E-payment, online application for NPS

The Pension Fund Regulatory and Development Authority is working on a slew of measures to make the New Pension Scheme more attractive for investors.

According to senior PFRDA officials, the regulator is putting in place an online application system and e-payment facility for internet-savvy investors.

The software is being developed in association with the Central Record-keeping Agency. It is expected to debut by the end of this year. PFRDA is also looking to have an ombudsman for redressal of investor grievances.

To increase liquidity of the scheme, there could also be Tier-II accounts by the end of this year, which would allow investors to withdraw money at any given point of time. However, sources said that investors who have Tier-I accounts would be allowed to have Tier-II accounts.

"By allowing Tier-II accounts, we want to offer liquidity to the investors, unlike Tier-I. This is next on the priority list," said a PFRDA official.

At present, investors are allowed to withdraw anytime before the age of 60 years. However, there is a condition that 80 per cent of the money will have to be used to buy an annuity plan. The rest 20 per cent can be paid in a lumpsum.

PFRDA has also recommended to the Centre that NPS be given the exempt-exempt-exempt status. At present, NPS has the exempt-exempt-taxed status, whereby contributions and returns are tax-free, but withdrawals attract tax.

Earlier, PFRDA had recommended that the annual maintenance charges be borne by the government for the initial few years. The move was aimed at promoting the product.

Currently, annual maintenance charges form a major part of the total charges that an investor has to pay. The CRA charges Rs 350 per customer as annual maintenance charge. The basic functions of a CRA include record-keeping, administration and customer service functions for all subscribers of NPS.

The initial response to NPS has not been too impressive. "We have registered 384 investors in one month. We would be looking at rationalising costs provided volumes increase," said a senior PFRDA official.

Sources said that PFRDA has spent around Rs 1 crore (Rs 10 million) till now on various media-marketing campaigns for creating awareness about NPS.

It has sought additional funds from the government to step up spending on advertising.