NPS : Frequently Asked Questions - Part 2

This post is in continuation of the previous post "NPS : Frequently Asked Questions - Part 1" with the aim to bring more clarity on NPS and cover maximum doubts.

Can Government Employee choose the Fund Manager or Scheme to invest in NPS in Tier - I account?

For Government employees, the option to change scheme preferences or pension fund managers for their NPS accounts is not available. Under Tier I, there is only one scheme (default) available to Central/State Govt. wherein the contributions are allotted to three Public Sector Pension Fund Managers (PFM).  NPS contributions are equally split among the three selected PFMs, who invest the money in a pre-decided manner. Each of the PFM’s invest the funds in the proportion of up to 55% in Government Securities, up to 40% in Debt Securities and up to 5% in Money Market Instruments.

1. SBI pension Funds Private Limited (34%)
2. UTI Retirement Solutions Limited and (33%)
3. LIC Pension Fund Limited (33%)

Can Non-Government Employee choose or change the Fund Manager or Scheme to invest in NPS in Tier - I account?

Yes, non-government employee can choose among the following fund managers and has the option to change the fund manager.

1. SBI Pension Funds Private Limited
2. UTI Retirement Solutions Limited
3. ICICI Prudential Pension Funds Management Company Limited
4. Reliance Capital Pension Fund Limited
5. IDFC Pension Funds Management Company Limited.
6. Kotak Mahindra Pension Fund Limited
7. Birla Sun Life Pension Management
8. HDFC Pension Management Company Limited

Under the New Pension Scheme (NPS) you have the option to change your pension fund manager once in a financial year for each Tier -I and Tier - II account. But, a change in fund manager basically denotes a change in fund. You can submit your request through the eNPS website or you can submit form no (UOS-S3/CS-S3) physically at a Point of Presence (POP) outlet.

Is there any default Pension Fund Manager (PFM) Option provided under NPS?

Yes, there is a default PFM provision under NPS and SBI Pension Funds Private Limited acts as the default Pension Fund Manager.

Who will Regulate NPS ?

NPS is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). PFRDA has appointed NSDL e-Governance Infrastructure Ltd. as the Central Record keeping Agency (CRA) for NPS. PFRDA is just like "SEBI" for mutual funds.

Can a subscriber get loan under NPS?

At present, interim utilization of pension wealth (such as availing of loan) by the subscriber before exit is not allowed under NPS. However, there is a facility of partial withdrawal. 

What happens to the PRAN in case a Subscriber is transferred to another location?

The PRAN (Permanent Retirement Account Number) allotted under NPS is unique and portable. This unique account number will remain the same for the rest of Subscriber’s life. You shall be able to access your Permanent Retirement Account from anywhere in India, based on the I-PIN sent to you by the CRA.

Is there any exit load or tax liability on changing the fund manager?

You are allowed to change your fund manager and investment mix once a year. There is no exit load or tax liability on doing so.