Changes you should be aware of before opting for an NPS investment

NEW DELHI: Recently, the pension regulator in India has introduced some changes in the National Pension System (NPS), a voluntary pension scheme that gives an opportunity to an investor to opt for both debt and equity exposure through a single investment tool.
In an NPS scheme, an investor can choose up to 75 per cent equity exposure and can withdraw up to 60 per cent of the maturity amount at the time of retirement.The remaining 40 per cent will be used for buying annuity, which will be used for monthly pension payable to the NPS account holders. Hence, essentially it is a contribution pension system that provides pension in retirement through market-linked returns. Any Indian citizen between 18 and 65 years of age can open a NPS account. Non-resident Indians can also opt for it.
The Government of India launched NPS in January 2004 as a contribution scheme. Initially, it was exclusively meant for government employees. In 2009, NPS was made accessible to all individuals. It is designed to ensure that account holders can earn a stable income even after retirement, along with considerable returns on investment.
Here are the top changes in NPS rules that NPS account holders should know:
1. Trail Commission Payment Through Points of Presence (PoP):
Pension Fund Regulatory and Development Authority (PFRDA) has allowed trail commission payment through points of presence ( PoP) for the NPS account holders. The rule is effective from September 1, 2022.But the trail commission on NPS contributions made through D-Remit, an electronic system that directly transfers money from your bank account to the trustee bank so that you get the net asset value (NAV) the same day for your NPS investments, would be similar to eNPS (online contribution) by subscribers who were on-boarded by the respective PoPs.
"The trail commission to PoPs for D-Remit Contributions of the associated Subscribers shall be @ 0.20% of the contribution amount (Minimum Rs 15 and Maximum ₹Rs 0,000) similar to eNPS. The applicable charges would be recovered by unit deduction on periodical basis," PFRDA said. This change come into effect from September 2022.
2. e-nomination flow:
The PFRDA changed the process for e-nomination for both government and private or corporate sector employees from 1 October 2022. The nodal office will have an option to either accept or reject the e-nomination request of the NPS account holder. In case, the nodal office does not initiate any action against the request within 30 days of its allotment, the e-nomination request will be accepted in the Central Recordkeeping Agencies (CRA) system.
A NPS subscriber must make a nomination in the prescribed form when they sign up for the National Pension System.
In the e-Nomination, the Subscribers will also need to submit an online declaration stating that “I understand and consent to that nomination being made by me now shall be invalid ab initio if it is not consistent with Regulation 32 of the PFRDA (Exits and Withdrawals) Regulations, 2015 and amendments", PFRDA stated.
3 No Separate Form To Buy An Annuity Plan:
In order to make the onboarding process easier for NPS investors, the Insurance Regulatory and Development Authority (IRDAI) has relaxed the need for submitting a separate proposal for buying annuity products at maturity. Earlier, NPS investors had to submit an exit form to PFRDA and a detailed proposal form to the life insurance company for buying an annuity plan to receive pension.
Since the information required in the application form is already available under NPS, to avoid duplication, IRDAI advised life insurance companies to treat the exit form as the proposal form for NPS retirees purchasing annuities — instead of again collecting information from customers.
4. Credit Card Payment Not Allowed For NPS Tier-2 Account Holders
The PFRDA has decided to stop the facility of credit card payment for NPS contribution in Tier-2 accounts. Henceforth, payment through credit cards are not allowed for Tier-2 account for NPS account holders.
5. Digital Life Certificate Submission:
IRDAI has advised insurance companies to simplify the life certificate submission process. It has asked companies to adopt Aadhaar-based authentication for verification of life certificates such as Jeevan Bima.
6. NPS withdrawal timeline reduced
The PFRDA reduced the timeline for execution of withdrawal requests under the NPS account to a T+2 basis from a T+4 basis.
The letter 'T' is the day of authorisation of withdrawal request by the Nodal office/PoP/subscriber, and the number '+2' is the settlement days.
For subscribers associated with Protean eGov Technologies Ltd, requests authorised up to 10.30 am will be settled on a T+2 basis. For subscribers associated with KFin Technologies Ltd & CAMS CRAs, the requests authorised up to 11 am will be settled on a T+2 basis.
7 You can also make payments through UPI
The PFRDA has launched a UPI handle for depositing contributions through D-Remit for subscribers. Prior to thise, the contributions were carried out through a net banking account using IMPS/NEFT/RTGS.