PFRDA Expands Reinvestment Rules for Returned NPS Transactions

The Pension Fund Regulatory and Development Authority (PFRDA) has issued expanded guidelines to allow reinvestment of returned and pending National Pension System (NPS) and Atal Pension Yojana (APY) transaction amounts into subscribers’ Permanent Retirement Account Numbers (PRANs).

The move aims to ensure that subscribers are not deprived of market-linked returns due to delays, failed credits, or procedural issues during withdrawal or exit processing.

Background of the Decision

Earlier, PFRDA had permitted reinvestment of returned amounts only in limited cases, mainly where funds could not be credited due to incorrect bank account details. However, several other situations were identified where authorised withdrawal amounts remained pending in the system, preventing subscribers from benefiting from market returns.

To address this gap, the Authority has now widened the scope of eligible transactions.

Transactions Now Eligible for Reinvestment

Under the revised guidelines, the Central Record Keeping Agency (CRA) is permitted to reinvest the following types of returned or pending amounts into the subscriber’s PRAN:

Failed or returned transactions due to reasons such as closed bank accounts, invalid IFSC codes, or dormant or frozen accounts
Annuity cancellation proceeds returned by Annuity Service Providers under the Free Look Period
Annuity cancellation proceeds arising from non-NPS cases such as OPS or family pension matters
Amounts held back due to quality checks or pending clarifications
Funds withheld due to legal disputes or withdrawal-related cases
Returned amounts related to Tier II withdrawals, partial withdrawals, or death withdrawal cases

Reinvestment Timeline and Communication

If required documents or clarifications are not received from the subscriber, nodal office, or Annuity Service Provider, the CRA will reinvest the returned amount into the concerned PRAN after 30 days from the date the funds are credited to the NPS Trust withdrawal account.

During this 30-day window, the CRA will actively communicate with subscribers and nodal offices through SMS, email, and other channels, requesting submission of necessary documents for remittance to the correct bank account.

If no response is received within this period, advance intimation will be provided regarding the proposed reinvestment. The CRA will also explain the procedure for reclaiming the reinvested amount at a later stage.

Important Note for Subscribers

PFRDA has clarified that any future claim related to reinvested amounts will be subject to market fluctuations. The value of the amount at the time of re-claim may vary depending on market performance.

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