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NATIONAL PENSION SYSTEM
The National Pension System (NPS), launched by the Government of India for its citizens to bring an attractive long term savings avenue to effectively plan for your retirement through safe and reasonable market-based returns. NPS is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). PFRDA has appointed NSDL e-Governance Infrastructure Ltd. as the Central Record keeping Agency (CRA) for NPS to promote old age income security to all Citizens of India (Resident or Non-Resident) with effect from May 1, 2009.
NPS is an easily accessible, low cost retirement savings account. Under the NPS, the individual contributes to his retirement account. NPS is a voluntary Pension System open to all citizens in the age group of 18-65 years. The objective is to provide old age pension; reasonable market based returns over long term.
Attention is invited to Staff Circular no. 5668 dated 26.05.2010 and no. 5677 dated 24.06.2010 whereby details of salary revision as per memorandum of Settlement dated 27.04.2010 signed with representative Workmen Unions and Joint Note dated 27.04.2010 signed with representative Officers’ Organizations were circulated. In terms of aforesaid settlement and joint note, the Bank employees’ Pension Regulation, 1995 dated 29th September 1995 / 26th March 1996 shall not apply to the employees who join the services of the Bank on or after 01.04.2010. Union Bank of India adopted NPS for employees’ w.e.f 01.04.2010. Employees joining after this date will be issued a Permanent Retirement Account Number (PRAN) card and having 12 digit unique numbers.
- These employees shall contribute from the month following the month in which they have joined the Bank, 10% of Pay and Dearness Allowance towards the defined contributory Pension Scheme.
- Bank shall make a matching contribution in respect of these employees. The contribution will continue till the employer-employee relationship exists.
- Funds collected under the scheme will be transferred to trustee Bank i.e. Axis Bank as appointed by PFRDA for NPS. NPS Trust will manage the funds.
- No Joint account in NPS
- No multiple NPS account allowed.
- NPS Trust shall specify, from time to time, the PFM(s) who may manage the funds. Presently, the funds are allocated to:-
Annuity Service Provider
- LIC of India
- HDFC Life Insurance Co. Ltd.
- ICICI Prudential life insurance Co. Ltd.
- SBI life insurance Co. Ltd.
- Star Union Dai-ichi life insurance Co. Ltd.
- HDFC Pension Fund
- ICICI Prudential Pension Fund
- Kotak Pension Fund
- LIC Pension Fund
- Reliance Capital Pension Fund
- SBI Pension Fund
- UTI Retirement Solutions
- Birla Sun Life Pension Scheme
- Investment pattern will be as per the Central Government Scheme which is in line with the present pattern of investment by the Bank.
- Returns would depend on the market conditions.
- Corpus details of individual members’ contribution will be maintained by NSDL who is the Central Record – keeping Agency (CRA) for this purpose.
- The employees can view the daily NAV of the corpus at the NSDL website npscra.nsdl.co.in or enquire using IPIN which is allotted at the time of registration.
- Pension Fund Regulatory and Development Authority (PFRDA) established by the Government of India, Ministry of Finance will monitor the scheme.
- Retirement Benefits will be looked after by the Annuity Service Provider as per the prescribed rules.
- Contributions towards NPS is eligible for tax benefit. As per Union Budget 2015-16, the tax benefit under NPS, where employee and employer both contribute towards the corpus, has been raised to Rs.150000/- (under section 80CCE) from earlier Rs.100000/-.
- Besides the above another additional tax benefit of Rs.50000/- (under section 80 CCD (1B)) has also been provided to the subscriber where the subscriber can contribute voluntarily is credited in Tier 1 of the PRAN account.
- The total tax benefit available, where the subscriber contributes voluntarily to the tune of Rs.50000/-, thus will be for Rs.200000/-. There will be no Bank contribution towards the additional amount of Rs.50000/- as it is voluntarily in nature.
- In case the employee + employer contribution is less than Rs.150000/-, say Rs.100000/-, the amount qualifying for the benefit under section 80CCE will be Rs.100000/- only. It can’t be clubbed with 80 CCD (1B). Neither can there be any voluntary contribution under section 80CCE under corporate structure of NPS followed by Banks.
- Extension of additional tax benefit of Rs.50000/- under NPS to all staff members covered under old pension scheme.
Under NPS account, two sub-accounts – Tier I & II are provided. Tier I account is mandatory and the subscriber has option to opt for Tier II account opening and operation. The following are the salient features of these sub-accounts:
- Tier-I account: A non-withdrawable retirement account which can be withdrawn only upon meeting the exit conditions prescribed under NPS.
- Tier-II account: This is a voluntary savings facility available as an add-on to any Tier-1 account holder. Subscribers will be free to withdraw their savings from this account whenever they wish.
PRAN Account Creation
- Step 1: Duly fill up the CSRF-1 form. This form is already provided in the Welcome kit.
- Step 2: Fulfill the KYC norms as per instructions given in the form.
- Step 3: Submit the form along with the required documents and duly completed in all respect to your Regional Office for their onward submission to CRA-FC.
- Step 4: The PRAN is generated within 10-15 days of submission of forms.
- Step 5: The PRAN kit is dispatched at the “present” address mentioned in the form.
- Step 6: PRAN kit contains PRAN card, I-pin, T-pin. With the help of I-pin one can view the transactions of the PRAN account.
KYC Documents Required
- Photo copy of PAN card.
- Proof of permanent and present address.
- One cancelled cheque of your bank account.
- One Passport size latest photograph.
- Read carefully the instructions given in the form CSRF-1.
If PRAN Is Already Availed
- Those who have already obtained PRAN in their previous organization they need to submit CS-S3 form for shifting of PRAN to our Bank’s POP. This form is available at UBINET and can also be obtained from respective ROs.
What Happens To the Fund Deducted?
- The deduction @10% of the “Basic + DA” is made from the salary of the employee and an equal amount is contributed by the Bank.
- For all branches of one RO, funds thus deducted are parked into a pool account maintained by RO.
- After reconciliation of funds, RO remits the fund to Central NPS Pool Account. This is done within 2 to 3 days of salary.
- This fund is then remitted to the trustee bank centrally. The details of Employee-wise contribution are submitted to NSDL.
- The contribution is visible in employees’ PRAN account statement within T+7 days (From date of remittance).
Exit from NPS
Following EXIT options are available to the subscribers.
- Normal Retirement : On attaining Normal Retirement age of 60 years, subscriber is required to invest minimum 40% of his/her accumulated savings (pension wealth) to purchase a life annuity from any IRDA-regulated life insurance company and remaining pension wealth can be withdrawn as lump sum or in phased manner.
The withdrawal can be differed up to 10 more years i.e. 70 years of age. But there will be no more contribution to the account after 60 years of age. When the subscriber turns 70 the PRAN account is closed and any amount lying in credit in the account should be withdrawn in lump sum compulsorily.
- Pre mature Retirement: At any point in time before 60 years of Age. Subscriber would be required to invest at least 80% of the Pension wealth to purchase a life annuity from any IRDA – regulated life insurance company. Rest 20% of the pension wealth may be withdrawn as lump sum.
- Death of subscriber: In such an unfortunate event, option will be available to the nominee to receive 100% of the NPS pension wealth in lump sum.
- As per regulation 4(b) of PFRDA (Exit & Withdrawal from NPS) Regulation 2015, subscriber can exit from the NPS if the subscriber having subscribed to the national pension system for at least a minimum period of ten years
Partial Withdrawal is allowed to the subscriber subject to subscriber fulfilling the following conditions and withdrawal can happen only against specified reasons:
- Subscriber should be in NPS for 3 years
- Amount should not exceed 25% of the contributions made by the subscriber.
- Maximum 3 times during the entire tenure of subscription for specific reason only
- Higher education of Children
- Marriage of Children
- Purchase / Construction of House
- Treatment of critical illness.
Circulars towards National Pension System (NPS)
Staff Circular No. 5834 dated 01.03.2012
Staff Circular No. 6320 dated 20.02.2016
Staff Circular No. 6326 dated 03.03.2016
Staff Circular No. 6744 dated 24.01.2018