NPS is based on a unique individual pension account viz. Permanent Retirement Account Number (PRAN) created for each individual subscriber.
The Pension Fund Regulatory and Development Authority (PFRDA) is required to provide a scheme with minimum assured returns to subscribers as an option under the National Pension System (NPS). The regulator has now invited bids from consultants to formulate/design in consultations with stakeholders a minimum assured return scheme that can be offered to the existing and prospective subscribers by Pension Funds.
As per the PFRDA document inviting proposals from consultants, the guarantees under the proposed minimum assured returns scheme may be based on the following parameters:
- Capital plus additional benefits or Interest Rate Guarantee.
- Applicable on each contribution individually.
- Funds received through a switch from other schemes may be considered as fresh contributions.
- Guarantee may be applicable only to future contributions (prospectively).
- All contributions will be eligible for the guarantee subject to certain monetary limits
- Guarantee may be based on Nominal return with preferences for Interest Rate guarantee
- Combinations of fixed or floating rates may be worked out for MARS
- Lock-in may be applicable on each contribution and applied based on the period since that contribution.
- Multiple lock-in period options (or have staggered guarantee periods) may be considered for flexibility.
- Withdrawals may be directly linked to the lock-in period. The subscriber may have the option to withdraw or to stay invested after the lock-in period, however, there won’t be any guarantee applied on the investment after lock-in.
- Minimum and maximum monetary limits on contributions may be prescribed.
- Pension Funds may be allowed to charge fees as a percentage of corpus managed by them
NPS is based on a unique individual pension account viz. Permanent Retirement Account Number (PRAN) created for each individual subscriber. A citizen of India aged between 18-70 years can join NPS either in their individual capacity or in association with their Employer.
Contributions to the Individual Pension Account can be made during one’s working life. This can be done either by the individual or employer or by the employer and employee together in equal or unequal proportion. The accumulated corpus under the scheme is utilized to procure a pension upon retirement/superannuation of the subscriber.