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ASHISH BHARDWAJ
USM, KURUKSHETRA
Mba,, final(a) 2015-2017

According to United Nations

Population Division World's life
expectancy is expected to reach 75
years by 2050 from present level
of 65 years. The better health and
sanitation conditions in India have
increased the life span. As a result,
number of post-retirement years
increases. Thus, rising cost of
living,
inflation
and
life
expectancy
make
retirement
planning essential part of today's
life. To provide social security to
more citizens the Government of
India has started the National
Pension System. UNO

Gift REPORT
SUMMER INERNSHIP
an SCHEME
Yourself
NATIONAL PENSION
Income
After
Retirement

A Summer Internship Program Report

On
National Pension Scheme
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Held at:

Stockholding Corporation India Limited, Chandigarh

Submitted in partial fulfillment of requirement for the award of

The Degree of

(MASTERS IN BUSINESS ADMINISTRATION)

(2015 - 2017)
Submitted to:

Submitted by:

Prof. Ramesh Chander

Ashish Bhardwaj

Dr. Naresh

MBA(A) final (9)

University School of Management

Kurukshetra University, Kurukshetra 136119

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Projec
t
report
of the

Topic: - NPS (National Pension Scheme)

Submitted by: -Ashish Bhardwaj
Class: MBA 2nd year
Roll.no.: 09 (gen.)

Summer Project Certificate

This is to certify that Mr. Ashish Bhardwaj (roll no.-09) a student
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of USM (university school of management)

has worked on a summer project titled National Pension Scheme
(NPS) at Stock Holding Corporation India Limited, regional office
Chandigarh after
Semester-2 in partial fulfillment of the requirement for the
Two year full-time MBA in finance (2015-2017). This is his
original
work to the best of my knowledge.

Date:________

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Signature _____________

Declaration
I hereby declare that the following project report titled
Increasing the value of National pension scheme in India is an
authentic work done by me. This is to declare that all the work
indulged in the completion of this work such as research, data
collection, analysis is a profound and honest work of mine.

Date:
Place: - Chandigarh

Ashish Bhardwaj
MBA (USM) 09

Acknowledgement
I would like to thank employees of SHCIL (Stockholding Corporation India Limited
for giving me an opportunity to intern with them. The training at the company was
held over a period of 45 days. During this period, I was guided by the Mr. pritesh
Kumar (branch manager of SHCIL Chandigarh). The project report and the learning
process would not have been possible without his inputs and guidance at critical
points of the project. He imparted to me the knowledge NPS. He also made sure that I
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was exposed to all the distribution channels, the operational processes and also was
exposed to the sale of NPS. Under his guidance I was able to enhance my financial as
well as marketing and inter-personal skills. During the course of the 45 days I also
came across other people who put in their time and effort towards acclimatizing me
towards the working of their organization. I express my thanks to every one of them.
These 45 days were very important to me as it helped me in going beyond the class
room and get a practical feel of how things worked.

Table of Content

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Sr.n
o.

Particular

Page
no.

Corporate profile
1.1 our identity
1.2 company key information
1. 3our retail services
1.4 our custodial services
1.5 our client
1.6 why stockholding
1.7 our values

Introduction to NPS
2.1 history
2.2 what is NPS
2.3 who can join NPS
2.4 need for NPS
2.5 salient feature of NPS

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NPS architecture
3.1 point of presence
3.2 pension fund manager
3.3 annuity service provider
3.4 trustee bank
3.5 custodian
3.6 central recordkeeping agency
3.7 NPS trust
3.8 PFRDA

18

NPS presence in various sector

22

Investment scheme
5.1 asset class E G C
5.2 scheme preference choice
5.3 rebalancing feature
5.4 scheme preference choice
5.5 contribution of fund

23

Charge structure

26

Benefits of NPS

27

Exit/fund withdrawal
8.1 types of annuity
8.2 partial withdrawal
8.3 risk management with NPS
9
Grievance management
9.1 grievance mechanism
9.2 modes of raising grievance
9.3 process of raising grievance
9.4 Escalation mechanism
10
Trend in NPS
10.1 overview of performance of NPS
10.2 scheme wise asset under management
10.3 returns
10.4 one crore subscribers
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10.5 recent data

28

30

32

Executive Summary
A NPS is a scheme in which several people invest their money for a common
financial goal retirement so that a person can live their rest life in peace and joyful
without any financial worry. Pension plans provide financial security and stability
during old age when people don't have a regular source of income. Retirement plan
ensures that people live with pride and without compromising on their standard of
living during advancing years. Pension scheme gives an opportunity to invest and
accumulate savings and get lump sum amount as regular income through annuity plan
on retirement. It started with little installments and the collected money invests in the
capital market, debt and the money market, which they earned, is divided based on the
number of units which they hold. The topic of this project is National pension
scheme in India. The NPS in India has seen dramatic improvements in quantity
as well as quality of product and service offerings in recent years. An effort has been
made to work on the concepts that have been taught in class along with other useful
parameters so that better study can be done. According to United Nations Population
Division World's life expectancy is expected to reach 75 years by 2050 from present
level of 65 years. The better health and sanitation conditions in India have increased
the life span. As a result, number of post-retirement years increases. Thus, rising cost
of living, inflation and life expectancy make retirement planning essential part of
today's life. To provide social security to more citizens the Government of India has
started the National Pension System.

1. Corporate profile

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1.1 Our identity

Stock Holding was incorporated as a Public Limited Company in 1986. It has been jointly promoted
by leading Banks and Financial Institutions. Stock Holding is a subsidiary of IFCI Limited. The
equity capital of Stock Holding is presently held by LIC, GIC, IFCI Ltd., SU-UTI, NIA, NIC, UIC,
and TOICL, all leaders in their respective fields of business.
Stock Holding, apart from being the countrys premier Custodian and Depository Participant, Stock
Holding is also the largest Professional Clearing Member; backed by an immense capacity to
process volumes with precision. To give an idea of our capability, every year we process around.

Stock Holding also provides Derivatives clearing, PF fund accounting, SGL constituent account
services, distribution of mutual funds and other capital market instruments, besides distribution of
life and non-life insurance policies.
Other offerings added to the bouquet are online net trading, loan against shares, Western Union
Money Transfer & E-stamping. In the pipeline are a host of services that will complement the range
of services offered by Stock Holding.

1.2. Company

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key information

Type of company

Public

Industry

Stock market and financial services

founded

1986

Headquarter

Mumbai Maharashtra, India

Area served

Custodial services, depository services,

e-stamping and share broking

Chairman

Mr. Ramesh N.S.G.

CEO and MD

Mr. Sanjeev vevrekar

Own product

Gold rush

Owned by

SU-UTI, IFCI Ltd., LIC, GIC, NIA, NIC, UIC,

and TOICL

Regd office address

Centre point
Unit no.-301 3rd floor
Dr bhemrao ambedkar road
MUMBAI-40012

Subsidiaries

1) SHCIL services limited

2) Stockholding Document Management
Services
Limited

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Our Mission

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1.3. Our retail services

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1.4. Our custodial services

Custodial Services
Stockholding provides first-rate custodial services to Indias leading Financial Institutions, Insurance
Companies, Mutual Funds, Foreign Institutional Investors (FIIs), Banks, Indian and Foreign
Venture Capital Companies, Funds, PF Trusts & Corporates.
Clearing & Settlement Services (Cash Segment)
Smooth Straight Through Processing (STP) systems with a choice of two reputed service providers,
enabling the competitive advantage of efficient settlements.
Seamless monitoring and constant updates on failed trades and status (T+2 basis)

Daily verification of settlements (Normal/Auction), thus mitigating systemic risks.

Efficient fund transfer facilities offering flexibility of settlement of funds through wide panel of
banks having RTGS (Real Time Gross Settlement) capabilities.
Effortless handling of residual trades in physical mode, since it has the necessary infrastructure in
place.

Electronic & Physical Safekeeping Services

Operations on both Depositories, National Securities Depository Limited & Central Securities
Depository Limited, manned by qualified, certified & experienced staff, complemented by cuttingedge back-office processes.
Comprehensive document tracking & storage systems that enable the instant tracking and status of
any investments in physical custody

Stockholding offers clients Customized reports

Customized reporting (delivery by paper & electronic media) to provide maximum value for clients.
Daily Saleable Holding Report provided before market hours to facilitate trading.
Timely Put/Call Intimations.
Forecast of redemptions and corporate actions

Premium Offerings
Online reporting / web - based of market information.
New Issue services i.e. handling IPO applications, allotments, open offers, buy-backs, ADR/GDR,
etc.
Corporate Actions Viz. Calculation of entitlements, benefit collections, Cheque/Warrant.
deposits, reconciliation and follow-ups

web-delivery
Daily trades reports, mark-to-market profit/loss reports, collateral margin reports, account
statements, outstanding position reports, span margins requirement report, and any other
relevant reports

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Technology
Stockholding has a dedicated in-house information technology support, which has won laurels from
the Smithsonian Institute, Washington and the Computer Society of India for innovative use of
technology. Stockholding uses leased lines, V-SATS (Very Small Aperture Terminals), Dial-up
modems, Multi-Protocol Label Systems, Fiber-optics and Radio links to ensure redundant
connectivity to clients, stock exchanges and depositories, besides maintaining a hot-site disaster
recovery using mirroring of data. The technology used ensures that high volume time critical
transactions are handled within a secured environment, with a zero error approach towards delivery
of products and services and a single window view of business. The sizable (over 1.2 terabytes)
Oracle database is efficiently managed in a secure environment using adequate Network Security
(Firewall, Proxy, Intrusion Detection Systems, Intrusion Prevention Systems) while the Internet
products have built in PKI features.
Personnel
Stockholding has a dedicated, highly experienced 'all-officer' team, qualified and certified as per
local requirements, with the collective man-years of experience being the highest in the Industry.
These officers are given continuous updates of knowledge and technology through training
programs.
Asset Servicing
A dedicated Corporate Actions team to ensure the timely forecast of all corporate actions & benefits
accruing on client holdings. The handling of all instrument types listed on both exchanges Bombay
Stock Exchange & National Stock Exchange, money market instruments (CPs & CDs), debt
instruments PTCs (Pass through certificates) and even unlisted securities.An exhaustive crosscountry database of Corporate Events, Book Closures, R&T Agents, Depositories, Stock Exchanges
as well as other industry-related information assiduously built up by continuous tracking of
Company, Exchange & Depository announcements, using live feeds.

Clearing Services (Futures and Options segment)

Stockholding is a Clearing Member on the Futures and Options segment of both National Stock
Exchange and Bombay Stock Exchange, offerings.
Clearing: Computing obligations of trading Members i.e. determining positions to settle.
Settlement: Performing actual settlement.
Collateral Management: Strictly adheres to specifications with efficient mechanisms for total
collateral management.
Risk Management: Total confidentiality of clients trading operations; monitoring positions on a
continuous basis.
Reports relating to the trading and settlement provided through

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1.5. Our clients

Stockholding has been providing first-rate

Custodial services spanning over 2 decades to India's leading Financial Institutions,

Insurance Companies,

Mutual Funds,

Foreign Institutional Investors (FII's), Banks,

Indian and Foreign Venture Capital Companies,

Funds, Pension Funds and

Provident Funds and Corporates.

1.6. Why stockholding

Being the pioneer, strongest knowledge base on local rules and regulations

Core competence in the securities business

Well integrated front and back office systems for paper and electronic processing

Fastest turnaround time

Excellent pedigree with highly experienced staff

Experienced in handling large settlement volumes efficiently on both exchanges, on both cash

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and derivatives segments

Well integrated front and back office systems for paper and electronic processing

No conflicting business lines

Risk mitigation with time tested systems and procedures, built in checks and balances, audits and

CISA qualified data security officers.

1.7. Our value

Safety and efficiency of the operation is the hallmark of stockholding.
Professionalism and integrity
Customer first
Relationship building
Commitment to quality irrespective of asset size

2.Introduction to NPS
2.1 History
Government of India established Pension Fund Regulatory and Development Authority (PFRDA) on
10th October, 2003 to develop and regulate pension sector in the country. The National Pension
System (NPS) was launched on 1st January, 2004 with the objective of providing retirement income
to all the citizens. NPS aims to institute pension reforms and to inculcate the habit of saving for
retirement amongst the citizens.

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Initially, NPS was introduced for the new government recruits (except armed forces). With effect
from 1st May, 2009, NPS has been provided for all citizens of the country including the unorganized
sector workers on voluntary basis.
2.2 What is NPS?
The National Pension System is an attempt towards finding a sustainable solution to the problem of
providing adequate retirement income to every citizen of India. NPS aims at ensuring financial
security to every citizen by encouraging them to start contributing towards the old age saving. This
defined contribution pension system has been designed to enable the subscribers to make optimum
decisions regarding their future through systematic savings during their working life. NPS seeks to
inculcate the habit of saving for retirement amongst the citizens.

NPS offers following important features to help subscriber save for retirement:
The subscriber will be allotted a unique Permanent Retirement Account Number (PRAN). This
unique account number will remain the same for the rest of subscriber's life. This unique PRAN can
be used from any location in India. This has a 12-digit unique number issued by Government of
India.
NPS account can be operated from anywhere in the country irrespective of individual employment
and location/geography.
Subscribers can shift from one sector to another. Hence a subscriber of Unorganized sector can
move to Central Government, State Government etc. with the same Account. Also subscriber can
shift within sector like from one POP to another POP and from one POP-SP to another POP-SP.
NPS provides secure web based interface to its subscribers through www.cra-nsdl.com
.It provides Unique I-Pin to every subscriber, with periodic password changing policy.
Subscriber can avail the following services online:
View Client master details and status of change detail requests to
Generate Portfolio query
View Transaction history showing
Pension Fund Manager
Units Allotted
NAV & Investment Value etc
Request and print for Transaction Statement to Raise Grievances against any intermediary
Reset I-Pin

2.3. Who can join NPS

A citizen of India, whether resident or non-resident, subject to the following conditions:
Subscriber should be between 18 60 years of age as on the date of submission of his/her
application to the POP/ POP-SP.
Subscriber should comply with the Know Your Customer (KYC) norms as detailed in the
Subscriber Registration Form. The Subscriber Registration form attached with this Offer
Document should be duly filled-in by the applicant and all terms and conditions mentioned

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therein should be duly complied with. All the documents required for KYC compliance need to
be mandatorily collected

2.4. Need for NPS

NPS is important for the burgeoning population of India as it provides:
Old age income security available to all citizens of India
Due to improvements in medical science and health facilities, the average life span of an individual
has improved significantly. Therefore, an individual will have to save enough to last for nearly 2
decades after he/she retires.
Increase in geographical mobility and change in social values lead to greater requirement of money
at the later stage of life of an old person.
There is considerable decline in the traditional family support for old age in urban areas due to
growing number of nuclear families.

2.5. Salient features of NPS

Following are salient features of NPS:

It is VOLUNTARY and open to every Indian citizen

It is SIMPLE all you have to do is open an account with any one of the Points of Presence and get
a PRAN
It is FLEXIBLE You choose your own investment plan and fund manger
It is PORTABLE can be operated from anywhere in the country and also if you change the job or
city
It is Regulated NPS is regulated by PFRDA, with transparent investment norms and regular
monitoring and performance review of fund managers by NPS Trust.

3. NPS architecture
NPS has an unbundled architecture where each function is performed by different entities as
mentioned below: -

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3.1Point of Presence

The Government of India (GOI) has rolled out the NPS for all citizens from 1st May 2009. Hence,
various facilities (like opening Permanent Retirement Account, contributing to NPS etc.) will be
required to be provided to all the citizens (known as Subscribers in the NPS architecture) at various
locations across India. These processes shall be carried out through the entities known as Points of
Presence (POPs) appointed by the PFRDA. POPs shall provide the services under NPS through
their network of branches called POP Service Providers (POP-SP). POPs are responsible to provides
various NPS services to subscriber including (annexure1)

Subscriber Registration
Regular subscribers contribution
Change in subscriber details
Change of investment scheme/fund manager
Processing of withdrawal request
Processing of request for subscriber shifting
Issuance of printed Account statement
Any other service prescribed by PFRDA
3.2 Pension Fund Managers
The Pension Funds (PFs) appointed by PFRDA would manage your retirement savings under the
NPS. Funds are managed by professional Fund Managers from Public & Private sector with proven
track record and as per the PFRDA approved investment guidelines. At present there are 8 pension
fund managers managing the pension wealth of subscribers. They are:

HDFC Pension Management Co. Ltd. **

ICICI Prudential Pension Fund Management Co. Ltd

Kotak Mahindra Pension Fund Ltd

LIC Pension Fund Ltd.

Reliance Capital Pension Fund Ltd.

SBI Pension Funds Pvt. Ltd

UTI Retirement Solutions Ltd

Pension Fund (PF) to be incorporated by Birla Sun life Insurance Co. Ltd

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Legal architecture of
NPS
3.3. Annuity
Providers

Service

ASPs would
be responsible
for delivering a regular monthly pension to you after your exit from the NPS. At the time of exit
from NPS for reasons other than death of the subscriber, the subscriber is required to purchase an
annuity providing for a monthly pension to the subscriber from an Annuity Service Provider
empaneled with PFRDA. In Indian context, annuities in simple terms, are financial instruments
which offer a monthly/quarterly/annual pension at a guaranteed rate for the period you choose for a
given purchase price.
Annuity Service Providers are IRDA licensed and regulated Life Insurance companies, transacting
annuity business in India and who are empaneled by PFRDA for servicing the annuity requirements
of the NPS subscribers.
Functions of ASPs

To provide Annuity services to the NPS subscribers at the time of superannuation/ annuitisation
through National Pension System as per option exercised by the subscriber.
To receive grievances from NPS subscribers during the purchase of annuity and post purchase of
annuity related to the servicing of annuity services and redressal of the grievances.

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Selection of Annuity Service Provider (ASP) the subscriber can choose from the list of selected
ASPs.
Selection of annuity scheme the subscriber will have an option to choose from the annuity
schemes available.
Option to change ASP & scheme (if already registered) before attaining retirement age.
The entire transfer of amount between NPS System and ASP will take place without any manual
intervention. At present the following 7 ASPs are providing the Annuity services to NPS subscribers:

Life Insurance Corporation of India

SBI Life Insurance Co. Ltd.

ICICI Prudential Life Insurance Co. Ltd.

HDFC Standard Life Insurance Co Ltd

Bajaj Allianz Life Insurance Co. Ltd.

Reliance Life Insurance Co. Ltd.

Star Union Dai-ichi Life Insurance Co. Ltd.

3.4. Trustee Bank

Axis Bank Ltd has been appointed by PFRDA as the Trustee Bank for National Pension System
(NPS) effective from 1st July, 2013 for an initial tenure of 2 years which is extendable annually up
to another 3 years.

Trustee Bank as an intermediary is responsible for the day-to-day flow of funds and banking
facilities in accordance with the guidelines/ directions issued by the Authority under NPS. It receives
NPS funds from all Nodal Offices and transfers the same to the Pension Funds / Annuity Service
Providers/other intermediaries as per the operational guidelines. Funds having incomplete
information or with any other discrepancy are returned back to the respective accredited banks of the
Nodal Offices for credit to the source account.

The NPS Trustee Bank accounts are maintained on behalf of the NPS subscribers and in the name of
the NPS Trust. NPS Trust is the registered owner of NPS funds. However, individual NPS
subscribers remain beneficial owners of these funds.

3.5. Custodian
Custodian shall mean Custodian of Securities who has been granted the Letter of Appointment by
the Authority for providing custodial and depository participant services for the Pension schemes
regulated by the Authority.
The custodian provides custodial services to the Pension Fund and ensure that benefits due on the
holdings are received; provide detailed information and other reports as required by the NPS Trust;
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maintain confidentiality of the transactions; and are responsible for any loss or damage to the assets
belonging to the Pension Funds due to negligence on its part or on the part of its approved agents.
The Custodian is not permitted to assign, transfer, hypothecate, pledge, lend, use or otherwise
dispose off any assets or property of the Fund, except pursuant to instruction from the Trustee.
Stock Holding Corporation of India Ltd. (SCHIL) has been appointed by PFRDA to function as
The Custodian and Depository Participant to NPS Trust and provide custodial services for
securities in physical form and Depository Participant services for securities in Demat mode.

3.6. Central Recordkeeping Agency

The recordkeeping, administration and customer service functions for all subscribers of the NPS are
being handled by NSDL e-Governance Infrastructure Limited, which is acting as the Central
Record-keeper for the NPS. NSDL e-Governance Infrastructure Limited has been appointed as
Central Recordkeeping Agency (CRA) for National Pension System (NPS) with effect from
1st December, 2007 for a tenure of 10 years.
Central Recordkeeping Agency is required to establish an internal system that delivers compliance
with standards for internal organization and operational conduct, with the aim of protecting the
interests of NPS subscribers and their assets.
Central Recordkeeping Agency carries operations as directed by PFRDA. It is responsible for
recordkeeping, administration and customer service functions for all NPS subscribers including
receiving instructions from subscribers through the points of presence, transmitting such instructions
to pension funds and effecting switching instructions received from subscribers. CRA acts as an
operational interface between PFRDA and other NPS intermediaries such as Pension Fund
Managers, Annuity Service Providers, Trustee Bank etc.

3.7. NPS trust

The National Pension System Trust (NPS Trust) was established by PFRDA on 27thFebruary, 2008
with the execution of the NPS Trust Deed. The NPS Trust has been set up and constituted for
taking care of the assets and funds under the National Pension System (NPS) in the interest of the
beneficiaries (subscribers).

3.8. PFRDA

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An autonomous body set up by the Government of India to develop and regulate the pension market
in India. The Pension Fund Regulatory and Development Authority (PFRDA) is a pension
regulatory authority which was established by Government of India on August 23, 2003. PFRDA is
authorized by Ministry of Finance, Department of Financial Services.

4. NPS presence in various Sectors

Initially launched for Central Government employees, NPS is now being offered to employees of
various State Governments, corporates, and individuals belonging to unorganized sector and
economically disadvantaged sections (NPS-Lite).

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NPS presence in various Sectors

5.Investment
schemes:
5.1 Assets Class E, G, C
The PFM will manage 3 separate schemes, each investing in a different asset class:

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Asset class E (equity market instruments) The investment in this asset class would be subject to a
cap of 50%. This asset class will be invested in index funds that replicate the portfolio of a particular
index such as BSE Sensitive index and NSE Nifty 50 index. These schemes invest in securities in
the same weightage as comprised in an index.
Asset class G (Government Securities) This asset class will be invested in central government
bonds and state government bonds.
Asset class C (credit risk bearing fixed income instruments) This asset class will be invested in the
following instrument

Liquid Funds of AMCs regulated by SEBI with the following filters:

o AMCs are SEBI regulated, with Average total assets under management (AUM) for the most recent
six-month period of, at least, Rs.5000 crores.
o All assets that are permitted for investment into liquid funds by SEBI.
Fixed Deposits of scheduled commercial banks with following filters:
Net worth of at least Rs.500 crores and a track record of profitability in the last three years.
o Capital adequacy ratio of not less than 9% in the last three years. Net NPA of under 5% as a
percentage of net advances in the last year
Debt securities with maturity of not less than three-year tenure issued by bodies corporate including
scheduled commercial banks and public financial institutions [as defined in Section 4 (A) of the
Companies Act] provided that at least 75% of the investment in this category is made in instruments
having an investment grade rating from at least one credit rating agency.
Credit Rated Public Financial Institutions/PSU Bonds
Credit Rated Municipal Bonds/Infrastructure Bonds.

5.2. Scheme preference choice

The NPS offers two approaches to invest subscribers money:
o Active choice - Individual Funds (Asset class E, C, G)
o Auto choice - Lifecycle Fund
Active choice - Individual Funds
Subscriber will have the option to actively decide as to how his NPS pension wealth is to be invested
in the available three options. Subscriber can invest his/her entire pension wealth in C or G asset
classes and up to a maximum of 50% in equity (Asset class E), subject to conditions prescribed by
PFRDA. In case the subscriber decides to actively exercise his choice about investment options, he
shall be required to indicate his choice of Pension Fund from among the six Pension Funds (PFM)
appointed by PFRDA

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Auto choice - Lifecycle Fund

NPS offers an easy option for those participants who do not have the required knowledge to
manage their NPS investments. In case subscriber is unable / unwilling to exercise any choice,
then the funds will be invested in accordance with the Auto Choice option.
In this option, the investments will be made in a life-cycle fund. The fraction of funds invested
across three asset classes will be determined by a pre-defined portfolio. At the lowest age of
entry (18 years), the auto choice will entail investment of 50% of pension wealth in E Class,
30% in C Class and 20% in G Class. These ratios of investment will remain fixed for all
contributions until the subscriber completes 35 years of age. From age 36 onwards, the weight
in E and C asset class will decrease annually and the weight in G class will increase
annually till it reaches 10% in E, 10% in C and 80% in G class at age 55. (annexure 2)

5.3. Rebalancing feature

As per PFRDA guidelines rebalancing of assets takes place in either of the below mentioned
situations
If Active Choice
A cap of 50% on investment under Equity scheme is applicable. In case this limit is
exceeded, rebalancing will need to be carried out once in a year on the date of the birth
of subscriber.
If Auto Choice
Dynamic (system driven) rebalancing across scheme as per the age wise allocation ratio
will be carried out on the date of birth of the subscriber.

5.4. Scheme Preference Change

NPS offers to its subscribers the option to change the scheme preference. Subscriber has option
to realign his investment in asset class E, C and G based on age and future income requirement.
Also, the subscriber has option to change the PFM and the investment option (active /auto
choice). In case the subscriber opts for a New Scheme Preference then the same will be
applicable to both past as well as prospective investments.
5.4.1. In case of Active Choice
Scheme preference will lead to switch of the entire corpus accumulated till then. All
investment will have to be in line with the current scheme preference.
A cap of 50% on investment under Equity scheme is applicable. In case this limit is
exceeded, rebalancing will need to be carried out once in a year.

5.4.2. In case of Auto Choice

Age wise allocation pattern is applicable on the total corpus and not only on fresh investment.
Dynamic (system driven) rebalancing across scheme as per the age wise allocation ratio will
be carried out on the date of birth of the subscriber.
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5.5. Contribution Payment

The subscriber is required to make first contribution at the time of applying for registration for
Tier I & Tier II account at any POP-SP. The contribution payment for Tier I & Tier II account
is subject to the following:
Contribution Amount
Tier I

Tier II

Minimum Contribution at the time of

account opening

Rs. 500

Rs. 1000

Minimum amount per contribution

Rs. 500

Rs. 250

Minimum total contribution in the year

Rs. 6000

Rs. 2000

Minimum frequency of contributions

1 per year

1 per year

To make contribution payment, the subscriber is required to approach the nearest POP-SP
branch. The subscriber can contribute through the following modes:
o Cash
o Local cheque (postdated cheques
acceptable)
o Demand draft
o Electronic clearing service (ECS): If this facility is provided by POP.

TIER-1

Over and above the mandated limit of a minimum of one contribution, you may decide on the
frequency of the contributions across the year as per your convenience.
Tier-2
Penalty of Rs. 100/- to be levied on the subscriber for not maintaining the minimum account
balance and/or not making the minimum number of contributions

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6. Charges structure
NPS Charges Matrix:
following are the charges under NPS
All the charges associated to Tier I account including Annual PRA Maintenance charge are paid
by the employer. In case of Tier II account, activation charge and transaction charges are paid by
the subscriber.
The POP charges and the CRA charges are given in the table below:

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7. Benefits of NPS

Some of the benefits of the National Pension System (NPS) are:

It is transparent - NPS is transparent and cost effective system wherein the pension contributions
are invested in the pension fund schemes and the employee will be able to know the value of the
investment on day to day basis.
It is simple - All the subscriber has to do, is to open an account with his/her nodal office and get
a Permanent Retirement Account Number (PRAN).
It is portable - Each employee is identified by a unique number and has a separate PRAN which
is portable i.e., will remain same even if an employee gets transferred to any other office.
It is regulated - NPS is regulated by Pension Fund Regulatory and Development AuthorityExternal website that opens in a new window, with transparent investment norms & regular
30 | P a g e

monitoring and performance review of fund managers by NPS Trust- External website that opens
in a new window.
Tax benefits- Presently, the tax treatment for contribution made in Tier I account is ExemptedExempted-Taxed (EET) i.e., the amount contributed is entitled for deduction from gross total
income up to Rs.1.00 lakh (along with other prescribed investments) as per section 80C (as per
the provisions of the Income Tax Act, 1961 as amended from time to time).
The appreciation accrued on the contribution and the amount used by the subscriber to buy the
annuity is not taxable. Only the amount withdrawn by the subscriber after the age of 60 is
taxable.
By subscribing to corporate NPS, both you and your employer stand to gain:
The employee contribution up to 10% of basic plus DA is deductible under Section 80 CCD
within the limit of Rs 1 lakh
The employer's contribution up to 10% basic plus DA is allowed as deduction under Section
80CCE over the Rs 1 lakh limit
The employer can claim tax benefits by showing the amount contributed towards pension of
employees as 'business expense'.
The tax benefit on employer's contribution has been offered since December 2011.
The contribution towards NPS will be over and above the mandatory contribution towards the
Employee Provident Fund.
Over 250 corporate houses have registered with the NPS for offering pension benefits to their
employees

8. Exit/fund withdrawal

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8.1. Types of Annuity

The subscriber can purchase an annuity from any one of the PFRDA empaneled annuity service
providers as per his choice or selection of the annuity type. Currently, the Indian life insurers
who act as Annuity Service Providers provide the following type of annuities in India:
Pension (Annuity) payable for life at a uniform rate to the annuitant only.
Pension (Annuity) payable for 5, 10, 15 or 20 years certain and thereafter as long as you is alive.
Pension (Annuity) for life with return of purchase price on death of the annuitant(Policyholder).
Pension (Annuity) payable for life increasing at a simple rate of 3% p.a.
Pension (Annuity) for life with a provision of 50% of the annuity payable to
spouse during his/her lifetime on death of the annuitant.
Pension (Annuity) for life with a provision of 100% of the annuity payable to
spouse during his/her lifetime on death of the annuitant.

8.2. Partial withdrawal

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 A partial withdrawal of accumulated pension wealth of the subscriber,

o Not exceeding twenty-five per cent of the contributions made by the NRI
o NRI shall have to be in National Pension System at least for a period of last ten years

o
o
o
o

Purposes for which partial withdrawal allowed

For the purpose of higher education of his/her children,
For marriage of his/her children,
For purchase or construction of residential house or flat
For treatment of specified illnesses.

Frequency of partial withdrawal

o Maximum 3 (three) times during entire tenure,
o Minimum 5 (five) years gap between consecutive withdrawals,

8.3. Risk Management with NPS

NPS offers individual to manage risks effectively through the:

Option to remain invested even after retirement.

o Unlike other pension plans NPS gives subscriber an option to remain invested in the
scheme even after the age of retirement. Hence even after the age of 60, an
individual, if not in need of money can remain invested in NPS and gain improved
returns.
50% cap on equity with rebalancing feature.

o To protect the subscribers contribution from the uncertainties of the equity market, the
investment in equity is limited to 50%
Auto choice option.
Where the subscriber doesnt have financial knowledge, the contribution will be made in a predefined portfolio in which the share of equity in the portfolio goes down as the age of the
subscriber increases.
Option to switch PFM & change asset allocation ratio.
o Subscriber has option to change PFM if he is not satisfied with the performance of fund, charge
structure, quality of service etc.
o Subscriber has option to revise the asset allocation ratio based on age and financial goals.

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9 Grievance Management
PFRDA has set up a centralized grievance redress mechanism to facilitate complaints from
customers as well as any intermediaries involved. This system ensures that the grievances
can be captured through multiple channels and are addressed in a time-bound manner.
9.1. Grievance Mechanism
Central Grievance Management System (CGMS) is the platform to register grievances for all
entities in CRA system. A subscriber can raise grievances against CRA for services provided by
CRA and POP/ POP-SP.

Key Feature of NPS Grievance Mechanism

The key features of NPS grievance mechanisms are
Centralized and transparent platform for grievance resolution.
Stipulated timeframe to resolve grievance.
Unresolved grievance gets escalated.
Email alert sent to concerned entity on resolution/ escalation.
Centrally monitored by PFRDA.
9.2. Modes of raising Grievance
The subscriber can raise grievance through any of the modes mentioned below:

Call Centre/Interactive Voice Response System (IVR)

o The Subscriber can contact the CRA call Centre at toll free telephone number 1-800-222080
and register the grievance by using T-PIN.
o Dedicated Call Centre executives.
Physical forms direct to CRA
o The Subscriber may submit the grievance in a prescribed format to the POP SP who would
forward it to CRA Central Grievance Management System (CGMS).
o Subscriber can directly send form to CRA.
Web based interface
o The Subscriber may register the grievance at the website www.npscra.nsdl.co.in with the use of
the I-pin allotted at the time of opening a Permanent Retirement Account

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9.3. Process of Raising Grievance

9.4. Escalation Mechanism

CGMS has both automatic and manual escalation mechanism for monitoring the status of the
grievance. The system has Maker-Checker concept in case of resolution of the entire Escalated
Grievances . Where the subscriber is not satisfied with the resolution provided, he has the option
to escalate the same to next higher level.
If the subscriber does not receive any response within 30 days or is not satisfied with the
resolution by CRA, he/she can apply to the Grievance Redress Cell (GRC) of PFRDA.
Complete address of the GRC of PFRDA is as under:
Grievance Redress Cell
Pension Fund Regulatory and Development Authority
1st Floor, ICADR Building, Plot No 6, Vasant Kunj,
Institutional Area, Phase II,
New Delhi 110070,
Tel no 011 26897948-49, Fax: 011-26892417,
Email: grcpfrda@gmail.com

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10. Trend in NPS

As a result of implementation of National Pension System (NPS), all employees of the Central
Government and Central Autonomous Bodies, with the exception ofthe armed forces, are now
mandatorily covered by this defined-contribution scheme with effect from January 1, 2004.
Subsequently, 26 State Governments have notified NPS for its employees. Two states,
West Bengal and Tripura, have not joined NPS. The subscriber base for the mandatory
government sector has crossed 3.35 million with AUM of ` 44,400 crore as on March 31, 2014.
The NPS was opened to all citizens of India from May 1, 2009, on voluntary basis. The
subscriber base of All Citizen as on March 31, 2014 is 3.41 lakh with AUM of ` 2,892 crore.
Subsequently, NPS Swavalamban, a model specifically designed to bring NPS within easy
reach of the economically disadvantaged sections of the society was introduced in Budget 201011. Since then, about 28.16 lakh subscribers have registered under this model and AUM under
this scheme is ` 844 crore, as on March 31, 2014.

10.1. Overview of Performance of National Pension System

As on March 31, 2014 the total number of subscribers were 6.5 million comprising of 1.4 million
Central Government and Central Autonomous Bodies employees (accounting for about 21 per
cent of the total subscriber of NPS), about 2 million State Government and State
autonomous bodies employees (31 percent), 2.8 million Swavalamban subscriber (accounting for
43 per cent of total number of subscribers) and 3.4 lakhs (5 per cent) subscribers from All
Citizen variant.

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The Assets Under Management (AUM)under the NPS is at ` 48136 crore as attend March 2014
of which the Central Government and Central autonomous entities accounted for the 50 per cent
of the total assets, the State Government/State Autonomous entities for 42 percent, All Citizen
for 6 per cent and the NPS Lite /Swavalamban for about 1.8 per cent of the total assets under
management.

Year-wise details of subscriber under various sectors with annual percentage increase over the
previous year are given in the Year on year growth of subscribers under NPS during the last 5
years i.e. from end Key achievements of NPS during the FY 2013-14 are as under:

o During FY 2013-14, enrolment of subscribers in NPS increased by 17.45 lakh to reach 65.06
lakh as on March 31, 2014, registering a growth of 36.7 per cent.
o

During FY 2013-14, Assets under Management increased by ` 18,284 crore to reach ` 48,136
crore as on March 31, 2014, registering a growth of 61.2 percent.

The growth of 61.2 per cent in AUM is supported by growth of 114.1 percent by All Citizen,
93.5 percent by NPS Swavalamban and 92.7 per cent growth by State Govt. subscribers.

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o As on March 31, 2014, 26 State Governments have notified and adopted NPS, of which 23 States
have commenced transfer of funds. While Arunachal Pradesh has taken further steps to
operationalize NPS, Maharashtra and Tamil Nadu are yet to operationalize this scheme.
o As on March 31, 2014, 79 Aggregators have been registered with PFRDA under the
Swavalamban initiative launched for economically weaker sections of society.
o As on March 31, 2014, 61 Points of Presence with a collective distribution network of about
36,030 branches are NPS enabled.
o There is an increase in share of AUM of subscribers from State Government, All Citizen
subscribers and Swavalamban in March 31, 2014 from March 31, 2013. However, the share of
AUM of Central Government subscribers in total AUM has declined from 58.9
percent in March 31, 2014 to 50.2 percent in March 31, 2013.

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o There is an increase in share of number of All Citizen subscribers and Swavalamban subscribers
in March 31, 2014 from March 31, 2013. However, the percentage
share of number of Central Government and State Government subscribers have declined during
the same period.

AUM per subscriber for NPSLite/Swavalamban subscribers is low at `0.03 lakh compared to
average AUM per subscriber of ` 0.74 lakh. However, the AUM per subscriber has improved
under all the variants of NPS scheme.
o During the FY 2013-14, there is growth of 36.7 per cent in subscribers base of NPS supported
by growth of 59.7 per cent by All Citizen, 58.2 per cent by NPS Lite/Swavalamban and 22.5 per
cent growth by State Government subscribers.
o

10.2. Scheme wise Assets under Management

The Assets under Management of NPS Schemes witnessed an overall growth of 61.2 percent
during the financial year 2013- 14, as shown in Table 2.5. All the schemes of NPS have
witnessed double-digit growth. Scheme E and Scheme Corporate CG saw a triple-digit increase
in its Assets. Scheme CG for central government employees posted around 39.7 percent growth
in its AUM during the year. On the other hand, Scheme SG and NPS Lite assets grew by 86.7
39 | P a g e

percent and 93.5 percent during the year. The high growth rate in AUM is partly due to low base.
Though the share of CG scheme in total AUM is highest at 50 percent, it has declined from 74
percent at end March 2011 to 50 percent at end March 2014. The shares of AUMs of other
schemes have improved over the last three years i.e. from March 2011 to March 2014. Scheme
wise AUM of the Pension Funds as on March 31, 2014.

10.3. Returns
The weighted average returns (since inception) of NPS Schemes

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10.4. ONE Crore Subscribers for National Pension System (NPS) as on 23.1.2016

National Pension System (NPS) had 11,459,555 subscribers with a total corpus of Rs.
90, 327 crore as on 23rd January, 2016. The total Assets under Management are worth Rs.
109,140 crore while Assets under Management per subscriber is Rs. 95,000 on an
average.

The number of NPS Subscribers of the Central Government are 1611,020 with a total
corpus of Rs. 34,754 crore while subscribers from the different State Governments are
2,859,094 with a total corpus of Rs. 45,486 crore. The number of NPS subscribers in the
Corporate Sector are 448,509 while in Unorganized Sector is 128,484, the total being
576,993. The number of subscribers under NPS Lite include 4,463,637 and under Atal
Pension Yojana (APY) 1,948,811, with a total number of subscribers 6,412,448 in these
two categories.

NPS subscribers of Central Government are 14.1% of the total subscribers while that
of the State Governments are 24.9%. The NPS subscribers under NPS Lite constitute
39% while under APY 17% of the total subscribers.

41 | P a g e

The Pension Fund Regulatory and Development Authority (PFRDA) is organizing

the 2nd Pension Conclave in national Capital on 4th February 2016 with the theme,
Towards Universal Pension: Coverage, Adequacy and Sustainability in which all the
stake holders are expected to participate and share their experiences. PFRDA proposes to
use this occasion to acknowledge/award the best performing banks and Post Offices in
mobilization and registration of subscribers under the Atal Pension Yojana (APY) up to
31st December 2015, and institute awards for best performing POPs under the Voluntary
segment of the National Pension System.

Earlier, PFRDA launched NPS Awareness Programme for State autonomous bodies,
Unorganized Sector, Corporate Sector and other categories in order to highlight the
benefits of joining NPS and has requested the various State Governments to implement
NPS more inclusively among the State Autonomous Bodies, Boards, Corporations,
Societies, Universities and State aided institutions under various State Government
departments. During the awareness programme, key features and benefits of NPS, details
and process of joining NPS, details about NPS architecture investment and exit
guidelines of NPS are highlighted.

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10.5. Recent data

FY 2016-17 up to
31/May/2016
(cumulative)

No. of
Subscriber
s

Total
Contribution
M&B (Crs)*

AUM (Crs)

Central Government

1,682,091

37,914.02

50,832.78

State Government

2,993,766

51,062.47

61,869.03

Corporate Sector

488,598

8,897.91

10,078.07

Unorganized Sector

231,766

1,394.39

1,480.48

NPS Swavalamban

4,469,996

1,889.46

2,240.80

Total

9,86,6217

101,158,26

126,501.15

At the end of FY
2015-16 (cumulativ
e)

No. of
Subscriber
s

Total
Contribution
M&B (Crs)*

AUM (Crs)

Central Government

1,657,623

36,329.43

48,135.03

State Government

2,923,882

48,006.60

57,498.27

Corporate Sector

473,515

8,348.75

9,290.05

Unorganized Sector

215,372

1,218.85

1,272.88

NPS Swavalamban

4,480,014

1,792.48

2,107.55

Total

9,750,406

95,696.11

118,303.78

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Tables and graphs

Sr. no.

Title

page

Contribution table

24

Charge structure

25

Exit/fund withdrawal

27

Subscribers under NPS

31

Asset under management

32

Comparative position of NPS

33

Returns

35

Asset class wise classification

37

Recent trend

38

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Annexure 1.

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GLOSSARY

NPS -NATIONAL PENSION SCHEME

CRA- CENTERAL RECORDKEEPING AGENCY

AMC -ASSET MANAGEMENT COMPANY

AUM -ASSET UNDER MANAGEMENT

SAB -STATE AUTONOMOUS BODY

CAB-CENTERAL AUTONOMOUS BODY

CRA-FC CRA FACILITATION CENTER

DSC- DIGITAL SIGNATUTRE CERTIFICATE

NSDL- NATIONAL SECURITY DEPOSTORY LIMITED

PRAN- PERMANENT RETAIREMENT ACCOUNT NUMBER

PAN-PERMANENT ACCOUNT NUMBER

PFRDA-PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY

CGMS-CENTRAL GRIEVANCEMANAGEMENT SYSTEM

V-SATS -VERY SMALL APRATURETERMINAL SYSTEM

POP-PERSON OF PRESENCE

POP-SP -PERSON OF PRESENCE SERVICE PROVIDER

KYC-KNOW YOUR CUSTOMER

GRC-GRIEVANCE REDRESS CELL

PFM-PENSION FUND MANAGER

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REFFERANCES
http://www.npstrust.org.in
https://nsdl.co.in/
https://india.gov.in/spotlight/national-pension-system-retirement-plan-all
http://www.businesstoday.in/
http://www.hdfcsec.com/Product-Services/New-PensionScheme/201008230423175468750
http://www.stockholding.co.in/

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