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Thursday, 4 February 2016

The finance ministry is examining a proposal by the PFRDA to exempt NPS withdrawals from payment of tax


The finance ministry is examining a proposal by the Pension Fund Regulatory and Development Authority (PFRDA) to exempt national pension system (NPS) withdrawals from payment of tax, so as to bring it on par with the employee provident fund (EPF) scheme.

This will provide a level-playing field for the two pension schemes.

"We have made a proposal to the finance minister ahead of the Budget, where exemption of NPS withdrawals from tax is one of the key recommendations. It will be a game-changer for NPS resulting in a substantial increase in the assets under management with more private subscribers coming on board," said a PFRDA official.

The Seventh Pay Commission had also recommended an exempt-exempt-exempt (EEE) status for NPS, to bring it on a par with the EPF scheme in terms of tax-free withdrawals.

The pay panel also pitched for extension of co-contribution incentive by the government beyond 31 December to attract subscribers under Atal Pension Yojana

The government has so far got over one million subscribers on board

Currently, the EPF withdrawals after five years of completion of service are tax-exempt, while premature withdrawals before five years attracts tax ranging between 10 per cent and 34.608 per cent, barring exceptions.

The EPF enjoys 'EEE' status, while NPS accounts have exempt-exempt-taxed status, where any contributions to the schemes and its earnings are not taxed but amount received on withdrawal is taxed.

"There is indeed a case to provide EEE status to NPS, but the matter is still under examination," said a government official.

The finance minister had in his last budget provided employees the option of choosing between EPS and NPS, and a cabinet note for amendment of EPF and MP Act, 1952, has been sent to the law ministry for vetting.

Also, while the Employees' Provident Fund Organisation has been giving a return of 8.25-9.5 per cent to its subscribers, NPS has given a return of 9.2 per cent and NPS Lite has given a compounded annual growth return of 9.68 per cent.

Of the over Rs1,00,000 crore assets under management of NPS, 90 per cent falls under the central and state government schemes.

Meanwhile, the APY scheme got over one million subscribers on board by December. APY guarantees subscribers a monthly pension of Rs1,000, Rs2,000, Rs3,000, Rs4,000, or Rs5,000 in return for the contribution varying from Rs42 to Rs210 per month.

Under the scheme, the government contributes 50 per cent of the subscriber's contribution or Rs1,000 per annum, whichever is lower, to each eligible subscriber account for five years to 2019-20, who joined the NPS before 31 December 2015 and who are not income taxpayers.

Currently, eight pension fund managers manage private-sector funds and only three run by state-owned financial institutions are allowed to manage central and state government funds.

SBI Pension Funds, UTI Retirement Solutions, and LIC Pension Fund manage the government corpus. They also manage the private-sector corpus along with ICICI Prudential Pension Fund Management, Kotak Mahindra Pension Fund, HDFC Pension Management, Reliance Capital Pension Fund and the pension fund incorporated by Birla Sun Life Insurance.

http://www.domain-b.com/finance/general/20160108_exemption.html

NPS to submit applications online for settlement of withdrawal claims from April 1: PFRDA

Pension fund regulator PFRDA has made it mandatory for the subscribers of New Pension System (NPS) to submit applications online for settlement of withdrawal claims from April 1 next year.

According to a PFRDA directive, no request in physical form would be entertained with effect from April 1, 2016.

"It has...Been decided that with effect from April 1, 2016 only such withdrawal requests raised on online platform will be accepted at CRA (Central Recordkeeping Agency) system for further processing.

"Physical withdrawal request forms received at CRA will not be accepted for further processing," the Pension Fund Regulatory and Development Authority said.

NSDL is the CRA for the NPS. A subscriber can exit NPS due to superannuation, premature exit and death.

PFRDA said it is committed to support the 'Digital India' campaign of the government and efforts were being made to make various NPS related services available on online platform.

Making withdrawal process online wherein subscribers can raise withdrawal request using online platform is one of the such initiatives, it said.

"This will make withdrawal process paperless to a great extent and seamless and exit claims of the subscribers can be settled in least possible time," it said.

NPS has been implemented for all government employees (except armed forces) joining Central Government on or after January 1, 2004.

Most of the State/UT Governments have also notified the NPS for their new employees. NPS has been made available to every Indian Citizen from May 2009 on a voluntary basis.

Further, from June 2015, the Atal Pension Yojana (APY), has been launched which has given the much required impetus to the social security schemes.

NPS and APY together have more than one crore subscribers with total Asset Under Management of more than Rs 1 lakh crore.

Meanwhile the retirement fund body EPFO is also in the process of providing facility of filing PF withdrawal claims online with an ultimate aim to process such applications with 24 hours of receiving it.

http://www.business-standard.com/article/pti-stories/apply-online-for-nps-withdrawals-from-april-next-pfrda-115112200197_1.html

National Pension System (NPS) has soared to Rs 90,327 crore with the 1.15 crore subscribers

The total corpus of National Pension System (NPS) has soared to Rs 90,327 crore with the contribution of nearly 1.15 crore subscribers, the Finance Ministry said on Tuesday. The total assets under management (AUM) are worth Rs 1.09 lakh crore while AUM per subscriber on average is Rs 95,000, a finance ministry statement said. "NPS had 1.15 crore subscribers with a total corpus of Rs 90,327 crore as on January 23, 2016," it said.

NPS subscribers of central government are 14.1 percent of the total subscribers while that of the state governments are 24.9 percent. The number of NPS subscribers in the central government is 16.11 lakh with a total corpus of Rs 34,754 crore. State governments contribute Rs 45,486 crore to the corpus, from their 28.59 lakh subscribers. There are 4.48 lakh NPS subscribers in the corporate sector and 1.28 lakh in the unorganised sector. The number of subscribers under Atal Pension Yojana (APY) 19.48 lakh. The pension fund regulatory body (PFRDA) completed two years of its statutory status on February 1, 2016 and to mark this occasion, it is observing NPS Service Week from February 1-6.

During the NPS Service Week, PFRDA will create awareness about the scheme, take efforts to reduce subscribers' grievances, update subscriber details and advise subscribers regarding benefits associated with Permanent Retirement Account among others. The Pension Fund Regulatory and Development Authority (PFRDA) will also organise a Pension Conclave on February 4.

http://www.moneycontrol.com/news/economy/nps-corpus-swells-to-rs-90327-cr115-cr-subscribers_5266501.html

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