NPS trust to simplify contract process for states

In a move that will lessen the teething troubles of all the 20 states on board the New Pension Scheme, the NPS trust is working at simplifying the process for states to sign up for the scheme.

If it goes through, then instead of every state signing separate agreements with the central record keeping agency and fund managers, they will simply have to sign up with the NPS trust. The NPS trust will ensure service delivery to the states by entering into a contract with the central record keeping agency and the fund managers.

?A standardised single contract will reduce paper work for states and will also encourage them to join the NPS,? an official with the Pension Fund Regulatory and Development Authority said.

The NPS trust headed by former Rajya Sabha secretary general Yogendra Narain oversees the functioning of the pension scheme. It is essential for every state, willing to join the NPS to enter into these contracts as after that only they can tap into the NPS architecture?put in place by PFRDA?and unroll the defined contribution based pension scheme for their employees.

?We are discussing the issue with our legal adviser and have also circulated a draft of the standardised contract to state governments to get their views,? he added. The National Securities Depository Limited, which is the CRA and the three fund managers? State Bank of India, UTI? Asset Management Company and Life Insurance Corporation have also been sent the draft agreements.

Of the 20 states that are a part of the NPS, Chhattisgarh at present is the only one to have signed up for the NPS architecture and signed agreements with NSDL and fund managers. Madhya Pradesh and Jharkhand are in the process of signing such agreements and another six states are likely to follow suit soon.

The move is also expected to soothe the nerves of many state governments which have doubts over tapping into the NPS architecture provided by the PFRDA. Some states had earlier raised the issue of costs charged by NSDL for maintaining pension records with the Centre, while a few were also tinkering with the idea of introducing their own pension schemes.