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PFRDA Moots Big Changes To Boost Efficiency Of NPS System, Seeks Public Feedback

It aims to reduce the application processing time and the number of PoPs, among other suggestions, to ensure an effective distribution channel for NPS and other schemes under the PFRDA Act, 2013.

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Outlook Money
July 22, 2023
Big Changes To Boost Efficiency Of NPS System

Big Changes To Boost Efficiency Of NPS System

The Pension Fund Regulatory Development Authority (PFRDA) is considering significant changes to the manner in which the point of presence (PoP) entities and central record-keeping agencies (CRAs) maintain the records of national pension system (NPS) subscribers.

In a circular on July 14, 2023, the authority sought public comments on the proposed changes to the PFRDA (Point of Presence) Regulations 2018 regarding the digitization and maintenance of subscriber records by PoPs and CRAs.

The move aims to reduce the application processing time and the number of PoPs to ensure an effective distribution channel for NPS and other schemes under the PFRDA Act, 2013. It is expected that the changes would encourage fair, efficient, and transparent market practices by PoPs towards old age income security and protect the subscribers’ interests. The draft changes also pertain to reducing compliance costs, simplifying the process, and ensuring the orderly growth of NPS.

Proposed Changes

PFRDA proposed to reduce the application processing time from 60 to 30 days and the minimum number of PoP branches from 15 to 10 for registration purposes. It seeks to digitize subscriber records, from onboarding, contribution and exit to KYC documents by PoPs and CRAs.

The objective of the changes, according to PFRDA, is to register, develop, regulate, monitor, and supervise PoPs. It has also inserted a new section in the PoP Regulations 2018 called “Key Managerial Personnel”, as defined under Section 2(51) of the Companies Act, 2013.

PoPs will also need to fulfil the minimum net worth criteria requirement on the date of the application instead of the last day of the immediately preceding financial year. They are also expected to appoint external auditors to conduct financial audits of PoPs and submit their reports to the POP boards and the pension authority.

As per the proposed regulations for PoPs, the PFRDA said an applicant may seek registration as a Point of Presence to undertake functions, including onboarding of subscribers, processing of contributions, service requests, exit and withdrawals and grievance redressal by satisfying the eligibility conditions and depositing the fees, taxes and levies specified under NPS rules.

It further said that only such entities would be eligible to undertake these activities, which covered its employees for social security benefits by having registered, either under the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 or the Employees State Insurance Act, 1948 or any other Act providing social security benefit and under the Goods and Services Act, 2017 for not less two years from the date of application.

The applicants will be permitted to seek registration to act as a PoP in any or all of the categories as mentioned in sub-regulation (1), subject to their fulfilling the eligibility conditions.

Such an applicant may choose to opt for registration of “any or all of such activities as permitted under sub-regulation (1)”, and the application so received in the authority will be “considered only in respect of those activity(s) for which it has been received,” the circular added.

The circular said all stakeholders could send their feedback in a Word document by email at [email protected] with the subject line ‘Feedback on proposed changes to the PFRDA (Point of Presence) Regulations, 2018’.

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