1st January 2004 marks a new era in Indian Pension industry. The Union Government introduced National Pension System (NPS) scheme as a mandatory scheme for all Central Government employees including employees of Central Government Autonomous Bodies in place of old defined benefit pension scheme.
Later on in 2008, this scheme was introduced as a mandatory scheme for all State Government employees including employees of State Government Autonomous Bodies in place of old defined benefit pension scheme.
On 1st May 2009, NPS was made available to all citizens of India on a voluntary basis with the objective of extending old age security coverage to all citizen and providing old age income by reasonable market based returns over long run. It was termed as All Citizen of India model, which is actually Retail NPS.
Subsequently, in order to bring employees working with various Companies across India under NPS, the Corporate NPS model was introduced in 2011.
This scheme is regulated by PFRDA (Pension Fund Regulatory & Development Authority). Any KYC compliant Citizen of India including NRI and OCI between the age group of 18 – 70 years can join NPS.
Key Stakeholders in NPS
In order to keep the operating cost low, NPS is based on unbundled architecture where various activities at different stages are performed by entities having existing set up of managing volume as shown below:
|Intermediary||Role of the Entity|
Point of Presence (POP)
|Points of Presence (POP) is the first points of interaction of the NPS subscriber with the NPS architecture. The authorized branches of a POP, called Point of Presence Service Providers (POP-SPs), acts as collection points and extend a number of customer services to NPS subscribers|
|Central Recordkeeping Agency (CRA)||The recordkeeping, administration and customer service functions for all subscribers of the NPS are being handled by separate record keeping agency, known as CRA|
|Pension Fund Manager||The Pension Fund Manager (PFM) appointed by PFRDA manages investment of funds under NPS|
|Annuity Service Provider (ASP)||Life Insurance companies registered with PFRDA to provider Annuity is called ASP. It is responsible for delivering a regular monthly pension post retirement|
|Trustee Bank||The Trustee Bank appointed under NPS shall facilitate fund transfers across various entities of the NPS system viz. PFMs, ASPs, NPS Customers etc|
|Custodian||Custodian holds and protects the underlying assets bought by the PFMs under your policy|
|NPS Trust||The NPS trust has been set up and constituted for taking care of the assets and funds under the NPS in the interest of the beneficiaries (NPS Customers)|
|PFRDA||An autonomous body set up by the Government of India to develop and regulate the pension market in India|