Pensions regulator PFRDA has flayed banks for not adhering to timelines for processing contributions to recently launched Atal pension yojana (APY), which is among the key social security schemes launched by prime minister Narendra Modi in May.
The regulator has a daunting task of getting two crore subscribers for Atal pension yojana by this year end and as of now it has about five lakh subscribers enrolled. And tardy processing of contributions isn’t helping its cause much either. Pension Fund Regulatory and Development Authority (PFRDA) administers the scheme and the institutional architecture of NPS is being utilised to enroll subscribers under Atal pension yojana.
In June 2015, there were several instances where subscriber contributions were delayed. PFRDA has warned that any overdue interest or subscriber compensation due to delay in processing may have to be borne by the concerned bank.
Under the schemes’ rules, banks are required to collect additional amount for delayed payments, such amount will vary from minimum Rs. 1 per month to Rs 10 per month.
Banks get an incentive for mobilising new accounts under Atal pension yojana and for promotion and development of the scheme as well. Under this particular scheme, a minimum pension amount is guaranteed by the government on the premise that certain parametres are met as per the guidelines. This is why timely remittance of funds and investment are crucial.
“It was observed that during June 2015, there were several instances where these timelines were not adhered by the banks. It may be noted that the delayed upload of contribution had also an adverse impact by way of overdue interest or increased monthly contribution for the subscribers due to change of age during the period of delay,” PFRDA said.
For example, a guaranteed Rs 5,000 monthly pension for a 35-year-old will require monthly investment of Rs 902. However, if the subscriber turns 36 during the period of delay, he/she will have to pay Rs 990 per month. PFRDA directed all the banks to adopt measures that will "streamline the process of contribution upload as per timelines."
Banks are required to generate the Permanent Retirement Account Number (PRAN) immediately after submission of applications and the subscribers are to be provided with acknowledgment slip indicating the pension amount opted and PRAN.
PFRDA directed banks to upload files containing subscriber’s data and remittance of funds collected on the second day of PRAN generation. By the fourth day, contributions should be matched and booked and units need to be allotted.