Delay in depositing the pension contribution sometimes lowered the fund values of subscribers and caused inordinate losses as the new pension system (NPS) operates on a real-time basis with subscribers funds invested through units whose net asset value fluctuates with changes in prices of bonds and equities.
PFRDA sources told FE the new rule is applicable for central and state government departments and not retail investors who deposit their contribution through a bank.
There have been delays due to cheque clearing and cheque rejections in some cases where the pay and accounts offices of central government and strict treasury offices of states have not adopted the NEFT/RTGS payment facilities, the official said.
In a notification, PFRDA said it has been decided to discontinue the remittances of NPS contribution funds through physical instruments and to accept remittances solely through electronic mode from April 2014.
Accordingly from April 1, all the nodal offices remitting NPS contributions have to mandatorily remit NPS through electronic mode NEFT and RTGS only, the regulator said.
Earlier, the Chief Vigilance Commission had ordered government offices to switch to electronic mode to avert delays or frauds. However, some government departments continue to operate through the physical mode, leaving scope for errors, delays and rejections.