Structure of New Pension Scheme
NPS is a well structured Defined Contribution Pension system with well defined system architecture having specified roles of various entities.
Pension Fund Regulatory and Development Authority
The Pension Fund Regulatory and Development Authority (PFRDA) is entrusted the responsibility to regulate and develop the pension market in India. The roles and responsibility of PFRDA include carrying out regulatory changes, overseeing quality and provision of services of NPSCAN, CRA, PFs Trustee Banks etc.,
New Pension System (NPS) Trustee
NPS Trust has been set up for taking care of assets and funds under the NPS. Trust has been appointed by PFRDA. Trustee is responsible for taking care of Funds under NPS. The securities shall be purchased by the PF(s) on behalf of and in the name of Trustees and the Securities purchased by each PF shall be held in the Custodial Account of NPS Trust. However, Individual subscriber shall remain beneficial owner of these securities assets and funds. NPS Trust will appoint Trustee Bank, Custodian NPS Trust will hold an account with it. Trustee Bank would receive Funds from Govt. / NPSCAN and send to PFs, ASPs Trustee Bank.
Central Record Keeping Agency (CRA)
CRA would undertake Record Keeping, Administration and Customers service. National Securities Depository Ltd (NSDL) has been appointed as the CRA for the NPS. The main functions and responsibilities of CRA will include: Recordkeeping, Administration, and Customers Service function for all subscribers of the New Pension System. Issue of unique Permanent Retirement Account Number (PRAN) to each subscriber, maintaining a data base of all subscribers, and recording transaction relating to each subscriber.
Pension Fund Managers
In order to introduce competition and to provide wider choice to the subscribers, PFRDA has allowed multiple fund mangers. The subscriber will have a choice to select from multiple pension fund managers and multiple schemes. Pension Fund Managers will manage investment of Retirement Savings of NPS. There will be no implicit or explicit assurance of benefits except market based guarantee mechanism to be purchased by the subscriber. PFRDA has appointed three pension fund managers, namely LIC Pension Fund Ltd., SBI Pension Fund Ltd. and UTI Retirement Solutions Ltd. for managing funds of Central Govt. employees (who will also manage State Govt Funds. Further, PFRDA has appointed six fund managers to manage funds of all citizens (excluding Central and State Govt Fund), which was opened to st the public from 1 May 2009.
Point of Presence (POPs)
PFRDA has appointed 22 POPs who will act as Collection Centre for NPS, will collect application forms from the subscribers (under All Citizens category) and send the same to the CRA.
The Trustee Bank will maintain the account of the Trustee and will receive credits from the government department or its agencies and transmit the information to the CRA for reconciliation. The Trustee bank shall remit the funds to the Pension Fund Managers, Annuity Service Providers (ASP). NPS Trust has appointed Bank of India as the Trustee Bank
The Custodian will provide Custodial Services to the Pension Funds, which will include among others to ensure that benefits due on the holdings are received, provide detailed reports to the PFs etc. NPS Trust has appointed Stock Holding Corporation of India Ltd as the custodian for the new pension system.
Annuity Service Providers (ASP)
The role of annuity service providers (ASPs) will be critical in the NPS, since they will offer annuity to the subscribers when members reach superannuation or withdraw pension assets. As per the provision there would be mandatory annuitization, and the members have to purchase annuity from ASPs. The ASPs will offer annuity products to the subscribers receive funds from CRA and pay regular monthly annuity.