PROJECT REPORT

ON

PFRDA
(Pension Fund Regulatory and Development Authority)

ECONOMICS

BY GROUP 2 :-
- Anushka Sethi
- Jipsa Gautam
- Madhurima Ekka
- Rohini Khemnar
- Dhruv Chandra
- Arghya Rai
- Arnaz Sethna

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 INDEX

Chapter 1……………………………………………………………03
Introduction……………………………………………………….03
History & Background …………………………………….….04
Functions……………………………………………………………05
Chapter 2……………………………………………………………06
How does it monitor…………………………………………..06
Key persons involved………………………………………….09
Role of government…………………………………………...11
Chapter 3……………………………………………………………12
Operating Intermediaries.......…………………………....12
Case Study………………………………………………………....16
Chapter 4……………………………………………………………17
Bibliography……………………………………………………....17

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 Chapter 1
Introduction

Pension Fund Regulatory and Development Authority is the regulatory

body under the administration of Ministry of Finance , Government of India.
In the year 1999, the Government of India authorized a national project titled
“OASIS” (an acronym for old age social & income security) to survey policy
related to old age income security in India. Based on the advises of the OASIS
report, the Government of India introduced a new Defined Contribution
Pension System for the new entrants to Central/State Government service,
except to Armed Forces, replacing the existing system of Defined Benefit
Pension System.
Interim Pension Fund Regulatory & Development Authority was established on
23rd August, 2003 through an intention by the Government of India to
promote, develop and regulate pension sector in India. On 22nd December
2003, the contributory pension system was informed by the Government of
India, now named the National Pension System (NPS).

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 History & Background

The Indian government commissioned OASIS (Old Age Social and Income
Security) in 1999 to investigate the policy surrounding old age income security
in India. Excepting for the military forces, the government implemented a new
Defined Contribution Pension System for new entrants to Central/State
Government employment, in view of the OASIS report. It was created to
supplant the previous Defined Benefit Pension System.

The government established the Interim Pension Fund Regulatory and

Development Authority on August 23, 2003, to promote, develop, and regulate
the pension sector in India and protect the financial security of the elderly. On
December 22, 2003, the government announced the contributory pension
scheme, presently known as the NPS, which took effect on January 1, 2004.
Initially, the NPS was exclusively available to government employees, but it
was later expanded to everyone on a voluntary basis, including entrepreneurs
and anyone working in the unorganised sector, with effect from 1 May 2009.
The Government of India passed the Pension Fund Regulatory and
Development Authority Act on September 19, 2013, to regulate the NPS, and it
took effect on February 1, 2014. The NPS is now regulated by PFRDA and is
under the Ministry of Finance's jurisdiction. Its goal is to encourage the
pension market's orderly expansion and development.

The PFRDA is a quasi-government organisation with headquarters in New Delhi

and regional offices around India. It is a Central Autonomous Body of the
Government of India. It has executive, legislative, and judicial authorities akin
to the RBI, SEBI, and IRDA, as well as other regulators of the Indian financial
sector. It is in charge of administering and regulating the NPS, as well as APY.
The primary intention in running the PFRDA is to ensure that residents have a
reliable pension fund when they leave their occupations (be they government
or private).

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 Functions

1. Promote the country's pension system by encouraging both required and

voluntary pension schemes to meet retired personnel's later life income
demands.
2. Raising awareness of the importance of pensions among the general public
and stakeholders.
3. Intermediary's training for the purpose of popularising and teaching the
public about the necessity of pensions.
4. Regulate NPS and pension systems covered by the PFRDA Act.
5. Create, grow, and supervise pension funds.
6. Defend the interests of subscribers to pension funds.
7. Identify and manage intermediates.
8. Approve schemes, terms and conditions, and set standards for the
management of pension fund assets.
9. Encourage the formation of a professional organisation associated with the
pension system.
10. Regulate the assets that are regulated.
11. Request information from intermediaries and other companies associated
with pension funds, as well as conduct inquiries, investigations, and audits.
12. Create a system for subscribers to file complaints.
13. Resolving complaints about the country's numerous pension programmes.
14. Resolve conflicts between intermediaries, subscribers, as well as between
the former and the latter.

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 Chapter 2
How does it monitor
PFRDA is central autonomous regulator which has judicial, legislative, and executive powers.
PFRDA monitors National Pension Scheme (NPS) whereby subscribers contributions are
collected and accumulated in an individual pension account using various intermediaries.
Under NPS, individual contributions are pooled together into a pension fund and is invested
as per approved investment guidelines.

PFRDA has appointed various intermediaries for the purpose of collection, management,
recordkeeping and distribution of accumulations. Various intermediaries of PFRDA are as
follows:

PFRDA

Forms a

Its Safeguards NPS TRUST SUSCRIBER

subscribers interests
Appoints
Invests

PENSION
Invests accumulated funds
POP OR
& generates returns FUND
MANAGERS ONLINE

CRA CUSTODIAN TRUSTEE BANK

Maintains data & Manages banking

Takes care of assets
Records of all subscribers purchased by Fund Manager operations

Central Record Keeping Agency (CRA)

• CRA is an agency registered under PFRDA to perform functions of record-keeping,

accounting, administration, and customer service to Pension scheme subscribers.

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 • CRA is responsible for issuance of PRAN and dispatch of PRAN card, digitization and
maintenance of the database of PRANs, and record transaction related to
subscribers.

• It initiates the contribution made by subscribers to their PRAN account.

• CRA receives instructions from subscribers and aggregate the instructions and pass it
on to other intermediaries such as Trustee Bank.

• Offer various services directly to subscribers, including consolidated account

statements.

• It provides call center facilities to subscribers and Process exit or withdrawal request
of subscribers etc.

Point of Presence (PoP)

• PoP is another intermediary registered under PFRDA as a point of presence and has
electronic connectivity with the CRA for the purposes of receiving and transmitting
funds and instructions and pay out of funds.

• PoP facilitates a registration of subscribers, verify KYC documents.

• It receives and upload grievance received from subscribers and other intermediaries
in the Central Grievance Management System (CGMS) of CRA, which in turn routes
the grievance to respective intermediaries.

Pension Fund Managers (PFMs)

• Pension fund is one of the intermediaries which has been granted a certificate of
registration by PFRDA as an authority for receiving contributions, investing them,
and paying the subscribers in a specified manner.

• PFMs collects the subscribers funds (subscribers who have given their choice of
investment and subscribers who have chosen auto allocation of funds) from trustee
bank for the purpose of investment.

• They maintain proper books of accounts for pension fund schemes.

• They declare the scheme NAV (Net Asset Value) at the end of each working day and
communicating to Central Record Keeping Agency (CRA) for unitization in subscribers
Permanent Retirement Account Number (PRAN).

• PFMs reports operational activities to NPS trust at regular intervals.

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Trustee Bank

• Trustee bank is responsible for the day-to-day flow of funds, and provides banking
facilities, receives NPS funds from all nodal offices, and transfers the same to
intermediaries such as pension fund managers or other intermediaries as per
operational guidelines.

Custodian

• A custodian is a responsible person to secure the assets or securities under NPS or

other schemes related to pension.

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 Key Persons Involved

Shri Supratim Bandyopadhyay, Chairperson

• On 19th February 2020, Supratim Bandyopadhyay took control as

the chairman of the Pension Fund Regulatory and Development
Authority (PFRDA), the regulatory body for promotion and
development of an organized pension system to serve the income
needs of the old age people.

• He worked as a member of Finance Department in the Pension

Fund Regulatory and Development Authority (PFRDA).

• He has been appointed for a period of five years, with effect from
the date he presided over the post or till attaining the age of 65
years or until further orders, whichever is the earliest.

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 Shri Pramod Kumar Singh, Whole-Time Member
(Law)

• According to a Personnel Ministry order on 10th February 2020,

Pramod Kumar Singh was elected as a wholetime member (law),
of the pension regulator of the country PFRDA.

• Before his appointment as a Whole Time Member of PFRDA he

was working as Competition Commission of India (CCI) secretary.

• He worked as an advisor of law with the competition watchdog

before becoming its secretary.

Note: The PFRDA consists of a chairperson and less than six

members, three of whom shall be whole-time members and
appointed by the central government.

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 Role of Indian Government

With the complete effect from January 1st, 2004, the Central Government
introduced the National Pension System (NPS), although this scheme was not
for the armed forces. Pension Fund Regulatory and Development Authority
(PFRDA) which is the regulatory body for NPS, appointed NSDL (National
Securities Depository Limited) as Central Recordkeeping Agency (CRA) for
National Pension System.
CRA is the first of its kind venture in India. The functions carried by CRA for all
the subscribers under NPA are:
1. Record keeping
2. Administration
3. Customer service

As stated by the Central Government of India, CRA shall issue a Permanent

Retirement Account Number (PRAN) to each subscriber and maintain database
of each Permanent Retirement Account along with recording transactions
relating to each PRAN.

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 Chapter 3
Operating Intermediaries

1. Pension Fund
PFRDA has designated this institution as an authority for receiving
funds, investing them, and rewarding dividends to subscribers in a
predetermined manner.
Its functions are as follows:
1. Monies from subscribers (subscribers who have specified an
investment option and subscribers who have selected automatic
allocation of funds) are collected from the trustee bank to
be invested in productive purposes on their behalf.
2. Establish an investing committee as well as a risk management
committee.
3. Keep accurate accounting records for pension fund programmes.
4. At the end of each working day, declare the Scheme’s NAV (Net
Asset Value) and communicate it to the CRA for unitization in the
customer's PRAN (Permanent Retirement Account Number).
5. Regularly submitting reports of operations and activities to the
NPS trust.

2. Central Record-Keeping Agency (CRA)

NPS subscribers are supported by this agency which handles the resp
onsibilities of maintaining records, accounting, administration, and c
ustomer support.
Its functions are as follows:

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1. Serves as an operational interface for all intermediates and
coordinates with all the relevant external entities to complete day-
to-day activities.
2. Issuing PRANs and sending out PRAN cards, as well as digitising
and maintaining the PRAN database and keeping track of subscriber
transactions.
3. Initiation of subscriber contributions to their PRAN account.
3. Initiation of subscriber contributions to their PRAN account.
5. Providers of pension schemes.
6. Enable the accounts of credit subscribers and the prompt
allocation of funds to them.
7. Managers of pension funds.
8. Provide users with a wide range of services, – for example
consolidated account statements.
9. Provide customers with access to a call centre.
10. Provide users with a centralized complaint addressal mechanism.
11. Handle exit or withdrawal requests, and so on.

3. Point of Presence (PoP)

An institution meant to receive or send funds and instructions, as
well as accepting and disbursing monies to the relevant entities. It's
electronically linked to the CRA, in order to perform the above-
mentioned duties.
Its functions are as follows:
1. Enable subscribers to sign up and to validate their KYC documents.
2. Processing of initial contributions at the time of registration.

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3. Accept and file complaints received from subscribers as well as
from intermediaries, in the CRA's Central Grievance Management
System (CGMS), which further routes said complaints to the
appropriate authorities.
4. Accept additional deposits with prudence and vigilance and
transfer the monies to the trustee bank.

4. Trustee Bank
This is a bank that is in charge of the day-to-day transfer of money as
well as providing banking services. All nodal offices from across the
country send in NPS funds to the Trustee Bank and it, in
turn, transfers them to relevant intermediaries such as pension
funds, annuity service providers, and others in accordance with
procedural rules.
Its functions are as follows:
1. Receive NPS investments from nodal offices via traditional and
digital means.
2. Account for the difference between the funds collected from
nodal offices and the amount paid by customers, if any.
3. Prepare a Fund Receipt Confirmation file by consolidating all
payment records.
4. Assist the CRA with the settlement process.

5. Custodian
This institution is responsible for taking custody and ensuring the
safety of securities and assets held in the name of pension funds.
Aside from this primary role, it also performs ancillary services, such
as maintaining accounts of capital, acting as a Domestic Depository,

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and collecting the benefits accruing from investments, among other
things.

6. Nodal Offices
These are crucial to the expansion and outreach of NPS programmes
and, as a result, are essential for ensuring a stable and effective
PFRDA. Nodal offices of the Central Government communicate
with CRA for the investors. State Government Nodal Offices also
serve the same function, albeit at a reduced scale.

7. Aggregators
Their job is ensuring the regular updation of subscriber KYC data.
They also deal with complaints or issues.

8. Annuity Service Provider (ASP)

ASPs are in charge of disbursing annuity payments to investors either
on a routine basis or at the time of termination (depending on the
annuity contract chosen), responding to questions from potential
investors about annuity purchases, facilitating registration of
investors, resolving grievances of investors who bought annuities
from it, and so on.

9. Retirement Advisor
Any person, company, trust, society, or other entity registered
with the PFRDA to provide advice on NPS (or any other pension
schemes governed by PFRDA) to individuals is referred to as a
retirement adviser.

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 Case Study

Hdfc Standard Life Insurance ... vs Pension Fund

Regulatory And ... on 15 May, 2014

HDFC Pension Fund Management Co. Ltd filed suit in the Delhi
High court, challenging the PFRDA’S decision to disqualify it from a
re-bid process to manage the funds of the private National
Pension System (NPS).

Brief Facts: -
In 2012, PFRDA issued guidelines for registration as Pension Fund Managers
under the NPS.
After fulfilling these norms, HDFC LIFE was granted the certificate of
registration with a validity of 1 year.

Two years later, on 16th January a fresh proposal was issued by PFRDA
for selection of new pension funds wherein, the applicants had to
submit technical and later commercial bids.

While, PFRDA further stated that the existing fund managers had already
passed the sine qua non of qualification mentioned by them.
Therefore, they were exempted from the technical bid stage and
would evaluated only on commercial bids.

HDFC filed a case against the regulatory body PFRDA as they weren’t invited
for commercial bid though they had qualified for it.

Final Judgement:

The Delhi High Court set aside the PFRDA’s decision to reject HDFC Life’s bid
for the selection of Pension Fund Manager. The court asked the
regulator to evaluate the bid in accordance with the said proposal.

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 Chapter 4
Biblograhphy

https://www.pfrda.org.in/
https://financialservices.gov.in/pension-reforms-divisions/Pension-Fund-Regulatory-and-
Development-Authority-(PFRDA)
http://www.npstrust.org.in/content/pfrda
https://www.adityabirlacapital.com/abc-of-money/what-is-pension-fund-regulatory-and-
development-authority

https://en.wikipedia.org/wiki/Pension_Fund_Regulatory_and_Development_Authority

https://economictimes.indiatimes.com/news/economy/policy/govt-mulls-changes-in-pfrda-act-to-
separate-it-from-nps-trust-for-govt-staff/articleshow/73835950.cms?from=mdr

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THANK YOU

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