The Central Government has introduced the National Pension System (NPS) with effect from January 01, 2004 (except for armed forces). Pension Fund Regulatory and Development Authority (PFRDA), the regulatory body for NPS, has appointed NSDL as Central Recordkeeping Agency (CRA) for National Pension System. CRA is the first of its kind venture in India which will carry out the functions of Record Keeping, Administration and Customer Service for all subscribers under NPS. CRA shall issue a Permanent Retirement Account Number (PRAN) to each subscriber and maintain data base of each Permanent Retirement account along with recording transactions relating to each PRAN.
NPS Corporate Sector Model is the customized version of core NPS to suit various organizations and their employees to adopt NPS as an organized entity within purview of their employer-employee relationship. This would facilitate corporate entities and other registered bodies to move their existing and prospective employees to NPS architecture. This is in an additional avenue for retirement planning being made available to organized sector and does not dilute their responsibilities under other statutory provisions like Provident Fund etc. Corporate sector has been formally launched from December 2011. Corporate may join NPS through any one of the existing POPs.
- Entities registered under Companies Act,
- Entities registered under various Co-operative Acts,
- Central Public Sector Enterprises
- State Public Sector Enterprises
- Registered Partnership firm
- Registered Limited Liability Partnership (LLPs)
- Anybody incorporated under any act of Parliament or State legislature or by order of Central / State Government
- Proprietorship Concern
- The features applicable under All Citizens of India are available under corporate sector. In addition to these features, a corporate / subscribers under corporate sector can opt for the following:
NPS provides platform for corporate to co-contribute for its subscribers or facilitate them to contribute for their pension. There are three variations of contributions from employer and employee:
- Equal contributions by employer and employee
- Unequal contribution by the employer and the employee
- Contribution from either the employer or the employee
A Corporate subscriber can also voluntarily contribute in their Tier I through their associated POP. However, contribution in Tier II account can be done through any POP.
Scheme setup option
In NPS, a Corporate would have flexibility to decide investment choice either at subscriber level or at the corporate level centrally for all its underlying subscribers. A corporate can also select a PFM at a corporate level and allow the underlying subscriber to decide the allocation of funds among the three asset classes viz: Equity, Corporate Debt and Government Security.
A corporate subscriber can open both Tier I and Tier II account simultaneously at the time of initial registration or can activate Tier II account subsequently through the associated POP. The investment option for the Tier-II account needs to be exercised by the subscriber, which can be different from Tier-I account.
Tax Benefit to Corporate
10% of the salary (basic and dearness allowance) of employers Contribution can be deducted as “Business Expense” from their Profit & Loss Account.
Tax benefit to Subscriber
The employer’s Contribution to NPS upto 10% of basic plus DA is allowed deduction under section 80CCD(2) and excluded from the limit of Rs.1.5 lakh.(http://indiabudget.nic.in) .
Steps to operationalise NPS Corporate
- Selection of a POP
- Registration of the corporate through the selected POP
- Registration of subscribers through the selected POP
- Commence contribution in Tier I account