NSDL becomes pension record keeping agency
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The Pension Fund Regulatory and Development Authority (PFRDA) has formally appointed National Securities Depository Limited (NSDL) as the Central Recordkeeping Agency (CRA) for the New Pension System (NPS) that was introduced by the Government for its new recruits from January 1, 2004.
As a CRA, the main functions and responsibilities of NSDL would include recordkeeping, administration and customer service functions for all subscribers of the NPS, issuance of the unique Permanent Retirement Account Number (PRAN) — which is portable across jobs — to each subscriber and acting as an operational interface between PFRDA and other NPS intermediaries such as pension funds, insurers and trustee banks.
"Even as we have no statuary powers over states which have conformed to the NPS, all the19 states have agreed to use the facility of the CRA and fund managers," said PFRDA executive director Meena Chaturvedi.
NSDL's appointment as the CRA is for a tenure of 10 years and against an annual fee of Rs 10 lakh.
From the customers, the CRA will be charging Rs 350 as annual maintenance charge and Rs 10 as transaction charge, in addition to a one-time initial payment of Rs 50 for opening an NPS account.
However, once the number of accounts reaches 30 lakh, the CRA will bring down its charges to Rs 250 and Rs 4 respectively. The Union Government has, however, decided to bear these charges on account of its employees.
The other category of charges that an account holder would be expected to pay is the fund management charge, which is currently estimated at 3-5 basis points.
"Our endeavor is to make NPS very cheap and we hope to bring the charges down to 1 basis point," added Chaturvedi.
The operation of the CRA is expected to commence from June 1, 2008. For now, PFRDA has appointed State Bank of India (SBI), UTI Asset Management Company (UTI-AMC) and Life Insurance Corporation (LIC) as pension fund managers under the NPS.