The National Pension System (NPS) is financial security and stability during old age when people don’t have a regular source of income. It is offered by the government under a retirement cum pension scheme.
A pension scheme gives an opportunity to invest and accumulate savings and get a lump sum amount as regular income through an annuity plan on retirement. The investors get the dual benefit of tax-saving and retirement planning, by investing in it. It provides a benefit to individuals by way of a deduction under Section 80C.
It not only secures your retirement planning but also saves taxes of up to Rs 1,50,000 a year. Both private and government employees can invest in NPS. The Pension Fund Regulatory and Development Authority (PFRDA) has introduced few changes in NPS.
Transaction in NPS via NACH mandate
The Pension Fund Regulatory and Development Authority has enabled the National Automated Clearing House (NACH) mandate in NPS transactions to curb the existing challenges in the fund transfer process. The complete transaction process will become digital for Point of Presence (PoP) and other NPS distributors, with the help of the NACH mandate.
PFRDA introduced the NACH mandate jointly by Trustee Bank and Central Record-Keeping through the National Automated Clearing House operated by the National Payments Corporation of India.
Withdraw Entire Accumulated Pension Wealth
NPS subscribers are allowed to withdraw the entire accumulated pension wealth without purchasing an annuity if the pension amount is less than Rs 5 lakh, on maturity. To date, the subscriber can withdraw up to 60 percent of the amount accumulated in the account. Other 40 percent is used in the purchase of an annuity plan.
Relaxation in timelines
Timelines for activities under NPS and NPS Lite- Swavalamban scheme has been relaxed by PFRDA. Point of Presence (POPs) are advised to undertake NPS related activities within prescribed Turn Around Time (TAT) under the Pension Fund Regulatory and Development Authority (Point of Presence) Regulations, 2018, and guidelines issued there-under, to ensure timely and efficient service to subscribers, the pension regulator mentioned.
Partial Withdrawal via self-declaration
To make the process of partial withdrawal simple for NPS subscribers, it was decided to allow them the partial withdrawal based on self-declaration and thereby doing away with the submission of supporting documents to substantiate the reason for partial withdrawal.
Deposit contributions under D Remit
Subscribers can now deposit contributions into their accounts under D Remit (or direct remittance) using IMPS. The pension regulatory said, “PFRDA is pleased to announce the enablement of contribution by subscribers into D Remit by using Immediate Payment System (IMPS), the instant fund transfer facility provided by National Payment Corporation of India (NPCI).”