementing the NPS for government employees. “Kerala is likely to join soon,” he remarked.

The cost structure of the NPS is much lower than other alternative pension plans, Mr. Agarwal argued. Moreover, subscribers can choose their fund managers, he added.

Kamma Narayana, Regional Provident Fund Commissioner, said the Employees’ Provident Fund Organisation is implementing the “second phase of its reforms,” after successfully completing computerisation of its systems. “A subscriber will have only one PF number, irrespective of where he is working. This will reduce the number of complaints about delayed settlements of those whose PF accounts have been transferred after they have moved over to another organisation,” Mr. Narayana said.

Rahimunnisa, Director, Employees’ State Insurance Corporation (ESIC), said the organisation covers 21 lakh employees in the State, which, inclusive of employees’ families, implied a coverage of 1.05 crore people. “The ESIC plays a significant role because it covers nearly 12 to 14 per cent of the people in Karnataka,” Dr. Rahimunnisa said.

http://www.thehindu.com/news/states/karnataka/article3882467.ece

PFRDA garnered Rs 15,466 crore under NPS till July: Finance Ministry

NEW DELHI: The government today said pension fund regulator PFRDA has garnered Rs 15,466 crore under the New Pension Scheme (NPS) as of July 2012. 

The subscriptions of the Central and state government employees under the NPS received up to July 31, 2012 is Rs 15,466.28 crore, Finance Minister P Chidambaram said in a written reply in the Rajya Sabha. 

Of this, Rs 10,741 crore was contribution from employees of Central government and Rs 4,725 crore from state governments, he said. 

"The performance of the NPS funds is satisfactory as it is in line with the market performance for the last three years and also for the current year," Chidambaram said. 

NPS is a government-run retirement scheme for individuals, including those in the unorganised sector. The scheme has been made mandatory for the government employees, except for those in the armed forces. 

In a separate reply, Chidambaram said death-cum- retirement gratuity is also paid to employees of the Central government under NPS. 

The government introduced the defined contribution-based NPS from January 2004 for Central government employees. Later, it was extended for all citizens in May 2009. The minimum annual contribution in the pension scheme is Rs 1,000. 

Interim Pension Fund Regulatory and Development Authority (PFRDA) has been given powers to supervise and regulate the NPS.

http://economictimes.indiatimes.com/personal-finance/savings-centre/savings-news/pfrda-garnered-rs-15466-crore-under-nps-till-july-finance-ministry/articleshow/16281946.cms