Type of entities that are eligible to adopt NPS for their employees under the NPS Corporate Sector Model

• Entities registered under the Companies Act, 2013 or a cooperative society registered under any law relating to Co-operative societies
• Bodies established or incorporated under any act of Parliament, or any law enacted by a State legislature or under any order/notification issued by the Central or State Government
• Public Sector Enterprises or any Government company
• Registered Partnership Firms
• Limited Liability Partnerships (LLPs)
• Proprietary Concerns
• Trusts / Societies
• Foreign companies having registration under section 591-608 of the Companies Act 1956 in respect of their eligible Indian employee(s)
• Foreign/ Diplomatic missions operating in India (Embassy / High Commission / Consulate etc.) in respect of their eligible Indian employee(s)
• International Organizations operating in India (UN / WHO / World Bank / ADB / IMF etc.) in respect of their eligible Indian employee(s)

Is it mandatory for an employer to offer NPS to their employees?

NPS can be introduced by an employer / corporate (entity) for their employees (as a retirement benefit scheme) within the purview of their employer-employee relationship. This can be done both on a voluntary or a mandatory basis.

In case the employer adopts NPS as a mandatory retirement benefit scheme for its employees, then all employees should join NPS from the date of adoption by the employer. In case of NPS being implemented on voluntary basis along with other retirement benefit schemes, choice of joining NPS would rest with the employee.

Employer contribution

Contributions to NPS under the Corporate Sector Model are flexible. They depend on the employer's policy on compensation and retiral benefits extended for their employees. NPS contribution can be either of the following:

• equal contributions by both employer and employee (say 10% each) or
• unequal by employer and employee (say 10% by employee and 14% by employer) or
• contribution by only employer or only employee

There is no mandate for the employer to contribute to the employees' NPS account.

Amount of Pension received by NPS subscribers

The amount of pension will depend on:

• The accumulated sum of contributions made;
• Accrual/ returns on the investments, and
• The portion of corpus utilised by the subscriber for purchasing an annuity plan from any of the Annuity Service Providers.

Annuity Service Providers for NPS are empaneled with the PFRDA. Under NPS, there is no implicit or explicit assurance of benefit, and the investments are subject to market conditions.

Does the employer play any role in deciding management of corpus of their employees?

Pension Funds registered with PFRDA are responsible for managing pension corpus in accordance with PFRDA Act rules, regulations, and investment guidelines.

Employers adopting NPS have the option of:

• Selecting any one Pension Fund (PF) out the PFs registered with PFRDA for managing the pension wealth of their employees and decide on the asset allocation (active or auto) that decide how NPS contributions will be invested by the Pension Fund.
• Allowing their employees to exercise these choices (PF & Asset Allocation) at an individual/employee level, if found suitable.

If the Employer / Corporate exercises the choice of Pension Fund and Asset Allocation on behalf of the Employee / Subscriber, then such Employee / Subscriber will have the option to revise the choices after 1 year (i.e. 365 days) or else will continue with the existing choices made by employer (applicable to corporates adopting NPS on or after 14th Nov 2018).

Types of accounts in NPS

NPS has two types of accounts - Tier I & Tier Il.

• Tier-I is the Individual Pension Account, which is the default pension account having all the tax incentives under Income Tax Act.
• Tier-ll is an optional investment account available to a subscriber having an active Tier-I account. This account has no withdrawal restrictions and tax benefits. Tier-ll is not a Pension Account.

Features of Tier-I and Tier-Il accounts

The subscriber can select different Pension Funds and Investment Options for their NPS Tier-I and Tier-ll accounts.

Transfer of existing Approved Superannuation Fund to NPS account of an employee

The facility to transfer Approved Superannuation Fund to NPS has been enabled in the NPS architecture. The transfer of corpus can be made in bulk as is where is basis or on an individual case to case basis.

Charges associated with NPS

Charges related to NPS Tier-I account can be borne either by the employer or the employee, at the discretion of the employer. Tier-ll transaction charges are same as Tier-I and are borne by the subscriber.

Each intermediary is entitled to recover the following prescribed charges towards the services rendered:

* In case a subscriber opts not to have a physical PRAN Card or Welcome Kit, reduced account opening charges of CRA are applicable as under:

Can my employer forfeit its contributions if I resign from job?

The employer cannot forfeit pension corpus from an NPS account even if the employee resigns from the organization.

However, in case of the employer being owned and controlled, either by the Central / State Government or a Government company, if so specifically provided in the service rules governing the terms of employment of the subscriber with it, the employer has the right to withhold its co-contributions including accruals thereon, for the purpose of recovery of the whole or part of any pecuniary loss caused, provided such loss is established in any departmental or judicial proceedings. initiated against such subscriber by such employer.