National Pension Scheme

GoI has initiated a National Pension Scheme (NPS), by opening pension scheme which till now was only applicable to its employees (22 state & UT Govts have also notified the scheme for its employees), to all the citizens of India. The scheme is on a voluntary basis.

Initially the scheme was to be implemented from 1 April 2009, which due to elections will now be started effective 1 May 2009. PFRDA (Pension Fund Regulatory & Development Authority) is the authority which has ben made responsible for creating the necessary architecture for the same.

The scheme being suggested by PFRDA is to allow a citizen to open an account. The contributions being made by an individual will be invested by professional fund managers, Investments will be in line with guidelines issued by the Govt to non-government Provident Funds.

The New Pension System reflects Government’s effort to find sustainable solutions to the problem of providing adequate retirement income. 

The framework that PFRDA has set-up would allow a subscriber to monitor his/her investments and returns under NPS, the choice of Pension Fund Manager (PFM) and the investment option would also rest with the subscriber. The design allows the subscriber to switch his/her investment options as well as pension funds. The facility for seamless portability and switch between PFMs is designed to enable subscribers to maintain a single pension account throughout their saving period. Efforts have been made to make the architecture transparent and web-enabled. 

PFRDA has set up a Trust under the Indian Trusts Act, 1882 to oversee the functions of the PFMs.  The NPS Trust is composed of members representing diverse fields and brings wide range of talent to the regulatory framework.