Annual Report (2015-16)

OOkkkkff‘‘kkZZdd ffjjiikkssVVZZ Annual Report isa'ku fufèk fofu;ked vkSj fodkl çkfèkdj.k PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY ch&14@,] nwljh eafty] N~=ifr f'kokth Hkou] dqrqc lalFkkxr {ks=] B-14/A, IInd Floor, Chhatrapati Shivaji Bhawan, Qutab Institutional Area, dVokfj;k ljk;] uà fnYyh& 110016 Katwaria Sarai,New Delhi-110016 Qksu /Tel % 011-26517501]26517503]26517097 www.pfrda.org.inisa'ku fufèk fofu;ked vkSj PENSION FUND REGULATORY fodkl çkfèkdj.k AND DEVELOPMENT AUTHORITY ch&14@,] nwljh eafty] B-14/A, IInd Floor, N~=ifr f'kokth Hkou] Chhatrapati Shivaji Bhawan dqrqc lalFkkxr {ks=] Qutab Institutional Area, dVokfj;k ljk;] Katwaria Sarai,New Delhi-110016 gsear th- dkaVªsDVj uà fnYyh& 110016 Phone : 011-26517501,26517503,26517097 vè;{k Qksu % 011-26517501,26517503,26517097 Hemant G. Contractor CHAIRMAN Nov 15, 2016Contents Abbreviations vi Vision ix Mission ix Chairman's Message x Part-I 1 1 1 8 8 11 18 Part-II 20 20 20 20 20 21 22 24 25 25ii 25 26 27 29 30 32 32 33 36 41 41 43 43 43 49 49 52 52 53 53 55 55Contents iii 58 58 58 60 61 61 61 61 5.3 Staff Strength in PFRDA 61 5.4 Setting up of SC/ST Cell and OBC Cell in PFRDA 6 1 5.5 Committee for Prevention of Sexual Harassment at Workplace 61 5.6 Staff Welfare Committee 62 5.7 Training of employees in PFRDA 62 62 62 62 63 64 53 65 65List of Tables Table 1.1: World Output Table 1.2: Estimates of GVA at Basic Price by Economic Activity (At 2011-12 prices) Table 1.3: No. of subscribers, contribution and AUM under NPS/APY Table 2.1: Details of Asset under Management Table 2.2: Maximum exposure to various investment instruments Table 2.3: Exposure of NPS to various instruments Table 2.4: The funds invested by various Pension Funds in different schemes Table 3.1: Investment limits for NPS Schemes (CG, SG, Corporate CG, NPS Lite schemes of NPS and Atal Pension Yojana) in different instruments Table 3.2: No. of exit/withdrawals from subscribers under different sector Table 3.3: Training Programme & workshops conducted by CRA during 2015-16 Table 3.4: Status of grievances received & disposed-off during 2015-16 Table 3.5: Amount spent on publicity and advertisement during 2015-16 Table 3.6: NPS on Social Media Table 3.7: No. of Banks and Post Office officials trained during FY 2015-16 Table 3.8: Asset Under Management (AUM) Break up in NPS - Growth Scheme Wise Position as on March 31, 2016 Table 3.9: Asset Under Management (AUM) Break up in NPS - Growth - Subscriber Class Wise Position on March 31, 2016 Table 3.10: Position of the AUM with the Pension Fund Managers Table 3.11: Notional Returns (%) of Schemes of different Pension Funds as on March 31, 2016 Table 3.12 a: Fees and charges to the subscribers at various stages Table 3.12b: Service Charge structure applicable to POPs for NPS accounts of NRIs sourced and serviced abroad Table 3.13: No. of subscribers – Sector wise Table 3.14: No. of APY subscribers opting for various monthly pension Table 3.15: Per cent of subscribers in different age groups Table 3.16: Per cent of subscribers contributing to different contribution range Table 3.17: Core activities of the Trustee Bank Table 3.18: The constitution of the NPS Trust Board as on March 31, 2016 Table 3.19: Contribution structure for NPS Accounts when serviced abroad ivList of Charts Chart 1.1: Inflation Chart 1.2: Repo Rate and G-Sec Rate (10 years) Chart 1.3: 10 year G-Sec yield Chart 1.4: Movement of indices Chart 1.5: Movement of Rs. /US $ Chart 1.6a: : Total investment of pension fund in selected OECD countries Chart 1.6b: Total investment of pension fund in selected ON OECD countries Chart 1.7a: Pension funds real net investment rate of return in selected OECD countries Chart 1.7b: Pension funds real net investment rate of return in selected ON-OECD countries Chart 1.8: NPS Hierarchy for Government Sector Chart 1.9: NPS Architecture Chart 2.1: Scheme wise Assets under Management (log scale) Chart 2.2a: % exposure of NPS in various instruments on March 31, 2015 Chart 2.2b: % exposure of NPS in various instruments on March 31, 2016 Chart 3.1: Year wise number of subscribers under NPS & APY Chart 3.2: Month wise number of APY subscribers Chart 3.3: Number of subscriber – State wise List of Annexures Annexure I : List of PoPs Annexure II: Pension Advisory Committee Annexure III: Annual Balance Sheet as on 31.03.2016 v ContentsAbbreviations AA Appellate Authority AIF Alternative Investment Fund AML Anti-Money Laundering APY Atal Pension Yojana ASP Annuity Service Provider AUM Assets Under Management BOJ Bank of Japan BSE Bombay Stock Exchange CAB Central Autonomous Bodies CAGR Compounded Annual Growth Rate CBLO Collateralised Borrowing and Lending Operation CBS Core Banking Solution CD Certificates of Deposit CFT Cross File Transfer CG Central Government CGMS Central Grievance Monitoring System CP Commercial Paper CPI Consumer Price Index CPIO Central Public Information Officer CRA Central Recordkeeping Agency CRA- FC Central Recordkeeping Agency- Facilitation Centre CSO Central Statistical Organisation DA Dearness Allowance DB Defined Benefit DC Defined Contribution DDO Drawing and Disbursing Officer DCCB District Central Co-operative Bank DFS Dept. of Financial Services DTA Domestic Tariff Area DTO District Treasury Office ECB European Central Bank EEE Exempt Exempt, Exempt EET Exempt, Exempt and Tax EMDE Emerging market and developing economies EME Emerging Market Economies EPF Employee Provident Fund ETF Exchange Traded Fund FCNR Foreign Currency Non-Residential FD Fixed Deposit FOMC Federal Open Market Committee FII Financial Institutional Investor FRC Fund Receipt Confirmation File viContents FTSE Financial Times Stock Exchange FY Financial Year GDP Gross Domestic Product GPF General Provident Fund GRC Grievance Redressal Cell GVA Gross Value Added IBA Indian Banks Association ICT Information and Communications Technology IDR Indian Depository Receipts IMF International Monetary Fund INR Indian Rupee IPIN Internet Personal Identification Number TPIN Trading partner identification number IRDAI Insurance Regulatory and Development Authority of India ITES Information Technology Enabled Services IVRS Interactive Voice Response System KYC Know Your Customer MSF Marginal Standing Facility MGNREGS Mahatma Gandhi National Rural Employment Guarantee Scheme MFI Micro Finance Institution MIS Management Information System NABARD National Bank for Agriculture and Rural Development NAV Net Asset Value NBFC Non-Bank Financial Companies NISM National Institute of Securities Market NLTA Non Lending Technical Assistance NPS National Pension System NPSCAN NPS Contribution Accounting Network NPST National Pension System Trust NRE Non Resident Rupee NRI Non-Resident of India NRO Non Resident Ordinary Rupee NSDL National Securities Depository Limited NSE National Stock Exchange OECD Organization for Economic Cooperation and Development OMO Open Market Operations OTP One Time Password RBI Reserve Bank of India REIT Real Estate Investment Trust RRB Regional Rural Bank RTI Right to Information PAN Permanent Account Number PAO Pay and Accounts Office viiPrAO Principal Accounting offices PGSP Payment Gateway Service Provider PF Pension Fund PFI Private Finance Initiative PFM Pension Fund Manager PoP Point of Presence PoP-SP Point of Presence Service Provider PPF Public Provident Fund PRAN Permanent Retirement Account Number PSU Public Sector Undertaking SATCOM Satellite Communication SCF Subscribers Contribution File SDL State Development Loan SEBI Securities and Exchange Board of India SG State Government SHCIL Stock Holding Corporation of India Ltd SLBC State Level Bankers Committee SOT Statement of Transactions TB Trustee Bank UDAY Ujwal DISCOM Assurance Yojana UNFPA United Nations Population Fund WPI Wholesale Price Index WTM Whole Time Member YTM Yield to Maturity viiiVision - Mission Vision “To be a model Regulator for promotion and development of an organized pension system to serve the old age income needs of people on a sustainable basis.” Mission “To establish and promote pension system for all citizens through guided development and prudent regulation of the pension industry, with focus on institution-building, capacity development and enabling framework for innovations in products, schemes and programmes across all stakeholders and market participants, in the best interest of the subscribers and the pension system.” ixx Chairman's Message The current global demographic shift to ageing population, largely reflecting rising life expectancy and declining fertility, has led many countries across the world to revisit their pension systems. The United Nations Population Fund (UNFPA) report has pointed that in India, persons above 60 would increase from existing 8.9 per cent of the population to 19.4 per cent of the population and persons above 80 would increase from the existing 0.9 per cent to 2.8 per cent by 2050. Traditionally, Pension schemes largely hinge on financing through employer and employee participation and thus have restricted the coverage to the organized sector workers - denying the vast majority of the workforce in the unorganized sector access to formal channels of old age economic support. The limited pension coverage of the huge unorganised sector is a matter of concern for all of us. However, given that a majority of the Indian population is still young, timely and suitable policy interventions can help avert an impending pension crisis. As an important path-breaking programme in this direction, the National Pension System (NPS) was conceived as the country's flagship programme in the pension sector. The system encourages a person to take responsibility of his/her own retirement by sufficient pension contributions during the person's earning lifespan to finance a reasonable standard of living even after retirement. To encourage people from unorganised sector to participate in self-contributory pension system Government has announced the Atal Pension Yojana (APY) for serving the unserved segment of the market at the 'Bottom of Pyramid' and to support individuals in the unorganized sector with much needed old age income security. The PFRDA and its entire set of intermediaries, particularly the banking industry is extending whole hearted support in promoting and expanding the scope and coverage of this programme. The programme has received a good response and I am confident that it will be able to attract many more individuals from the unorganised sector in the coming days. Both NPS and APY are comparatively new schemes and awareness of these schemes need to be spread for their acceptance across the various segments of the society. Government supports to these schemes in the form of attractive tax benefits and guarantee for APY increases the appeal of these schemes but they still have to be pushed to the people. There is strong need to have trained advisors for consultative selling, given the low level of awareness about pension and retirement planning and PFRDA is appointing retirement advisors who will help the prospects/subscribers in deciding retirement plans and guide them toward a financially secure retirement. Further, to ensure dissemination of NPS awareness, PFRDA has aggressively embarked upon promotional and developmental activity by appointing a dedicated agency for imparting training and capacity building for officials of banks, post offices, POPs, Nodal Offices etc. and more than 90,000 officials of banks and post office have been trained. To enable our citizens living outside India to have access to pension, Non Resident Indians have been allowed to subscribe to the NPS account on both repatriable and on non-repatriable basis. Besides, NRIs can also open an NPS account online through NRI eNPS. PFRDA continued to leverage technology across the value chain to drive efficiencies and improve ease of access to NPS for the subscribers and providers alike. e-NPS, a convenient online based subscriber registration and contribution facility for NPS has been introduced for the existing and potentialChairman's Message subscribers. eNPS facilitates opening of Individual Pension Account under NPS and making initial and subsequent contribution to the Tier I as well as Tier II account online. This feature also enables the subscribers to change their Pension Fund Managers, Asset Class, Allocation Ratio, and Scheme Options after authentication. NPS subscribers can initiate withdrawal request from Tier II account by using their login credentials and OTP authentication on registered mobile number. With a view to provide easy access to NPS account, Mobile App has been launched where the subscribers can view their current holdings, raise the request for Transaction Statement, change contact details, change password and get notifications related to NPS. I am sure that these newly added technology based features will provide greater convenience to subscribers. Besides the expansion in coverage, the provision of old age income security also entails working towards adequacy of income post working life, which can be done by optimizing returns through appropriate investment guidelines. Toward this, new alternative investment assets which consist of commercial mortgage based securities or residential mortgaged based securities, units issued by Real Estate Investment Trusts, asset backed securities, units of Infrastructure Investment Trusts and Alternative Investment Funds regulated by SEBI have been added as investment options under NPS. Taking the next step, PFRDA has planned to introduce two additional life cycle funds to NPS Private Sector subscribers in addition to the existing life cycle fund (available under default mode). These Life Cycle Funds may be referred to as “Aggressive Life Cycle Fund” with equity allocation of 75% at the age of 35 years and “Conservative Life Cycle Fund” with equity allocation of 25% at the age of 35 years. It is also proposed that LC-50 (Moderate Life Cycle Fund) and LC-25 (Conservative Life Cycle Fund) will also be made available to the Government employee along with the other options in consultation with the Government. Looking forward, India will witness paradigm shift in the entire concept of pension as a social security measure from a welfare-oriented to needs-oriented one, with much greater accessibility and sustainability. National Pension System is a great framework that can enable long term savings for retirement and provide a decent hedge against post-retirement income uncertainties for the unorganized sector, besides being a valuable income supplement for the organized sector. NPS is equipped to take on the opportunities and challenges of creating an inclusive, affordable and fair pension system in India and I am certain that with the momentum gained in extending pension and retirement benefits to our citizens, this goal will be achieved. Hemant G Contractor xiPart- I Policies and Programmes 1.1 Review of General Economic Environment discord—are generating substantial uncertainty. and the performance of financial market Global growth during the year 2015 was at 3.1 percent against the growth of 3.4 percent during 2014. Global As per World Economic Outlook, April 2016, major growth during the second half of 2015 , remained macroeconomic realignments are affecting prospects subdued at 2.8 percent. The weakness in late 2015 differentially across countries and regions. These reflected to an important extent softer activity in include the slowdown and rebalancing in China; a advanced economies—especially in the United States, further decline in commodity prices, especially for oil, as also in Japan and other advanced Asian economies. with sizable redistributive consequences across The picture for emerging markets is quite diverse, with sectors and countries; a related slowdown in high growth rates in China and most of emerging Asia, investment and trade; and declining capital flows to but severe macroeconomic conditions in Brazil, emerging market and developing economies. These Russia, and a number of other commodity exporters. realignments— together with a host of non-economic Table 1.1 gives the rates of growth in output in factors, including geopolitical tensions and political different countries during 2014 and 2015. (% change) 2014 2015 World Output 3.4 3.1 Advanced Economies 1.8 1.9 United States 2.4 2.4 Euro Area 0.9 1.6 Germany 1.6 1.5 France 0.2 1.1 Italy Spain Japan United Kingdom Canada Other Advanced Economies Emerging Market and Developing Economies Commonwealth of Independent States Russia 1Part -I 2014 2015 Russia Excluding Russia Emerging and Developing Asia China India ASEAN-5 Emerging and Developing Europe Latin America and the Caribbean Brazil Mexico Middle East, North Africa, Afghanistan, and Pakistan Saudi Arabia Sub-Saharan Africa Nigeria SouthAfrica Source: WEO Low Inflation - Headline inflation in advanced historically low yields for safe-haven government economies in 2015, at 0.3 percent on average, was the bonds. These developments were triggered by lowest since the global financial crisis, mostly concerns about lack of policy space in advanced reflecting the sharp decline in commodity prices, with economies to respond to a potential worsening in the a pickup in the late part of 2015. In many emerging outlook, worries about the effects of very low oil markets, lower prices for oil and other commodities prices, and questions about the speed at which China's (including food, which has a larger weight in the economy is slowing as well as its authorities' policy intentions. The current slowdown in China's growth consumer price indices of emerging market and has been driven mainly by investment and exports. developing economies) have tended to reduce The weakening in investment reflects a correction after inflation, but in a number of countries, such as Brazil, an extended period of very rapid growth. Given Colombia, and Russia, sizable currency depreciations China's size, openness, and high investment rate and have offset to a large extent the effect of lower the high import content of its investment and exports, commodity prices, and inflation has risen. the slowdown has entailed sizable global spillovers Global financial markets have also been volatile, amid through trade channels. These trade effects are both rising global risk aversion, substantial declines in direct (reduced demand for trading partners' global equity markets, widening of credit spreads, and products) and indirect (impact on world prices for 2specific goods that China imports––for example, the year 2014-15 of Rs. 105.52 lakh crore. commodities), affecting other countries' exchange Real GVA (value of output less the value of rates and asset markets. intermediate consumption), i.e, GVA at basic constant The policy stance remained very accommodative but (2011-12) prices for the year 2015-16 is estimated at Rs. with asymmetric shifts. In December 2015, while the 104.27 lakh crore, showing a growth rate of 7.2 percent US Federal Reserve raised policy rates above the zero over GVA for the year 2014-15 of Rs.97.27 lakh crore. lower bound for the first time since 2009 and The sectors which registered growth rate of over 7.0 communicated that any further policy actions will percent are 'financial, real estate and professional remain data dependent, the European Central Bank services' (10.3 percent), manufacturing (9.3 percent), (ECB) moved further in following an unconventional 'trade, hotels, transport, communication and services monetary policy. The Bank of Japan (BoJ) introduced a related to broadcasting' (9.0 percent), and 'mining and negative interest rate on marginal excess reserves in quarrying' (7.4 percent). The growth in the January 2016. Many of the commodity exporting 'agriculture, forestry and fishing', is estimated at 1.2 EMDEs raised policy rates in 2015 to rein in currency per cent, 'construction' 3.9 per cent, 'electricity, gas, depreciation and associated changes in inflation and water supply & other utility services' 6.6 per cent and inflation expectations. 'public administration, defence and other services' is The Indian Economy estimated to be 6.6 per cent. GDP Growth The 'financial, real estate and professional services' sector has shown a growth rate of 10.3 per cent during Real GDP ( value added after adjusting for taxes and 2015-16 as against 10.6 per cent during the last year. subsidies) or GDP at constant (2011-12) prices for the Economic activity wise rates of growth in the gross year 2015-16 is estimated at Rs.113.50 lakh crore , value added during 2015-16 is given in Table 1.2 showing a growth rate of 7.6 percent over the GDP for Table 1.2: Estimates of Gross Value Added (GVA) at basic price by Economic Activity (At 2011-12 prices) 9.0 3Part -I Per Capita Income groups - food articles, manufactured products, The per capita income in real terms (at 2011-12 prices) electricity and all commodities, has risen by 3.3 per during 2015-16 is likely to attain a level of Rs. 77,435 as cent, (-) 1.1 per cent, 4.0 per cent and (-)2.5 percent, compared to Rs. 72,889 for the year 2014-15. The respectively during April-March, 2015-16. The rate of growth rate in per capita income is estimated at 6.2 inflation based on WPI remained in the negative zone percent during 2015-16, as against 5.8 percent in the throughout the FY 2015-16 backed by negative previous year. inflation in Fuel and Power and Manufacturing products. Inflation The wholesale price index (WPI), in respect of the 4In the early month of the year food price From the second half of October 2015, money pressures stemming from unseasonal rains and market rates, which had dropped by 68 bps in subsequently from a delayed and skewed onset response to the end-September policy rate of the South- West monsoon where muted by reduction, began to firm up reflecting the strong favorable base effects. By July-August tightening of liquidity on account of slowdown 2015, CPI inflation ebbed to an intra-year low of in government expenditure in the run-up to the 3.7 per cent. From September the base effects end-year fiscal targets and increase in currency dissipated and inflation rose unrelentingly demand. month after month to 5.7 per cent in January Through the second half of the year, turnover in 2016. In February - March 2016, vegetable and money market segments increased, mainly pulses prices declined and downward reflecting the call money and market repo adjustments in fuel prices pulled down segments, even as the CBLO segment showed a headline inflation to 4.8 per cent in March 2016. decline. The CPI inflation for April-March, 2015-16 was 4.9 per cent. G-Secs Market Domestic Financial Market In the government securities (g-secs) market, yields hardened in the beginning of 2015 -16 on Money Market prevailing bearish sentiments in the market and Money market rates trended below the policy also tracking a weak rupee. By mid-May, the rate with a sustained downside bias, except drying up of liquidity and emergence of stress during mid-April to May. Notably, besides the in the German bond market triggered sell-offs resumption of public expenditure from June, a and hardening of yields globally, including in structural mismatch between deposit India. Expectations of another sub-normal mobilization and credit off-take during this monsoon also kept yields elevated through period engendered surplus liquidity in the June 2015. After trading tightly range-bound, money market. Interest rates on commercial yields started to ease from the last week of papers (CPs), certificates of deposits (CDs) and August as expectations of monetary policy 91-day treasury bills also traded on an easing accommodation domestically gained ground, note and priced in 50 bps reductions in the aided by the US Federal Open Market policy rate announced at end-September. Committee (FOMC) keeping the first half of the Turnover in all segments of the overnight year, yield moved in a range of 7.53 per cent to market generally picked up in the first half of 8.09 per cent. Average daily turnover picked up the year starting from May 2015. in the secondary g-secs market, up by over 7 per cent from a year ago. Chart 1.2: Repo Rate and G-Sec Rate (10 years) 5Part -I From the second week of October, yields firmed up. the fiscal deficit target for FY2017 maintained its Expectations of an interest rate hike by the US Fed in pressure on bond yields, pushing it upwards.The December 2015, some increase in inflation and the announcement of the Union Budget 2016-17 including continuing oversupply of securities due to borrowings adherence to the fiscal consolidation brought some by states, concerns on issuance of UDAY bonds, and relief, with the yields easing on a positive sentiment, borrowing by public sector entities through tax-free supported by low inflation during February-March bonds, are some of the reasons that contributed to the 2016 as well as favorable global developments, firming up of yields. Higher headline inflation for the particularly the Fed's dovish guidance. month of January 2016 and fears of upward revision in Chart 1.3: 10 year G-Sec Yield Corporate Debt Market relation to the previous year. Taking advantage of low yields vis- à-vis bank lending rates, corporates raised In 2015-16, there was a surge in public issuances of more resources from the bond market in the recent corporate bonds. In the secondary market, however, period. activity was subdued reflecting low liquidity. Yield spreads over g-secs increased during the year on Equity Market concerns relating to balance sheet stress and debt During the financial year, the benchmark indices S&P servicing capabilities of less than AAA rated corporate BSE Sensex and Nifty 50 decreased by 9.4 and 8.9 per issuers . In the second half of the year, following cent respectively over March 31, 2015 . The Sensex September 2015, reduction in the policy repo rate and closed at 25,342 on March 31, 2016, registering a again towards the close of the year, yields of AAA decrease of 2,616 points over 27,957 as on March 31, rated corporate bonds eased, following g-secs yields. 2015. The Nifty decreased by 753 points to close at Foreign portfolio investment in corporate bonds stood 7,738 on March 31, 2016 over 8,491 at the end of March at about Rs. 3.4 trillion at end-March 2016, amounting 31, 2015. The benchmark indices Sensex and Nifty to around 80 per cent of the limit. Turnover in the reached their maximum on April 13, 2015, when they corporate bond market declined by 6.3 per cent in 6touched the highest levels of 29,044 and 8,834 previous financial year. The movement in the NIFTY respectively. The lowest level attained by Sensex was 50 and Sensex during the years 2014-15 and 2015-16 are 22,952 on February 11, 2016 while Nifty touched a low given in Chart 1.4. of 6,971 on February 25, 2016. The biggest gain in Exchange Rate Movements: Sensex and Nifty was observed on March 1, 2016 when both the indices appreciated by 3.4 per cent. Both the A combination of global and domestic developments indices registered their biggest fall of 5.9 per cent on impacted the foreign exchange market in the early August 31, 2015. In the cash segment, the turnover at months of 2015-16. The exchange rate of the rupee BSE and NSE declined by 13.4 per cent and 2.1 per cent traded with a downside bias, and was vulnerable to respectively during 2015-16 as compared to a rise of spillovers from the Greek crisis, global sell-offs, 63.9 per cent and 54.2 per cent, respectively during the Chart 1.4: Movement of indices hawkish Federal Open Market Committee (FOMC) tightly range-bound through September 2015, through guidance and the uncertainty surrounding the this eventful period for emerging market currencies, evolution prices of international crude. Domestic the rupee turned out to be better performing among developments amplified these pressures – the the peer currencies. persistent shrinking of exports; portfolio outflows in In the second half of October 2015, depreciating response to Minimum Alternate Tax (MAT); and pressures set in again with growing anticipation of projections of a subnormal monsoon. After a brief lull policy rate action by the Fed in December 2015. The of range-bound movements, the exchange rate came exit of portfolio investors from Indian debt and equity under renewed downward pressure in mid-August markets accentuated the pressures on the rupee. 2015, with sudden devaluation of the Renminbi and Eventually, the increase in the target Federal Funds the selloffs in Chinese equity markets. The rupee rate in December turned out to be fully discounted by crossed the level of Rs. 66 against the US dollar at the markets. end of August 2015, before stabilizing and trading 7Part -I While the turmoil in international financial markets close of the year. The depreciation of the rupee against kept the rupee under pressure through January 2016, the US dollar during 2015-16 was moderate relative to and the first half of February 2016, conditions other Emerging Market Economies (EMEs). In stabilized thereafter. The presentation of the Union nominal terms, it depreciated by 6.6 per cent against Budget 2016-17, followed by resumption of portfolio the US dollar during the year, while in real effective flows on dovish Fed guidance, helped stabilize the terms it appreciated by 2.9 per cent against a basket of rupee and imparted a modest appreciation bias by the 36 currencies. Chart 1.5: Movement of Rs. /US $ 1.2 Review of policies and programmes overall decline in the total OECD pension fund having a bearing on the working of the investments is largely driven by the decline in the National Pension System and other pension United States, which represented 58% of all pension fund investments in the OECD area. In addition, the schemes covered under the Act growth rate of pension fund investments was below 1.2.1 Performance of Pension Sector in India and 2% in Japan, the Netherlands and the United Kingdom, representing altogether a further 22% of other countries investments within the OECD area. Pension fund investments down slightly in 2015 In some countries investments are channeled through Preliminary data of OECD show that aggregated vehicles other than pension funds. In Denmark, most pension fund investments in the OECD area for 2015 is of the occupational pension plans were managed by USD 24.8 trillion, down slightly from USD 25.2 trillion specialized life insurance companies. The overall size in 2014. of investments in the funded pension system in Denmark exceeded two times its GDP. In Canada, However, when pension fund investments are pension funds accounted for half of the investments in expressed in national currency, they grew in all the funded pension system. The size of investments in countries in 2015, with the exception of Denmark, the Canadian whole funded pension system was Luxembourg, Poland and the United States. The assessed to be 157% of Canada's GDP in 2015. 8Outside the OECD area, pension fund investments accumulations and account for 7.8 per cent of GDP in increased in nominal terms between 2014 and 2015 in 2015. 24 non-OECD economies. Albania, Armenia, Ghana, The aggregated amount of investments of pension and Pakistan experienced an increase by more than funds in the sample of 24 non-OECD economies, 30% of pension fund investments since December including Brazil, India and Russia, remained low 2014. These investments still represented less than 5% compared to the OECD and was worth USD 0.5 trillion of their GDP of these five economies, as their funded in 2015. Pension funds were prominent in the funded pension systems are not mature yet. The number of pension systems of this selection of non-OECD plan members grew in these economies, leading to a economies. higher amount of contributions to pension plans and therefore more investments. Pension funds' investments in case of India include the NPS and EPF Chart 1.6 a: Total investment of pension Chart 1.6 b: Total investment of pension fund fund in selected OECD countries in selected NON OECD countries Source: OECD For India, include figs of NPS and EPF 9Part -I Average returns on pension fund investments Pakistan (9.3%). The relative fall of pension fund investments may be The strengthening of the US dollar vis-à-vis other explained by low real net investment returns in 2015, currencies could also help explain the decrease of the coupled with the strengthening of the US dollar vis-à- overall pension fund investments expressed in US vis other major currencies. dollar terms. For example, the US dollar appreciated vis-à-vis the euro and the pound between end-2014 Real net investment returns were low in 2015, with a and end-2015. weighted OECD average at 0.4% . These low real net returns help explaining the relative fall in OECD Pension fund investment returns are adjusted for pension fund investments. Preliminary real inflation. In non-OECD economies such as Brazil and investment rates of return ranged from positive Russia, high inflation may account for the low real values, peaking at 7.1% in the Netherlands, to negative investment rates of return. values, down to - 5.9% for Turkey's personal plans. Developments in stock markets: The negative Twenty-two countries witnessed positive investment preliminary estimates measuring the real rate of return rates of return, but lower than 2% for eight of them. of pension fund investments could be partially Three OECD countries had negative returns in 2015: explained by negative equity returns in some quarters Poland, Turkey and the United States which dragged of 2015 (e.g. in the United States and Hong Kong, the OECD weighted average close to zero. China). The S&P 500 and FTSE 100 exhibited lower Outside the OECD area, performance of pension fund levels at the end of 2015 compared to 2014. The MSCI investments also varied across economies, from -5.9% Pacific Index slightly increased by 0.4% in end-2015 in Hong Kong, China to 13.5% in Serbia. The weighted compared to end- 2014. These developments may be average real investment rate of return in 2015 was behind the weak performance of pension funds in lower than in the OECD area. This average was equal 2015. to -3.1%, resulting mainly from a performance around Allocation to shares: The weak performance of stock or below -3% in jurisdictions with the highest amount markets may have led to lower investment returns in of pension fund investments (e.g. Brazil; Colombia; 2015, especially in Hong Kong, China; Poland and the Hong Kong, China; and Russia). The highest returns United States where pension funds respectively among OECD and non-OECD economies of this invested 61%, 82% and 47% of their portfolios in analysis were observed in three non-OECD shares. economies: Serbia (13.5%), Costa Rica (12.7%) and 101.2.2 NPS and Intermediaries associated with 2004 initially for Central Government employees other NPS than armed forces. Subsequently, from May 2009, NPS was extended to the private sector including the The Pension Fund Regulatory and Development unorganised sector on voluntary basis. In October 2010 Authority (PFRDA) were established in 2003 to government launched the NPS Lite- Swavalamban promote, develop and regulate the pension market in Scheme for the under privileged workers in India. unorganised sector. In May 2015 the Atal Pension Yojana was launched with a minimum guarantee Pursuant to reports of various expert committees to pension and co-contribution by the Government of adapt pension systems to fiscal imperatives and India (for certain eligible subscribers who join the demographic trends, India made a conscious move to scheme up to March 31, 2016) focusing primarily on shift from the defined benefit, unfunded, pay-as-you the under privileged workers in unorganised sector. go public pension system to defined contribution, funded pension system, initially called the New The NPS is a contributory pension system where the Pension Scheme now renamed as National Pension subscriber contributes to the fund over his/her System (NPS). NPS was made effective from January 1, working life and at retirement, draws the corpus so 11Part -I created to buy an annuity that will provide regular contribution scheme available to all eligible income in retirement. The money contributed by the subscribers subscriber (and employer, where applicable) is c) The Corporate model for companies wishing invested by the pension fund(s) as per the investment to use the NPS platform to provide retirement guidelines prescribed by PFRDA. As per the PFRDA benefit to its employees Act, subscribers have the right to choose the pension d) NPS Lite/Swavalamban – a feature optimized funds and investment patterns. The expected risk and low cost model for unorganised sector return from each fund depends upon the type of investments it holds, which is declared upfront. There e) The Atal Pension Yojana with minimum are no guaranteed returns or principal protection in guaranteed pension by the government for the NPS. Subscribers earn market returns on their unorganised sector contribution and the pension drawn depends on the The Government of India introduced National Pension corpus that is available to buy the annuity on System (NPS) based on defined contribution (DC) for retirement. the new entrants recruited on or after 01.01.2004 in the The pension funds pool the contributions of different Central Government (CG) under various subscribers. The money so contributed is invested in a Ministries/Departments (except Armed Forces) vide portfolio of securities according to the investment its Gazette Notification No. 5/7/2003-ECB & PR dt objective of the respective fund and regulatory norms 22.12.2003. Accordingly, the Central Government laid down by PFRDA, and managed by fund managers Ministries & Departments are covered under NPS. appointed by the PFRDA. The contributions made NPS is not mandatory for the state governments. periodically along with the returns earned accumulate However, the state governments also realized the over time in each subscriber's individual account to benefits of NPS and at present, all states barring West form the corpus. Larger the contribution, higher the Bengal and Tripura have notified adoption of National returns earned and longer the period of investments, Pension System. Tamil Nadu has also notified NPS higher will be the retirement corpus available to the but is yet to adopt its architecture. The employees of subscriber. The NPS gives the subscriber the flexibility Central Autonomous organizations and the to choose the contribution they want to make (except Autonomous organizations of the respective State in the case of government employees where there is a Government/UTs are also eligible to join NPS. minimum contribution of 10 per cent of salary (basic Presently under the NPS – Government sector, there is plus dearness allowance) by the employee and a a three layered architecture working as nodal offices. matching contribution by employer), the period for Under Central Government - which they will make the contribution, the way the contribution has to be invested to earn returns, the l The Principal Accounts Officer fund manager who will manage the funds and the l Pay & Accounts Officer facility to track the performance of their funds and Drawing & Disbursing Officer form the three levels of switch between funds and fund managers, depending control for NPS related functions. upon their performance. Under State Government - Variants of NPS l The Directorate of Treasury & Accounts, The National Pension System (NPS) platform offers l District Treasury Officer different models to suit the different segments of users. These include : l Drawing & Disbursing Officer are responsible for NPS related functions in State Government sector. a) The Government model for the Central and State Government Employees These nodal offices are responsible for NPS related b) The All Citizens Model as a voluntary functions in State Government sector. 12Chart 1.8: NPS Hierarchy for Government Sector (as on 31.03.2016) As on 31.03.2016, there are 642 PrAOs in CG sector and scrutinizes the form and PRAN is generated. 233 DTAs in SG sector registered under NPS Following models of contributions upload are architecture. Similarly, there are 4056 PAOs and 18,326 available to the nodal offices: DDOs in CG sector under 642 PrAOs. The number of l Centralized DTOs and DDOs under various directorates in SG sector is on a higher side. There are 3943 DTOs and l De-centralized 206,180 DDOs in SG sector. l Quasi-Centralized l NPS architecture which is unbundled has been In both Central Government and State Governments, designed in order to provide seamless service to a DDOs are responsible for drawing of salary bills & huge number of nodal offices involved in catering NPS bills as per their accounting system. After to government subscriber base of 45.82 lakhs. For drawing, salary bills are forwarded to the PAO/ DTO. the purpose of operating the CRA system, Nodal PAO/DTO prepare Subscribers Contribution File offices and Subscribers need to get registered in the (SCF) and upload it to NPSCAN system using the user CRA system. Upon registration, the entities are id and I-Pin allotted by CRA. After this, the PAO/ allotted with unique Registration Numbers, DTO remits the funds to the Trustee Bank with the Usernames and passwords, which is used for required information (PAO Registration number and accessing and operating the NPSCAN/CRA Transaction id). The role of the Principal Accounts system. After registration of the nodal offices, the Officer (PrAO) in CG sector and the Directorate of subscribers can submit Subscriber Registration Treasuries & Accounts (DTA) in SG sector is forms for generation of Permanent Retirement supervisory in nature and they are responsible for Account Numbers (PRANs). A subscriber will effective NPS implementation in the concerned offices. submit the form to his concerned DDO. DDO verifies the form and forward it to the PAO for Every month 10% of salary (basic +DA) are onward submission to Central Recordkeeping contributed by the employee and an equivalent sum by Agency – Facilitation Centre (CRA-FC). CRA –FC the government. Under the Government model the 13Part -I contribution is invested as per the investment deduction available under section 80CCE. The guidelines issued by PFRDA wherein a maximum of employer contribution is however first added to the 15% of the contribution can be invested in shares or salary. Employers generally give the NPS contribution equity-oriented investments and the rest in fixed to their employees by reorganizing the salary income securities comprising of government securities structure. The choice of fund manager and investment and corporate bonds/debenture. The government option can be made either at employer level or the pays the cost related to opening and maintenance of employer may give that choice to the employees. The Tier I account of their employees. periodic contributions of the employees and the employer can either be directly uploaded by the b) The All Citizens Model of the NPS is available to all corporate on NPS or routed through the Point of citizens of India, whether resident or non-resident, Presence (PoP) with which the company has tied up to subject to the conditions that applicant should be provide the service. between 18 – 60 years of age as on the date of submission of his/her application to the POP/ POP-SP The NPS allows the flexibility to the subscriber to and also the applicant should comply with the Know transfer the retirement account across locations and Your Customer (KYC) norms as detailed in the between sectors. The subscriber can move the account Subscriber Registration Form. All the documents between employers if the subscriber changes required for KYC compliance need to be mandatorily employment from the State to Central or vice versa, or submitted. to the Corporate Sector or to the All Citizens model, as the case may be. The subscriber signs on directly for this model and makes periodic voluntary contributions. The d) Fresh registration under NPS Lite/Swavalamban subscriber decides how the funds contributed will be has been discontinued w.e.f April 1, 2015. The invested in debt and equity investments offered by the subscribers of Swavalamban/NPS Lite who are in the NPS, with a cap of 50% on equity investments. The age group of 18-40 years have been given option to charges associated with opening and maintaining the migrate to new Atal Pension Yojana launched by the retirement account are paid by the subscriber. GoI in May 2015 which provide minimum guaranteed pension and is focused towards the poor and the c) Companies can extend the benefit of NPS to their under-privileged citizen of India. NPS Lite/ employees. The advantage to the company is that they Swavalamban subscribers who are above 40 years of can provide retirement benefits to their employees age and thus cannot migrate to APY can continue in the using the established NPS architecture instead of Swavalamban scheme till they attain the age of 60 taking on the responsibility of setting up and years. If they wish, they can also exit from the scheme. managing trusts, investing the funds and providing annuity. The contribution to the retirement account e) Atal Pension Yojana provides a minimum defined may be made by the employer alone, employee alone pension after 60 years of age. Under the APY, the or the employer and employee in any decided subscribers would receive the minimum guaranteed proportion. Subscribers get tax benefit under section pension of Rs. 1000 per month, Rs. 2000 per month, Rs. 80CCD (1) for contribution up to 10% of basic +DA up 3000 per month, Rs. 4000 per month, Rs. 5000 per to an overall limit of Rs.1, 50,000 under Section 80CCE. month, at the age of 60 years, depending on their An additional tax deduction on investment upto Rs. contributions, which itself would be based on the age 50000/- is available under Sec. 80CCD (1B) which is of joining the APY. The minimum age of joining APY is exclusively available for NPS. Additionally, any 18 years and maximum age is 40 years. Therefore, contribution made by the employer up to the limit of minimum period of contribution by any subscriber 10% of Basic + DA is also eligible for tax deduction under APY would be 20 years or more. under section 80CCD (2) of the Income Tax Act, 1961 The Scheme operates through all Bank Branches /Post without any monetary limit. This is over and above the Offices having CBS platform registered with Central 14Recordkeeping Agency (CRA). subscribers through different mode of communication in English, Hindi and Vernacular languages there Subscribers' joining at 18 years of age have to should also be adequate thinking/capacity building of contribute Rs 42 on monthly basis to get a minimum banking personnel involved in the subscriber guaranteed monthly pension of Rs 1000. The registration and servicing towards this end. Activities contribution amount increases with increase of age of undertaken by PFRDA during the year 2015-16 are as the subscriber and intended pension. Monthly, under: Quarterly and Half Yearly mode of contribution is available for subscribers. l All Banks of Public Sector, Private Sector, RRBs, Co-operative Banks both in urban and The contribution is payable by auto debit facility from rural areas which are under CBS platform were the Subscribers savings bank account. Deduction asked to register with Central Recordkeeping under Income Tax Act under section 80 CCD (as Agency, NSDL (CRA-NSDL). applicable under NPS) is available for the contribution made by subscriber under APY. l Several meetings were conducted with Banks, IBA and other entities to conceptualise APY Persons who are not covered by any Statutory Social module for ease of the enrolments and record Security Schemes and are not income tax payers and maintenance under the compatible CBS who joined APY upto March 31, 2016, will receive environment. Government of India co-contribution i.e. 50% of the total contribution or Rs. 1000 per annum, whichever is l Handholding by other financial regulators like lower for a period of 5 years i.e till 2019-20. NABARD to the DCCBs for development of APY module. State Governments of Himachal Pradesh, Andhra Pradesh and Gujarat have notified APY for their l Structuring of the guidelines & related forms. various category of unorganized workers. PFRDA has l Training support by PFRDA through engaged with many Departments like Finance, empanelment of Training Agencies for Health/Family Welfare, Women/Child training of 1.5 lac bankers across the country. Development, Labour rural development etc. both at l Review cum strategy meetings were the Central and State Government level for conducted in the different regions of the considering their underlying occupational groups to country with the Banks to enhance the give APY. performance. Implementation of APY across the country l Weekly video conference meetings were Conferences, workshops and training programmes are organised by DFS for review of the being organized with Banks/Service Providers and performance. Sporadically mega campaigns other stake holder such as DFS,CRA, State Govt were organised by the banks. representatives with a view to share their experience of l Support through awareness creation by the implementation of APY across the country. It was felt means of advertisements and supply of by the participants that the scheme requires vide marketing material to the service providers. spread awareness creation among the prospective subscribers across the country. All the functionaries l State Governments of Himachal Pradesh, namely banks involved in subscriber registration and Andhra Pradesh and Gujarat has notified APY servicing State Govt Depts. involved in the for their various category of unorganised implementation of welfare schemes such as ASHA, workers. PFRDA has engaged the with many Anganwadi, MGNREGS, construction laborer State Govt Departments like Finance, agriculture laborer etc should on regular basis create Health/Family Welfare, Women/Child awareness about the scheme among the potential Development, Labour for considering their 15Part -I underlying occupational groups. Pension System (NPS) crossed Rs. 1 lac crore and stood at Rs. 118,810 crore as end of March 2016 from Rs. Subscribers, Contribution and AUM under 80,855 crore as end of March 2015. AUM of APY stood NPS/APY at Rs. 506 crore as end of March 2016. Assets under Management (AUM) of National Table 1.3: No. of subscribers, contribution and AUM under NPS/APY No. of subscribers (lakh) 21,513 32,010 48,105 80,855 1,18,810 32,750 37,955 Intermediaries and their functions (POP), Central Recordkeeping Agency (CRA), Trustee Bank, Pension Fund Managers (PFMs), NPS Trust, NPS Constituents Custodian and Annuity Service Providers. The NPS architecture consists of Points of Presence Chart 1.9: NPS Architecture 16Points of Presence (PoPs) remitting withdrawal funds to subscriber's account and to annuity service provider for the Points of Presence are banks and non-banking annuity scheme financial companies registered with PFRDA for registration and servicing of the subscribers to the CRA- Facilitation Centres (CRA-FC) are entities NPS. A PoP is the first point of interaction between the appointed by the CRA to provide various services to subscriber and the NPS. The registered PoPs have PoPs. CRA-FCs typically have multiple branches authorized branches to act as collection points and around the country. The services offered by CRA-FC extend services to customers, called POP-Service include : providers (PoP-SP). The functions of the PoP include: l Acceptance of application for allotment of new l Subscribers Registration PRAN l Processing subscriber contributions l Acceptance of subscriber request for change in signature or change in photograph. l Change in personal details l Change in investment scheme/fund manager Trustee Bank l Processing subscriber shifting from one model to The trustee bank handles the funds side of the the other transactions between various entities. Axis Bank Ltd is l Issuing printed account statement the designated bank to facilitate fund transfers across subscribers, fund managers and the annuity service l Processing of withdrawal/ exit request on providers based on the instructions received from the superannuation CRA. The trustee bank receives funds from the nodal Central Record-keeping Agency (CRA) offices across sectors and reconciles it with the subscriber contribution file. The trustee bank holds the The CRA is the core infrastructure of the NPS. NSDL e- funds in the name of the NPS Trust and the subscribers Governance Infrastructure Ltd. has been designated are the beneficial owners. the CRA for the NPS. The main functions include: Pension Fund Managers (PFM) l Maintaining subscriber records, administration and customer service functions. These are professional pension fund managers l Issuing Permanent Retirement Account Number appointed to invest the corpus in a portfolio of (PRAN) for each subscriber, maintaining the securities and manage them. Currently the pension database of all PRANs and recording transactions fund managers for the All Citizens Model are –ICICI relating to each PRAN. Prudential Pension Funds Management Company Ltd., LIC Pension Fund Ltd, Kotak Mahindra Pension l Acting as the interface between the various Fund Ltd., Reliance Capital Pension Fund Ltd., SBI intermediaries of the NPS system. This includes Pension Fund Pvt. Ltd., UTI Retirement Solutions Ltd, monitoring contributions by each member and and HDFC Pension Management Co Ltd.,. The instructions and communication of the same to the functions include : pension funds. They will also periodically send PRAN statement to each member. l Investing the contributions as per the mandate l Providing a centralized grievance management l Constructing the scheme portfolio system l Maintenance of books and records, reporting to l Providing timely fund transfer to fund managers, authorities and making disclosures measure fund performance using NAVs declared The pension funds are registered after their sponsors by the fund managers meet eligibility requirements laid down in the PFRDA l Co-ordinate instructions with the trustee bank for (Pension Fund) Regulations, 2015, such as fund 17Part -I management experience of at least five years in equity l Informing about the actions of the issuers of and debt markets, engaged in financial business securities held that may impact the benefits. activity and regulated by regulators such as SEBI, IRDAI and others, tangible net worth of at least Rs.25 1.2.3 Policies and programmes having a crores for each of the preceding five years and profit bearing on the working of the National after tax in three of the five years, among others. Pension System and other pension schemes covered under the Act NPS Trust Under the provisions of the Income-tax Act, tax A trust set up under the Indian Trusts Act, into which the contribution of subscribers is pooled and held in treatment for the National Pension System (NPS) referred to in section 80CCD was Exempt, Exempt and their beneficial interest. The trust has the fiduciary responsibility for taking care of the funds and Tax (EET) i.e., the monthly/periodic contributions during the pension accumulation phase are allowed as protecting the subscriber interests. The NPS trust monitors and supervises the functioning of the deduction from income for tax purposes; the returns generated on these contributions during the Pension Fund Managers and interacts with other intermediaries like the Central Record Keeping accumulation phase are also exempt from tax; however, the terminal benefits on exit or Agency (CRA), Trustee Bank, Custodians and other superannuation, in the form of lump sum entities towards their functions of servicing the withdrawals, were taxable in the hands of the subscribers. individual subscriber or his nominee in the year of Annuity Service Providers receipt of such amounts. Annuity Service Providers (ASPs) are appointed by Through the Finance Act 2016 the Income Tax Act has the PFRDA to provide the annuity to the subscribers been amended to the effect that any payment from through their various schemes. Investors can chose National Pension System Trust to an employee on any ASP from which to buy the annuity and the ASP account of closure or his opting out of the pension will provide the monthly pension to the subscriber for scheme referred to in Section 80CCD, to the extent it the rest of their lives. The ASPs that have been does not exceed forty percent of the total amount appointed are Life Insurance Corporation of India, payable to him at the time of closure or his opting out HDFC Life Insurance Co. Ltd, ICICI Prudential Life of the scheme, shall be exempt from tax. However, the Insurance Co. Ltd., SBI Life Insurance Co. Ltd., Star whole amount received by the nominee, on death of Union Dai-ichi Life Insurance Co. Ltd. They are the assesse shall be exempt from tax. entities regulated by IRDAI. Also, the lump sum received by nominees in the event Custodian of the death of the annuity holder will be tax-free in their hands. The services of life insurance business The custodian handles the security side of the provided by way of annuity under the National transactions. The securities bought for the NPS trust Pension System (NPS) regulated by Pension Fund are held by the custodian, who also facilitates Regulatory and Development Authority (PFRDA) of securities transactions by making and accepting India has been exempted from service tax. delivery of securities. The PFRDA has appointed the Stock Holding Corporation of India Ltd as the Further with a view to bring all the pension plans custodian. The functions include: under one umbrella, it is also provided to exempt one- l Maintaining details of securities held time portability from a recognized provident fund and superannuation fund to National Pension System l Collecting the benefits like dividend, rights, bonus etc. on securities With the implementation of the above proposals from 18the Financial Year 2016-17 and the tax benefits funds through the taxation system, for the workers in available under NPS as elaborated below, NPS has the informal sector this kind of incentive is largely not become very attractive for the subscribers. For relevant as low paid workers are not subject to corporates also, NPS now provides seamless facility to taxation and do not pay tax. the subscribers of Superannuation Scheme and Pensions usually involve some form of incentive Provident Fund scheme to shift to NPS without any tax structure, as savings are required to be made and not implication. withdrawn over the long-term. This means that there The announcement of additional tax benefit available is some liquidity premium to be paid in order to under Sec 80CCD (1B) of IT Act for investment up to encourage them to tie up their savings for several Rs. 50,000/- for contribution to NPS as announced in decades. In the informal sector, with lower and more Union Budget 2015-16 has become beneficial to the irregular incomes, the liquidity premium required is subscribers. This is an exclusive tax benefit which can likely to be higher. In such circumstance, any initiative be availed of by any individual by opening NPS to increase coverage is likely to require governments to account and making contribution to NPS. Subscribers play an active role. Towards this, matching covered under NPS can also avail this benefit in contribution was tried by the government in the addition to the tax benefit available under Sec. 80CCD Swavalamban scheme. However, due to lack of (1). This deduction can also be availed of by employees guaranteed return the Swavalamban scheme had covered under the defined benefit pension scheme by lukewarm response from the subscribers. In order to opening NPS account and contributing up to Rs. provide some assurance about the return on their 50,000/- to it on their own. Further, the subscriber contribution to pension funds, Government launched mandatorily covered under NPS can avail tax benefit a minimum guaranteed pension scheme namely Atal on employers' contribution to NPS in addition to the Pension Yojana on May 9, 2015 which became above tax benefit under section 80CCD (2). operational from June 1, 2015. APY is focused towards the poor and the under-privileged citizen of India; it While salaried class and people from organized sector provides a minimum defined pension after 60 years of are incentivized to contribute to conventional pension age. 19Part -II Part- II Investment of Funds under NPS 2.1 Pension Funds (PFs) bidding basis and the investment management fee charged by Pension Funds for managing the Govt. Pension Fund refers to intermediary which has been employees NPS portfolio is presently 0.0102 per granted a Certificate of Registration under sub-section cent per annum of the assets under management. (3) of section 27 of PFRDA Act 2013, by the Authority B. Pension Funds (PFs) for Private Sector as a Pension Fund for receiving contributions, accumulating them and making payments to the i) HDFC Pension Management Co. Ltd. subscriber in the manner as may be specified by ii) ICICI Prudential Pension Fund Management Co. regulations. Ltd. 2.1.1 Functions iii) Kotak Mahindra Pension Fund Ltd. The Pension Fund functions in accordance with the iv) LIC Pension Fund Ltd. terms of its Certificate of Registration and the v) Reliance Capital Pension Fund Ltd. Regulations and guidelines issued by Authority from vi) SBI Pension Funds Pvt. Ltd time to time. Pension Funds are mandated to invest and manage the pension assets of the subscribers vii)UTI Retirement Solutions Pvt. Ltd covered under NPS and the APY which is inclusive of Birla Sun Life Pension Management Limited but not confined to the following: has also been issued Certificate of Registration but a. Professional investment of contributions as per it is yet to commence the business. investment guidelines prescribed by the Authority The Investment management fee charged by Pension in the best interest of subscribers. funds for the non-govt. sector portfolio is 0.01 per cent b. Scheme portfolio construction as per laid out per annum of the assets under management. schemes by the Authority. 2.2 Type of Account c. Maintains books and records of its operations. Under NPS following two types of accounts are d. Reporting to the Authority/NPST at periodical available: interval. e. Public disclosure. Tier-I account: Under Tier-I account the subscriber contributes his savings for retirement/ pension into 2.1.2 List of Pension Funds (PFs) this partially-withdrawable account. Premature During the FY 2015-16, three Pension Funds have been withdrawals are allowed subject to certain conditions. managing the investments of the Govt. employees Tier-II account: This is a voluntary savings facility. mandatorily covered under the NPS and seven Where the subscriber is free to withdraw the savings Pension Funds have been managing the assets of rest from this account whenever he/she wishes. of the subscribers under the NPS. The details are as under: 2.3 Schemes A. Pension Funds (PFs) for Government Sector Presently the following Scheme(s) under National i) LIC Pension Fund Limited Pension System managed by the Pension Funds are operative: ii) SBI Pension Funds Pvt. Ltd iii) UTI Retirement Solutions Ltd A. Schemes applicable to Government Employees The Pension Funds are engaged on competitive Central Government Scheme (available for Central 20Govt. employees and employees of Central Yojana. Autonomous Bodies). 2.4 Regulations Notification State Government Scheme (available for State Govt. During the FY-2015-16, following Regulations were employees and employees of State Autonomous notified under PFRDA Act 2013. bodies). Pension Fund Regulatory and Development Authority B. Schemes applicable to Individuals & Corporates (Pension Fund) Regulations 2015 were notified w.e.f 1. NPS-Lite Scheme ( for Un- organised sector) 19.05.2015. The objective of the Regulations is to 2. Corporate CG Scheme standardize the framework for monitoring, 3. Scheme - E (Tier-I & Tier-II) supervision and internal control for Pension Funds to enable them to establish high standards for internal 4. Scheme - C (Tier-I & Tier-II) control and operational conduct, with the aim of 5. Scheme - G (Tier-I & Tier-II) protecting the subscribers and ensuring proper C. Beside the above Schemes under the NPS, PFRDA management of risk. also administers and regulates the Atal Pension Table 2.1: Details of Asset under Management 21Part -II Chart 2.1: Scheme wise Assets under Management (log scale) 2.5 Exposure of National Pension System and the investment guideline of PFRDA, the portfolio under CG, SG, Corporate CG and NPS other pension schemes portfolios to different Lite APY schemein various investment categories of investments instruments have been provided in Table 2.2. The maximum prescribed exposure limit, as per Table 2.2: Maximum exposure to various investment instruments 22For schemes for Pvt. Sector subscribers i.e. As against the investment guidelines issued by Scheme E – I & II, Scheme C – I & II and Scheme PFRDA , the actual exposure as on March 31, G – I & II, the ceiling of exposure in Asset Class E 2016 and March 31, 2015 in different financial (Equity), C (Corporate Debt) & G (Government instruments under different schemes has been Securities) is 50 per cent, 100 per cent and 100 provided in Table 2.3. per cent, respectively. Table 2.3: Exposure of NPS in various instruments Chart 2.2a: % exposure of NPS in various Chart 2.2b: % exposure of NPS in various instruments on March 31, 2015 instruments on March 31, 2016 23Part -II l Percentage exposure to Govt. Securities has l Exposure to Cash and Net Current Assets have also declined from 49.04 per cent as end of March 2015 increased from 2.42 per cent to 2.48 per cent during to 46.95 per cent as end of March 2016. the FY 2015-16. l However, percentage exposure to SDL has 2.6 Detail of Pension Fund wise vis-a-vis marginally increased from 3.56 per cent as end of March 2015 to 3.72 per cent as end of March 2016. scheme-wise Asset under Management l Percentage exposure to Corporate Bonds which LIC Pension Fund Ltd., SBI Pension Funds Pvt. Ltd. includes PSU/PFI bonds, Infra Bonds and FD (>1 and UTI Retirement Solution Pvt. Ltd. manage the year) has increased from 33.51 per cent to 35.29 per funds of Government and APY subscribers. The cent during the FY 2015-16. funds of government and APY subscribers are l Exposure to equity market which includes distributed among the three fund managers in the exposure to equity and equity Mutual Funds has proportion as decided by PFRDA. Funds of NPS Lite increased from 10.2 per cent to 10.65 per cent as at subscribers are managed by the above funds as well as the end of March 2016. by Kotak Mahindra Pension Fund Ltd. However, funds of Corporate CG are managed only by SBI l Exposure to money market which includes money Pension Funds Pvt. Ltd and LIC Pension Fund Ltd. market mutual funds has marginally increased from 0.54 per cent as end of March 2015 to 0.89 per Funds of private sector subscribers are invested in cent as end of March 2016. On the other hand Scheme E – I & II, Scheme C – I & II and Scheme G – I & exposure to FDs has declined from 0.74 per cent as II. Funds are invested in these schemes according to end of March 2015 to 0.03 per cent as end of March the choice of subscribers by their chosen Pension Fund 2016. subject to ceiling of 50 per cent of the fund in Equity. Table 2.4: The funds invested by various Pension Funds in different schemes HDFC Pension 24Part- III Statutory functions of the Authority 3.1 Registration of intermediaries and Offices and 233 Treasury & Account Offices, 55 PoPs, 14 Aggregators, one Central Recordkeeping Agency, suspension, cancellation, etc., of such one Trustee Bank, seven Pension Funds and five registration; and regulation of activities of the Annuity Service Providers. intermediaries associated with the National During the year 2015-16, the regulations with respect Pension System or the pension schemes to intermediaries like CRA, Pension Fund and Custodian of securities were notified. Section 14 of the PFRDA Act, 2013 lays down the i) Pension Fund Regulatory and Development duties, powers and functions of the Authority to Authority (Central Recordkeeping Agency) regulate, promote and ensure orderly growth of the Regulations, 2015 National Pension System and pension schemes, and to protect the interests of subscribers of such system and ii) Pension Fund Regulatory and Development schemes. Authority (Pension Fund) Regulations, 2015 The National Pension System and any other Pension iii) Pension Fund Regulatory and Development Scheme not regulated by any other enactment are Authority (Custodian of Securities) Regulations, 2015. operationalized by PFRDA through large number of These regulations prescribed for the eligibility criteria entities such as Pay & Accounts offices / Treasury for the registration and selection of the entities - CRA, Offices at the Central and State government which are PF, Custodian etc., their functions, roles and responsible for the registration and upload of the responsibilities, provision for their operations, periodic NPS subscription of the Government compliance with regulations and the penalties in case employees on the NPSCAN, the Point of Presence of default by them. (PoPs) which are banks, non-banking financial companies (NBFC), micro finance institutions (MFI) According to Section 27 of the PFRDA Act, 2013, no etc. which assist in the registration and upload of NPS intermediary, to the extent regulated under this Act, subscription for the corporates, private sector and shall commence any activity relating to a pension fund unorganised sector employers, the aggregators which unless Certificate of Registration is granted by the help in the last-mile reach to the potential subscribers Authority in accordance with the Act. particularly in the informal sector, the Central Record Based on a few complaints/representation it came to Keeping Agency (CRA), which is responsible for the the notice of PFRDA that some persons/entities which recordkeeping of individual pension accounts called are not registered with PFRDA were soliciting PRAN of the subscribers and acts as a coordinator for subscription under NPS Lite/Swavalamban, PFRDA the NPS architecture, Trustee Bank, responsible for issued public notice advising to desist and refrain from the day-to-day flow of funds and banking facilities, the operating under NPS Lite/Swavalamban. Pension Funds (PFs), mandated to invest and manage the pension assets of the subscribers covered under The PFRDA (Central Recordkeeping Agency) NPS as per the investment guidelines prescribed by Regulations, 2015, have been notified on April 27, 2015. PFRDA and annuity service providers (ASPs), The objective of the Pension Fund Regulatory and empanelled with PFRDA to provide a monthly Development Authority (Central Recordkeeping annuity pension to the subscriber. Agency) Regulations, 2015 is to set standards for the eligibility, governance, organization and operational As on March 31, 2016 there are 4056 Pay & Account 25Part -III conduct of the entity who wish to function as Central Pension Fund Regulatory and Development Authority Recordkeeping Agency. Regulations would ensure an (Custodian of Securities) Regulations 2015 have been effective and credible use of inspection, investigation, notified on May 14, 2015.The objective of the surveillance and enforcement powers and Regulations is to standardize the framework for implementation of an efficient compliance program in monitoring, supervision and internal control for tune with the spirit of PFRDA Act. Custodian of Securities to enable them to establish high standards for internal control and operational Entity registered as Central Recordkeeping Agency conduct, with the aim of protecting the NPS assets and through this regulation is required to establish an ensuring proper management of risk. internal system that delivers compliance with standards for internal organization and operational Prior to enactment of the PFRDA Act and notification conduct, with the aim of protecting the interests of NPS of the POP Regulations, 64 PoPs were registered with subscribers and their assets. PFRDA. As per the Regulations, 61 PoPs have applied for re-registration and 22 fresh applications for NSDL e-Governance Infrastructure Ltd, was registration have been received. Of these, 44 existing appointed by PFRDA, as the Central Recordkeeping POPs and 11 new PoPs have been issued Certificate of Agency and an agreement was executed on November Registration. As per the Regulations, six corporates 26, 2007. After notification of the PFRDA (Central and seven special entities have applied for registration Recordkeeping Agency) Regulations, 2015 with effect as PoPs, of which two special entities have been issued from April 27, 2015, NSDL e-Governance Certificate of Registration. The remaining Infrastructure Ltd was issued certificate of registration applications are under examination. to work as Central Recordkeeping Agency effective from December 18, 2015 for the remaining period of As per PFRDA (Aggregator) Regulations, 2015, 14 the original contract dated November 26, 2007 applications for re-registration have been received effective from December 01, 2007 for 10 years. from aggregators and letters of acceptance have been issued. Axis Bank Ltd. was selected Trustee Bank under NPS through an open bidding process with effect from July 3.2 Approval of schemes, the terms and 1, 2015 for a period of 5 years, as per the terms of the conditions thereof including norms for the PFRDA (Trustee Bank) Regulations, 2015. management of corpus of the pension funds and investment guidelines under such Pension Fund Regulatory and Development Authority schemes (Pension Fund) Regulations 2015 have been notified on May 19, 2015. The objective of the Regulations is to Investment guidelines for NPS Schemes (Applicable to standardize the framework for monitoring, Scheme CG, Scheme SG, Corporate CG and NPS Lite supervision and internal control for Pension Funds to schemes of NPS and Atal Pension Yojana) has been enable them to establish high standards for internal issued by PFRDA vide circular no. control and operational conduct, with the aim of PFRDA/2015/16/PFM/7 dated 3.06.2015 which is protecting the subscribers and ensuring proper w.e.f. June 10, 2015. management of risk. 26Table 3.1: Investment limits for NPS Schemes (CG, SG, Corporate CG, NPS Lite/Swavalamban schemes of NPS and Atal Pension Yojana) in different instruments Investment of funds of private subscribers i.e. other including the conditions, purpose, frequency and than government subscribers, corporate CG limits for withdrawals from individual pension subscribers, NPS lite subscribers and APY subscribers account, as also the conditions, subject to which a are also allowed to be invested in the above category of subscriber shall exit from the NPS and purchase an asset class. However, ceiling of exposure in Asset Class annuity thereupon. E (Equity), C (Corporate Debt) & G (Government For the purpose of exit from the NPS, the subscribers Securities) is fixed at 50 per cent, 100 per cent and 100 are categorized and defined as (1) Central and State per cent, respectively. Government sector, (2) All citizens including Corporate Sector and (3) NPS- Lite and Swavalamban 3.3 Exit of subscribers from the National subscribers. The exit regulations specified apply Pension System accordingly to the category to which the subscribers The PFRDA (Exits and Withdrawals under the belong. A subscriber may exit the NPS due to death, National Pension System) Regulations, 2015 were premature exit or on superannuation. During the year notified on May 11, 2015. The regulations aim at the number of applications received from subscribers providing an effective mechanism in the interest of for exit from different sectors under different reasons subscribers, upon exit or withdrawal from the NPS, are given in Table 3.2. 27Part -III Table 3.2: No. of exit/withdrawals from subscribers under different sector All Citizen These are the requests which are rejected due to family documents and the Know Your Customer )KYC) pension paid, non-NPS subscriber, subscriber wants to documents submitted are some of the reasons for continue the PRAN, PRAN not provided at the time of outstanding withdrawal requests. submission of withdrawal request, nil balance in the Partial Withdrawal under NPS PRAN and withdrawal form returned to the Nodal Offices. NPS offers two types of accounts, namely Tier I and Non-submission of required documents by the Tier II. While Tier I account is the Pension account and subscribers, authentication and approval by the is mandatory for opening of Tier II account which is a PAO/DDOs and similar officers and mis-match of savings account and is optional. Tier-I account name of the subscriber as per NPS registration 28provides for partial withdrawals, not exceeding 25 With a view to facilitate the withdrawal in hassle-free percent of the contribution made by the subscriber for manner, PFRDA vide its circular no. PFRDA/2015/27/ Exit/2, dated November 12, 2015, higher education and marriage of children, purchase / has decided that with effect from April 01, 2016, only construction of a house and medical treatment of such withdrawal requests which are raised on online specified illnesses on completion of 10 years from the platform will be accepted at CRA for further date of joining of the NPS. A maximum of three processing. withdrawals are allowed subject to a gap of 5 years Annuities with return of purchase price are the most between any two withdrawals. Tier II account common annuity chosen and LIC and SBI Life provides for voluntary savings with complete insurance are the annuity service providers most flexibility of contribution and withdrawal of funds. preferred by the subscribers. 3.3.1 Details of Annuity Service Providers 3.4 Activities undertaken for protection of (ASPs) and Annuity Schemes opted by interests of subscribers under the National subscribers Pension System and of other pension schemes under the Act Annuity provides for a monthly payment of pension against deposit of a lump sum amount. The subscriber The Authority has formulated regulations in respect of has to mandatorily buy the annuity as specified in the Pension Funds, National Pension System Trust, exit rules of NPS, from a PFRDA empanelled Annuity Trustee Bank, Central Recordkeeping Agency, Service Providers. Annuity Service Providers are Custodian of securities, Aggregators, Point of Insurance Regulatory and Development Authority Presence, Redressal of subscribers' grievances etc. (IRDA) licensed and regulated life insurance While framing all these regulations, the interest of companies, transacting annuity business in India and subscribers has been the top most priority. Utmost care these are empanelled by PFRDA for servicing the has been taken while framing the regulations to keep annuity requirements of the NPS subscribers. As on the NPS system transparent and fair, to protect the March 31, 2016, the following five ASPs are providing interest of the subscribers. The investment of funds is the Annuity services to NPS subscribers. prudentially regulated with the exposure limits set for - Life Insurance Corporation of India each kind of portfolio. The investment of funds is kept diversified with limits on exposure to a single group or - SBI Life Insurance Co. Ltd. related group, industry, instrument etc. - ICICI Prudential Life Insurance Co. Ltd. Trustee Bank is appointed to facilitate transfer of funds from Nodal Offices to Pension Fund Managers. The - HDFC Standard Life Insurance Co Ltd following measures have been undertaken to improve - Star Union Dai-ichi Life Insurance Co. Ltd. the system in order to protect the interest of subscribers: These ASPs are governed under prudential regulations and monitored by Insurance Regulatory Intimation about return of remittances to the and Development Authority of India (IRDAI). Under respective Nodal Offices is sent through emails as well National Pension System (NPS), the subscriber has the as physical letters. Apart from reasons for rejection of option to choose the type of Annuity and the Annuity the remittances, remedial action and precautions to be Service provider. The subscriber may choose the taken by the nodal office is provided to them to avoid annuity type/scheme basing on his requirements from repetition of the errors and avoid return. This ensures the available schemes offered by the respective ASPs. timely investment of the contribution made by 29Part -III subscribers. In the interest of subscribers, NPS Trust subscribers across the sector and geography as a part discloses standardized and comparable information of a wider financial consumer protection policy. on investment returns and costs and charges of PFRDA's website serves the subscribers and potential pension schemes. PFRDA undertakes activities for subscribers with information and guidance materials enhancement of consumers' awareness on NPS and including information on the protection of subscribers' provide financial education programmes through the rights and interests, regulations, circulars, pension training agencies selected by PFRDA. These training schemes products , pension funds, intermediaries, exit agencies impart training to the Central and State Govt. and benefits. nodal officers- Pay & Accounts Offices (PAOs), Drawing & Offices (DDOs), Points of Presence/ Besides, CRA conducts training programmes for the banks/ Post Offices involved in the registration of Nodal Offices based on the request received. An online subscribers, aggregators, etc. about the salient features platform is also available to the offices where they can of the NPS / APY, the process of joining etc. Further request for training. training , workshops, camps, have been organized for Table 3.3: Training Programme & workshops conducted by CRA during 2015-16 3.5 Mechanism for redressal of grievances of handling of grievance/complaint in the interest of the subscribers and activities undertaken for subscribers by, inter alia, laying down guidelines for redressal of such grievances redressal of subscriber grievances through a well- defined Grievance Redressal Mechanism to be The PFRDA (Redressal of Subscriber Grievance) followed by the intermediaries of the National Pension Regulation 2015 was notified on January 29, 2015. The System and other pension schemes. It stipulates objective of the Redressal of Subscriber Grievance timelines for redressal of grievance, appointment of Regulation is to provide a framework for seamless Ombudsman, mechanism of appeal by a subscriber to 30an Ombudsman and the provision of penalty. PFRDA can also raise a reminder through any one of the modes is constantly striving to upgrade the quality of services mentioned above by specifying the original token through technology aided platform for smooth and number issued. If subscriber does not receive any efficient implementation and through inculcating response within thirty (30) days or is not satisfied with quality consciousness amongst all service personnel the resolution by intermediary, in such case subscriber and intermediaries associated with NPS architecture. can escalate the grievance to NPS Trust. Similarly, if the subscriber is not satisfied with the response or no NPS has a multi-layered Grievance Redressal response has been received within 30 days, subscriber Mechanism centralised at Central Recordkeeping can escalate the grievance to Ombudsman. The process Agency (CRA) which is easily accessible, simple, for appointment of Ombudsman/ stipendiary quick, fair, responsive and effective. The Regulations Ombudsman is currently under active consideration have provided for four level escalation matrix for of the Authority and it is expected that the resolving subscriber grievance. Subscribers have the Ombudsman/ Stipendiary Ombudsman will be in option of registering grievance/complaints through position soon. The subscriber can also appeal to Call centre/ Interactive Voice Response System (IVR), designated member of PFRDA if they are not satisfied web based interface, physical forms. Subscriber can with the order passed by the Ombudsman. check the status of the grievance at the CRA website www.cra-nsdl.co.in for the grievances logged in As on March 31, 2016, the position of grievances through Central Grievance Monitoring System received during the year at CGMS and its status is (CGMS) maintained by CRA, or through the Call furnished in the Table 3.4. Centre by mentioning the token number. Subscriber Table 3.4: Status of grievances received & disposed-off during 2015-16 31Part -III The major grievance head are Contribution amount appropriate investment pattern is crucial for the not reflected in account, SOT Related, PRAN Card pension plan participants. India, considered to be low Related, Incorrect Processing of Subscriber Details, in financial literacy, demonstrate a tangible need for Delays in Uploading of Contribution Amounts etc. financial advice with respect to retirement decisions. Grievances are registered in CGMS by the subscriber Retirement advisors can play an important role in and are directly routed to concerned intermediaries for guiding and helping consumers to have a better necessary action. Thus, it is for the concerned understanding of investment and pay-out options. intermediaries to resolve and close grievance in CGMS This necessitates development of a pool of human raised against them. The periodic reminders are sent to resources having right skills and expertise in concerned intermediary for resolving and closing retirement advice and choosing appropriate grievance in CGMS. pension/savings product for retirement quality intermediation to market participants. 3.6 Professional organisations connected with Taking into account international experience and the the pension system needs of the Indian system of organised and unorganised workers, with a view to protecting the 3.6.1 Non Lending Technical Assistance interests of retiring population and more importantly, (NLTA) from the World Bank for minimising risks of losses arising out of deficient understanding of the various options in the returns In order to undertake a detailed exercise covering a from the NPS, PFRDA has accredited National number of pension sector issues and to evaluation of Institute of Securities Markets (NISM) as the the learnings that could guide future direction in accredited institute for Certification of the Retirement policy developments and facilitate the transition, Adviser Certification Examination. PFRDA collaborated for a Non Lending Technical Assistance (NLTA) with the World Bank. The primary 3.7 Collection of data by the Authority and the focus of the engagement would be to address the intermediaries including undertaking and regulatory gaps, review the scope of PFRDA regulations, capacity building in the sector and the commissioning of studies, research and PFRDA, policy and product development reforms projects through transition from Defined Benefit (DB) to Collection and compilation of a comprehensive data Defined Contribution (DC) based pension regime. base on demographics, retirement savings and Further, there is a need for a unified pension regime investments, the different financial products/ and unified regulations which are critical for the schemes issued by the different Organizations to cater orderly growth and stability of the pension industry. to the old age income security of the underlying The diversity and various challenges in the pensions subscribers, the returns generated thereon, the landscape also led to exploring risk-based supervision disclosure and protection provided to the subscribers of the pension sector by PFRDA, exit related annuities etc. under different scheme are the on - going activities etc., besides the host of other interventions and of PFRDA. Towards this end, PFRDA is compiling support. information on people covered under various pension schemes and also people receiving pensions under 3.6.2 Certification Programme for Retirement various schemes. Letters have been written to the Advisers Central and State Governments and other pension With shift in the design of pension systems from providers in the country to solicit information. defined-benefit plans to defined-contribution plans Analysis of this information would help in policy where individuals need to make financial decisions formulation on the pension sector catering to the wider and bear greater financial risk, selection of an section on sustainable basis. 323.8 Steps undertaken for educating carried out. subscribers and the general public on issues The campaigns were executed through print media. In relating to pension, retirement savings and light with PFRDA mandate to cater to the populace of related issues and details of training of the country irrespective of language and region, intermediaries advertisements were carried out in Hindi, English and 11 other regional languages in over 130 newspapers NPS Awareness Campaigns pan India per print coverage. To have a better recall, various campaigns were conceptualized on the topics of NPS Tax Savings, Tier II Account, eNPS, eNPS through Aadhaar, NPS Service week, Online Exit, Contribution using eNPS, etc. were carried out. In addition to that, to have a multi-pronged visibility To fulfill PFRDA's mandate of creating awareness for across different media, campaigns were also carried the need of saving for retirement and retirement through TV commercials, Radio (FM channels). planning, PFRDA embarked upon a media campaign Furthermore, to complement the efforts of putting the under the tagline “NPS- Save Right, Retire Bright”. NPS on an online platform, advertisements and The tagline not only captures the essence of the awareness campaigns were carried on the websites product (NPS) but also reminds the general public that through web banners, Run-on-Site ads and bulk e- for a happy and comfortable retired post work life, one mailers. needs to save regularly and invest in right instruments to create a healthy corpus. Details of the amounts that have been spent on publicity, advertising in different media during 2015- Extensive print media campaigns under the aegis of 16 is provided in Table 3.5. the NPS tagline “NPS-Save Right, Retire Bright” were Table 3.5: Amount spent on Publicity & Advertisement during 2015-16 33Part -III NPS on Social Media communicating with the citizens. Government agencies across the country are In light of the same, the social media accounts of increasingly looking to leverage various media PFRDA and NPS were activated on Twitter, Facebook, platforms to enhance their outreach and engage better Youtube, Google+ and on the content sharing websites with the citizens. These platforms are providing viz. Author Stream, SCRIBD, Slideshare. The status of governments, government institutions and other the said accounts as on March 31, 2016 is provided at entities with options of connecting and Table 3.6 Table 3.6: NPS on Social Media March 31, 2016 NPS and APY Information Helpdesk the Indian society. In light of PFRDA's overarching responsibility of Presently two toll free numbers are being operated spreading awareness about retirement planning, old through the NPS information desk i.e. 1800110708 (for age income security and NPS as a product, PFRDA has NPS) and 1800110069 (for APY). The NPS Toll free been operating dedicated information desk. The number has been in operation since 2012 and the APY information desk is engaged in providing information toll free number was operationalized simultaneously and responding to the queries from existing as well as along with the launch of the APY in May/ June 2016. potential subscribers in respect of product features, The toll-free numbers are owned by and have been new policies, regulations etc. made available by PFRDA. The charges for toll-free NPS is an on-going scheme and PFRDA believes that numbers are paid by PFRDA on actual basis. having a dedicated Information Desk for The NPS Information Desk is operational for 8 hours disseminating information on NPS, which is accessible a day (9.30 a.m.– 5.30 p.m.), 7 days a week (including from across the country would not only help Sundays) throughout the year excluding National enlightening people about the latest developments in Holiday- Gandhi Jayanti- Oct 2, Independence Day- NPS, but it would also help in promoting the concept August 15, Republic Day- January 26 and mandatory of old age income security through NPS while helping holidays (viz. Election day). PFRDA to understand their expectation from the System. Furthermore, PFRDA also makes use of the PFRDA has been undertaking the promotion of NPS call data to gauge the awareness of NPS and estimate and APY on a regular basis and the promotion of the the popularity of the System across various sections of same is expected to be a continuous process. The NPS 34Information Desk receives an increased number of Bodies was organised on January 22, 2016 by Govt. of calls during the campaign period. This helps further in Karnataka in association with PFRDA for bringing the keeping the callers informed about NPS and APY. unregistered State Autonomous Bodies under NPS. 135 participants from 86 State Autonomous Bodies Conferences held during FY 2015-16 attended the programme. A conference on National Pension System for Initiatives for improving delivery of pension Corporates and Points of Presence (POPs) was products and services for ensuring “inclusive organized by PFRDA on April 15, 2015, at New Delhi growth” under the theme “NPS- Expanding Horizons- The Way Forward” with the objective promotion of NPS l Meetings were held with the secretaries of among corporates, corporate employees and private Department of Agriculture, Animal Husbandry, citizens. Health & Family Welfare, Labour, Panchayat Raj, Rural Development and Women & Child A conference on National Pension System for Central Development under GOI and Chief Minister of Autonomous Bodies was organized by PFRDA on Gujarat, Chief Secretaries of Gujarat, Odisha, August 7, 2015 at New Delhi to make the participants Maharashtra, Karnataka, Kerala, and Tamil Nadu aware about the circulars and guidelines issued by the for implementation of APY Govt regarding implementation of NPS in central autonomous bodies and understand the concern of the l NPS awareness sessions were conducted for the entities who have not registered under NPS and to SABs of states of Tamil Nadu, Maharashtra & provide a platform to suitably address those issues. Karnataka. A conference on NPS for NRIs was held on July 22, l Periodical SMS alerts are sent to NPS subscribers 2015 to apprise Points of Presence about the processes about contribution credits, value of investments involved in opening of NPS a/cs for NRIs and the etc. benefits available therein. l APY is extended through 216 Atal Pension Yojana Second Pension Conclave under the theme of service providers i.e. Banks and India Post. More “Universal Pension- Coverage, Adequacy and than 1.47 lakhs branches are involved as Sustainability” was organised by Pension Fund distribution channels for promoting APY. Regulatory and Development Authority on February Capacity building of bank/PO officials through 4, 2016 at New Delhi. The objective of the conclave was training agencies. A total of 2067 trainings have been to provide a platform to discuss, deliberate and to completed covering more than 90,000 bank and debate key issues pertaining to the challenges in Department of Post officials. Zone wise trainings pension sector and the need and ways to expand the conducted during the financial year 20115-16 is given pension coverage across the country. in Table 3.7. NPS awareness programme for State Autonomous Table No. : 3.7: No. of Banks and Post Office officials trained during FY 2015-16 No of Bank and No of Training Zone post office officials Programmes trained 35Part -III l Around 250 town hall meetings/outreach Retirement Adviser in tie up with NISM which can programmes were conducted across the country in play a significant role in educationg and helping the coordination with DFS,SLBCs. prospects/subscribers in retirement plans. l SATCOM trainings on APY were conducted in NPS Awareness week organized by PFRDA Ahmedabad in coordination with Government of Gujarat covering 2500 villages. PFRDA observed National Pension System Service l Conducted state –level workshops across the Week from February 1, 2016 to attract more subscribers country for co-operative banks and RRBs in towards government and voluntary pension plans. coordination with NABARD for activation of The week-long campaign was dedicated to service- DCCBs and RRBs. orientation towards the subscribers and aimed at l Periodic advertisement through Print and awareness building and improved information Electronic media. dissemination. The campaign was launched to mark l Sourcing APY account through net banking the completion of two years of statutory status of platform is implemented by SBI and ICICI bank PFRDA. and other banks have also been urged to adopt the During the week, the PFRDA aimed to create same. awareness about the scheme, make efforts to reduce l Periodic Regional strategy cum review meetings subscribers' grievances, update subscriber details and with Public/Pvt sector Banks/RRBs /SCBs & advise subscribers regarding benefits associated with DCCBs. Permanent Retirement Account among others. l PFRDA has launched various campaigns such as APY login Days, Carnivals etc. for banks to give This exercise was aimed to help NPS subscribers focused approach for enhanced APY coverage and through more than two lakh points of interface activation bank branches. comprising of government offices, banks, non-bank Points of Presence and aggregators. l Meetings were conducted with State Governments for seeking their support and cooperation in Post NPS service week , updation in the month of Feb implementation of APY. Labour Department, 2016 jumped by 63 per cent and 84 per cent in Government of Andhra Pradesh , Government of comparison to November 2015 for Central Himachal Pradesh and Government of Gujarat Government and State Governments, respectively. has issued a notification for adoption of APY for construction workers . CRA (NSDL) also participated in the NPS awareness campaign. NSDL sent SMS and email alerts to Educating and making people aware of the benefits of subscribers informing them about the NPS Service the retirement planning and creating awareness about week. A dedicated webpage was created highlighting the pension schemes is critical for increasing NPS Service week and contact details of dedicated participation in the voluntary segment of NPS and the CRA Officials. Atal Pension Yojana (APY) regulated by PFRDA. 3.9 Performance of pension funds and Towards this end, the role of an advisory entity is performance benchmarks considered critical in propagating the schemes to the masses in order to achieve adequate social security. The total Assets under Management comprising of This requires penetration at the grass root level. both NPS & APY have increased from Rs. 80,855 crore Retirement Advisers, with adequate knowledge of at the end of March 2015 to Rs. 1,18,810 crore at the end prospects' needs and means, and knowledge of the of March 2016, showing an increase of Rs. 37,955 crore pension products and process, will be in a better or 47% during 2015-16 as against Rs. 32,750 crore position to advise individuals, who have different during 2014-15, as shown in Table 3.5. All the schemes levels of education, financial literacy, wealth, income witnessed double-digit growth. Tier 1 and Corporate potential, capacity to save and financial goals. In view CG scheme recorded high growth of 79.15% and of this, PFRDA has initiated certification of 3665.77% in terms of AUM. other hand, Scheme SG's assets grew by 58.51% during the year. Scheme wise AUM growth has been provided Scheme CG for central government employees posted in table 3.8 31.03% growth in its AUM during the year. On the Table 3.8: Asset Under Management (AUM) Break up in NPS - Growth Scheme Wise Position as on March 31, 2016 AUM as on March 31 (Rs. In crore) Note: 1.DVC 194.10 cr is shown under SG Corporate CG does not include AUM of DVC 37Part -III There was a healthy growth in the AUM of all the NPS significantly high at 46.9%, while in absolute terms, the Scheme for the unorganized / private sector as shown corpus increased by Rs 37,955 Crore. in Table 3.9 given below. The increase in AUM is Table 3.9: Asset Under Management (AUM) Break up in NPS - Growth - Subscriber Class Wise Position on March 31, 2016 AUM as on March 31 Note: 1. NPS main includes UoS Tier II AUM also 2. Corporate includes DVC 38Performance of Pension Fund Managers Table 3.10: The position of the AUM with the Pension Fund Managers All the PFMs continued to witness good growth in PF having the largest corpus. HDFC Pension assets under management. All the PFMs maintained Management Company Limited registered the highest their relative ranking in terms of size of AUM with SBI growth in AUM in percentage terms. 39Part -III Table 3.11: Notional Returns (%) of Schemes of different Pension Funds as on March 31, 2016 403.10 Regulated Assets 3.11 Fees and other charges levied or collected by the Authority during the financial year “Regulated Assets” means and includes tangible and intangible assets created exclusively for the purpose of Fees and charges are levied on the subscribers of the operations of CRA comprising bespoke software with NPS at various stages by the intermediaries serving to all the components required for running the the subscribers. At the entry to the NPS system, the application, any third party software and component intermediaries responsible for registration of the off the shelf specific to the CRA application system, all subscribers in NPS i.e. PoPs, charge fees which are relevant CRA project data, dedicated specific collected upfront from the subscribers. In case of hardware/software components of Data Centre and aggregators, the charge for registration of NPS-Lite/ Disaster Recovery Centre, networks and all other Swavalamban and the Atal Pension Yojana (APY) is facilities excluding physical infrastructure (building, borne by the government. In the next stage, CRA, the air conditioners, power supply infrastructure, recordkeeping agency, levy fee for opening account furniture). and generation of PRAN, maintenance of account by cancellation of units. Thereafter, for each transaction On the expiry of the tenure of the registration or in the involving contribution of the subscribers there is event of termination of the CRA, information and charge by both CRA and POP. Investment regulated assets held by CRA shall be transferred to management fee is charged by the Pension Funds for managing the investment portfolio of the subscribers. another CRA registered with the Authority, within the And finally, the custodian of the securities charges for time period and in the manner, as may be required the assets under its custody. under the PFRDA Act, rules or regulations or as may be directed by the Authority. 41Part -III Table 3.12 a: Fees and charges to the subscribers at various stages p.a NPS Trust Trust fee 0.01% of AUM * In case of Government employees, CRA charges are being paid by the respective Governments 42Table 3.12 b: Service Charge structure applicable to POPs for NPS accounts of NRIs sourced and serviced abroad Method of Intermediary Charge Head Service Charges Collection Initial Subscriber USD 8 or Equivalent in Registration local currency. USD 1, or Equivalent in Initial Contribution & local currency or 1%, To be Collected POP all Subsequent whichever is higher subject Upfront Contribution to maximum of USD 8 or Equivalent in local currency. All Non-Financial USD 1 or Equivalent in local Transaction currency. Charges for all other intermediaries are the same. (ii) For NPS account of NRIs sourced domestically but serviced abroad, i.e. contribution and other non-financial transactions being done abroad by the POP, the charge for overseas servicing is applicable. (iii) For NPS account of NRI sourced overseas but serviced in India i.e. contribution and other non-financial transaction being done in India, the charge for domestic servicing under the existing All Citizen Model is applicable. 3.12 Information sought for, inspections audit and inspection of CRA and Trustee Bank undertaken, inquiries conducted and to protect the interests of the subscribers. investigations undertaken including audit of 3.13 Others intermediaries and other entities or organisations connected with pension funds 3.13.1 Subscribers (category wise) covered PFRDA and NPS Trust review the reports under the National Pension System and ther submitted by CRA, Trustee Bank and their pension schemes under the Act auditors to ensure that the intermediary is a) Number of subscribers under NPS over the following the turn around time as defined in years service level agreements. PFRDA Central Recordkeeping Agency and Trustee Bank Enrolment of subscribers in NPS increased from 4.3 regulations also have provision to conduct lakh in March 2009 to 122.1 lakh as on March 31, 2016. 43Part -III The CAGR growth of number of subscribers during on account of introduction of Atal Pension Yojana. 2009-2016 is 61.3 per cent. Year wise number of NPS subscribers is provided in Chart 3.1. With the growth in subscribers base, the annual growth over the past three years has been in the range of 37 per cent with a sharp increase seen in FY 2015-16 Chart 3.1: Year wise number of subscribers under NPS & APY b) No. of subscribers – Sector wise l Under Private sector, number of corporate subscribers has increased from 3.73 lakh to 4.73 l During FY 2015-16, there is an increase of 34.9 lakh, an increase of 1.00 lakh (26.9%) lakh subscribers. The subscriber base under subscribers. The subscribers under UoS have NPS and APY together has increased from 87.5 increased from 0.86 lakh as end of March 2015 lakh as end of March 2015 to 122.3 lakh as end to 2.15 lakh as end of March 2016, an increase of March 2016, registering a growth of 39.9%. 1.29 lakh (148.2%) subscribers. APY scheme which was launched in May 2015 added 24.85 lakh subscribers. State l Percentage of subscribers of NPS Lite and APY Government subscribers increased from 26.30 constitute 56.9 per cent of total subscriber base lakh to 29.24 lakh. i.e increase of 2.94 lakh followed by Government sector (both Central during the FY 2015-16. This includes and State Governments) i.e. 37.4 per cent. The subscribers of State Autonomous Bodies also. Private Sector subscribers (Corporate and All Citizen) constitute 5.7 per cent of total l Central government subscribers have subscribers' base. increased from 15.11 lakh as end of March 2015 to 16.58 lakh subscribers as end of March 2016, registering an increase of 1.46 lakh (9.7%). 44Table 3.13: No. of subscribers – Sector wise % of total % of total % of total % of total % of total % of total With the concerted efforts of banks, post offices state for government co-contribution. governments and other stakeholders, 24.85 lakh Month wise number of APY subscribers since it subscribers have been registered under APY in FY became operational i.e. June 2016 is provided in Chart 2015-16, of which 16.97 lakh subscribers were eligible 3.2. 45Part -III Chart 3.2: Month wise number of APY subscribers Majority of APY subscribers i.e. 46.3 per cent have subscribers opted for various monthly pension as on opted for monthly pension of Rs. 5000 /- followed by March 31, 2016, is provided in Table 3.14. monthly pension of Rs. 1000/-. Details of number of Table : 3.14 No. of APY subscribers opting for various monthly pension 958,930 195,933 123,416 55,979 2,484,895 1,150637 c) Number of subscriber – State wise have more subscribers under NPS Lite and APY. However, the smaller states like North- Eastern states Bigger states like Karnataka (10.34% of total and UTs have low NPS subscriber and majority of the subscriber), Uttar Pradesh (9.65 %) and Maharashtra subscribers are from Government sector. State wise (8.67%) have more number of NPS/APY subscribers distribution of NPS /APY subscribers across the states followed by Andhra Pradesh (7.87%), Madhya is depicted in Chart 3.3. Pradesh (5.86%) and Tamil Nadu (5.49%). These states 46Chart 3.3: Number of subscriber – State wise d) Number of subscriber – Age wise employees on mandatory basis. In public sector banks which falls under Corporate Sector, new employees 43 per cent of the total subscribers under NPS are in the who joined after January 2010 have been mandatorily age group of 26-35 years. In Government Sector covered under NPS. Therefore, the maximum number subscribers are clustered in the age group of 26-35 of subscribers in these sectors are in the age group of years as the new employees of Central Government 26-35 years. For voluntary sectors i.e. All Citizen, NPS who joined services w.e.f. January 1, 2004 are Lite and APY the subscribers are by and large mandatorily covered under NPS. Also State distributed across the age bracket. Governments have implemented NPS for their new 47Part -III Table 3.15: Per cent of subscribers in different age groups e) Number of subscriber – Contribution wise Rs. 24,001- Rs. 50,000, In All Citizen, 38 per cent of the subscribers have contributed in Rs. 24,001- Rs. 50,000 45 per cent of the NPS/APY subscribers have range in FY 2015-16 compared to 9 per cent subscriber contributed upto Rs. 6000 during FY 2015-16. This is in FY 2014-15. This shift may be because of additional because around 57 per cent of the total subscribers are tax exemption of Rs. 50,000/- made available to the NPS Lite/APY subscribers with limited savings subscribers for NPS contribution in the Union Budget potential. In Government Sector, where subscribers 2015-16. are mandated to contribute 10 per cent of basic and D.A. towards NPS contribution, for majority of subscribers, annual contributions are in the range of 48Table 3.16: Per cent of subscribers contributing to different contribution range 3.13.2 Points of presence appointed by PFRDA, as the Central Recordkeeping Agency and an agreement was executed on November After notification of PFRDA (Points of Presene) 26, 2007. Regulations, 2015, 44 existing POPs and 11 new PoPs have been issued Certificate of Registration. As per the CRA acts as an operational interface for all Regulations, six corporates and seven special entities intermediaries. The role includes liasoning with all have applied for registration as PoPs, of which two necessary external agencies and recordkeeping, special entities have been issued Certificate of administration and customer service functions for all Registration. The remaining applications are under subscribers of the NPS. examination. List of PoPs registered with PFRDA is a) Selection of second CRA provided at Annexure I A policy decision was taken for induction of second 3.13.3 The Central Recordkeeping Agency, its CRA keeping in view the technological advancements role and functions and innovations in the market that have the potential to reduce cost of CRA operations. Competitive NSDL e-Governance Infrastructure Ltd, was pressure will also lead to improvement in service 49Part -III quality. PFRDA issued RFP in December, 2015 for reports using NAVs send by PFMs to CRA. selection of second CRA. l TB: b) Role and responsibilities of CRA To reconcile pension fund reports received The major role and responsibilities of CRA are as from Trustee Account with pension fund follows: contribution information report and generate error/discrepancy report on fund i. Continuous Enhancements and reconciliation, sending instruction to Trustee developments of new functionalities Bank to remit withdrawal fund to subscribers' It is the responsibility of the CRA to create and account and remit remaining amount to establish facilitation centres network across country. Annuity Service Providers' account against the They have to develop various new annuity scheme. functionalities/utilities and do continuous l ASPs: enhancements and development of modules to address changing requirements of various To collect physical application forms from the stakeholders. subscribers and forward them to ASPs and sending funds transfer details for the ii. Services to Subscribers of all sectors subscriber's annuity to ASPs. Transferring The primary role of CRA is of recordkeeping, electronic data transfer to ASPs with respect to administration, providing customer service functions subscriber details and sending instruction on for all NPS subscribers, issuance of unique Permanent Annuity scheme. Retirement Account Number (PRAN) and IPIN/TPIN l Others: to the subscribers. The various services to the subscribers includes sending SMS alerts and emails at Provide periodic and ad-hoc MIS (including the time of registration, credit/ debit of units, Grievance redressal) to PFRDA, State withdrawal, balance in the PRAN, conducting Governments, Central Government and subscriber awareness programs and providing web Ministry of Finance, conduct periodic based access to all the NPS stakeholders. CRA also orientation programs for nodal offices and to provides Centralized Grievance Management System provide seamless and error-free system and call centre facility to the subscribers and Nodal operations involving CRA system, PFMs, TB offices. Besides these services all subscriber and other entities in NPS. maintenance services such as change of scheme, c) Development of new functionalities change of demographic details, grievance handling etc. are being handled by CRA. Continuous enhancements and development of modules to address changing requirements of various iii. Services to Intermediaries stakeholders is one the main objective of CRA. Various l PFMs: functionalities were developed by CRA to ensure the seamless functioning of NPS system. Few of the major It is the primary responsibility of CRA to developments are as under: timely allocate the funds to PFMs, prepare and send consolidated Investment Preference l Opening of NPS accounts online Scheme information, sending net fund transfer PFRDA has taken initiative to provide online report to PFMs on the basis of confirmation of registration facilities for prospective fund transfer report received from Trustee subscribers. CRA has provided a window on bank and to measure the Scheme performance their website for the prospective subscribers to 50register for NPS account directly. The website the release of this new functionality, the POPs also facilitates contributions through a can process the 'Voluntary' contributions payment gateway. made by any Corporate subscriber even if they are not associated to them. l Contributions upload for shifted subscribers l Functionality for nodal offices on Tier – II Points of Presence (POPs) were previously operations and voluntary contribution allowed to upload the regular monthly processing contribution in the CRA system only for the subscribers pertaining to their associated The Govt. sector Nodal Offices have now been Corporate. Now, a POP can also upload the provided with utility for activating the Tier II contribution for subscribers who have shifted account and its operation for all Government from one of their associated Corporate to employees. The Government subscribers another associate Corporate. (mandatorily covered under NPS) can also approach their associated Nodal Office for l Upload of unequal contribution for Govt. making additional investment (Voluntary employees Contributions) in their PRAN - Tier I account. In case of Govt. sector employees, the l Insertion of QR Code facility on backside of Uploading Office is required to prepare and PRAN upload the contribution file wherein the Employee and Employer Contribution are The QR code is a matrix barcode and is used to equal for each subscriber. This functionality store URL of websites. The QR code can be will now allow the Uploading Offices to converted to data by using a smart phone. The prepare and upload contribution files where application to read QR code is available as free Employer and Employee contribution amount application for all smart phone users. Further, are not same. utility to convert website URL to QR code is also freely available online. l One way switch l Pop - Up window for resolution of pending Previously, there was no provision for transfer grievance in CRA system of funds from Tier-II to Tier-I account. Now, the POP can process a subscriber request to To aid the Nodal Offices, a pop-up alert is transfer funds from Tier II to Tier I account. displayed on the home page immediately after Such transactions can be processed only for the User logs in to CRA website (www.cra- subscribers under All Citizens of India Model nsdl.com). The pop-up displays the count of or Corporate Sector Model having active Tier I grievances pending (if any) for more than 30 and Tier II accounts, subject to the availability days. The User have two options i.e., either to of adequate holdings in the Tier II account. resolve the grievances immediately by There is no limit (minimum or maximum) on selecting the option 'Resolve Now' (which will the amount and number of one way switches guide the user to 'grievance resolution' screen) that can be requested by a subscriber. or to select 'Resolve Later' to continue with regular operations and provide resolutions to l Processing of voluntary contribution for the grievances later. The pop-up window is a corporate subscribers through any POP reminder to all the Nodal Offices which have Currently, POPs are allowed to upload any grievance pending for resolution beyond contributions for corporate subscribers only if 30 days in Central Grievance Management the Corporate is associated with them. With System (CGMS) module. 51Part -III d) Dashboard revamping b) Roles and responsibilities of Trustee Bank: i. Trustee Bank facilitates fund transfers across PFRDA has revamped the dashboard reports of CRA various entities of CRA system viz. Nodal Offices for the convenience/ better understanding of the (uploading offices), Pension Fund Managers, Annuity subscribers and other stakeholders. Service Providers and subscribers. 3.13.4 Pension funds ii. Trustee Bank uploads a file containing the details of the funds received from various Nodal Pension Fund means an intermediary which has been Offices to the CRA system. These details are then granted a Certificate of Registration under sub-section matched with contribution details provided by Nodal (3) of section 27 of PFRDA Act 2013, by the Authority Office(s) to CRA system. as a Pension Fund for receiving contributions, iii. Trustee Bank receives fund transfer accumulating them and making payments to the instructions from CRA system as a part of Pay-in subscriber in the manner as may be specified by process to transfer funds to various entities viz. PFMs, regulations. Annuity Providers, Withdrawal Account and may also Functions receive funds from Pension Fund Manager(s). The Pension Fund functions in accordance with the iv. Return of unidentified remittances or terms of its Certificate of Registration and the remittances with incomplete information to the Regulations issued by Authority from time to time. PF concerned entity. is mandated to invest and manage the pension assets of v. At the end of each settlement day, the balance the subscribers covered under NPS, which is inclusive funds at Trustee Bank account are reconciled with of but not confined to the following: CRA system. a) Professional Investment of contributions as per c) Timelines for Trustee Bank investment guidelines prescribed by the Authority in the best interest of subscribers. The business activities of Trustee Bank are linked with the other processes at CRA. Therefore, bank ensures b) Scheme portfolio construction. that the activities are completed within the timelines c) Maintains books and records of its operations. specified. The core activities and time limit within which the same is carried out by the Bank is indicated d) Reporting to the Authority/NPST at periodical in Table 3.17. interval. e) Public disclosure. 3.13.5 The Trustee Bank a) Trustee Bank: Axis Bank Ltd. was selected as the Trustee Bank under NPS through an open bidding process with effect from July 3, 2015 for a period of 5 years, as per the terms of the PFRDA (Trustee Bank) Regulations, 2015. 52Table 3.17: Core activities of the Trustee Bank Nature of Activity Timelines Return of unidentified funds T+1 Upload of Fund Receipt Confirmation file (FRC) T+1 (by 9:00 a.m.) Download Pay- in instruction files from CRA Daily Transfer of matched and booked funds to Pension Fund T+1 Managers Upload of statements and closing balance of various accounts Daily Note: (Assumption- Fund realisation at TB on day T) 3.13.6 Custodian under the National Pension March 12, 2015. System The National Pension System Trust is managed by a Board of Trustees, consisting of a minimum of five Stock Holding Corporation of India Limited (SHCIL) trustees and not more than eleven trustees as may be has been registered as the custodian under the NPS in appointed from time to time by the Authority. Out of the year 2008 for a period of ten years for providing the trustees appointed, one trustee is designated by the custodial and depository participant services. The Authority as Chairperson of the Board of Trustees of custodian fee charged by SCHIL is 0.0075 per cent p.a. the National Pension System Trust. Authority appoints a person with appropriate 3.13.7 The National Pension System Trust background and experience as Chief Executive Officer of the Trust (CEO) who is responsible for day to day The NPS Trust is the registered owner of all assets administration and Management of the Trust subject under the NPS architecture. NPS Trust was established to the superintendence, control and direction of the on February 27, 2008 through a Trust Deed executed by Board of NPS Trust. The Board meets once in every its Settlor namely Pension Fund Regulatory and three calendar months. The constitution of the NPS Development Authority (PFRDA). The trust holds Trust Board as on March 31, 2016 is provided in Table these assets for the beneficial interest of the 3.18 subscribers. The PFRDA (National Pension System Trust) Regulations was notified by the Authority on 53Part -III Table 3.18: The constitution of the NPS Trust Board as on March 31, 2016 S.No Name Designation 1 Sh. Shaliesh Haribhakti Chairman 2 Smt. Pallavi Shroff Trustee 3 Sh. Pramod Kumar Rastogi Trustee 4 Sh. N. D. Gupta Trustee 5 Sh. Ashvin Parekh Trustee 6 Sh. Bijay Kumar Trustee Management of NPS Funds by the NPS Trust Dissemination of Information The NPS funds of subscribers held in the name of NPS l The website of the NPS Trust has been designed Trust are managed by seven registered pension funds with a view to facilitate better dissemination of on behalf of the Board of Trustees to realize and fulfill information to the subscribers. Information the objectives of the NPS Trust in the interest of the regarding NPS that are useful for the subscribers Subscribers. The Performance of the Pension funds are available in one place. NAV details, Returns are reviewed on a quarterly basis by NPS Trust, and of the schemes, Portfolio details of the schemes instructions/Guidance is being given to them for are disclosed for subscriber's protecting the interest of the subscribers. information/comparison. Disclosure of Portfolio details are disseminated to the a) PFRDA (NPS Trust) Regulations, 2015 subscribers to ensure transparency. On March 12,2015, PFRDA notified the PFRDA (NPS Financial Literacy Trust) Regulations 2015 which prescribed the roles & responsibilities, powers & functions of the Board of Facility of Pension calculator has been provided NPS Trust for monitoring & evaluation of all in the NPS Trust website to the subscribers for operational and service level activities of all planning his savings for retirement. intermediaries under NPS and for protecting the Facilitating Interface to the subscribers interest of subscribers. NPS Trust was thus designated as the nodal point for co-ordinating the operations of Facilities like FAQs, Subscriber Registration all NPS intermediaries, within its existing forms, service forms and facility to lodge and view organizational framework. grievances have been provided at one place on the website. b) New Developments and Achievements Exit and withdrawal Scheme accounts of NPS : l Online withdrawal has been made mandatory l The Scheme accounts and consolidated scheme from April 1 2015 across all Nodal offices, to accounts of NPS were examined and adopted by reduce the pendency and to decrease the the Board of NPS Trust after due deliberation (FY turnaround time of the withdrawal claims 2015-16). processing. 54l Withdrawal process under NPS has been w.e.f. November 1, 2015 changed. Now, NPS Claims Processing Cell at Central Recordkeeping Agency (NSDL) process 3.13.8 Other intermediaries including the and approve the claims as per the prescribed Aggregator, etc. guidelines/regulations directly instead of sending the claims to NPS Trust. Aggregators are the intermediaries identified and approved by PFRDA, to perform subscriber interface l Workshops were conducted for District Treasury functions under NPS-Swavalamban in respect of their officials (DTO) of State government for creating constituent groups. The aggregators are the entities awareness among them to utilize the online already in existence having continuous functional withdrawal processing module for error free and relationship with a known customer base for delivery faster settlement of claims. of some socio-economic goods / services. After Managing Subscriber grievance notification of PFRDA (Aggregator) Regulations 2015, l There is a Grievance Redressal Policy for 14 Aggregators have been issued letter of acceptance. handling of grievances raised against NPS Trust. The functions of aggregators include: There is a facility for subscribers to escalate grievances to NPS Trust in centralized grievance l Promotion of NPS and awareness about the need management platform. Long pending for old age income security among its constituent grievances in the CGMS system have been group members. resolved. l Meeting the 'Know Your Customer' requirements l Training sessions were conducted for Nodal in respect of potential NPS subscribers as Offices of Central and State Governments for mandated under AML/CFT requirements. creating awareness for timely resolution of l Discharge of responsibilities relating to fund and subscriber grievances. data upload within prescribed time limits. l Facilities to enable subscribers to lodge grievance l Collection of contributions from subscribers and in the system (Nodal offices can lodge grievance ensuring its passage to Trustee Bank. on behalf of subscribers against itself) have been initiated. l Ensuring availability of services to its underlying subscribers as mandated under NPS-Lite. Agreements l Handling grievances received from subscribers l Service Level Agreements have been signed with and their resolution. reappointed Trustee Bank namely Axis Bank and Central Recordkeeping Agency (CRA) i.e. Any other responsibility as assigned to them by National Securities Depository Limited (NSDL). PFRDA to ensure protection of subscribers' interest. eNPS 3.13.9 Other functions carried out by the SBI epay has been appointed as Payment Authority in the area of pensions. Gateway Service Provider (PGSP) for online eNPS and implementation of facility for NPS for NRIs online account opening and subscription payment for NPS Subscribers. NRIs are also eligible to open an NPS account provided they are between the age of 18 years and 60 Recovery of Fee/ charges by NPS Trust years at the time of opening the account. The NPS NPS Trust charges fee/charge @ 0.01% of the account can be opened through a PoP/PoP-SP or AUM on daily accrual basis to meet its expenditure online through eNPS using their Aaadhar of PAN 55Part -III Cards. Most banks are registered PoPs. The NRI can force. All other features are same for the NRI and open the account through the bank in which they hold Resident subscriber. their NRI account. The application has to be The contribution amounts are to be paid by the NRIs accompanied by a copy of the passport, and proof of either by inward remittance through normal banking address if the local address is different from the channels or out of funds held in their own address mentioned in the passport. The contributions NRE/FCNR/NRO account. can be made from the NRE account or NRO account of the NRI subscriber. At the time of exit or withdrawal, the annuity will be paid in INR, as will as the lump sum amount. Repatriation is allowed, subject to the rules in Table 3.19: Contribution structure for NPS Accounts when serviced abroad Particulars Tier I Tier II Minimum Contribution at the time of Rs.6,000/- Rs.2,000/- account opening Minimum amount per contribution Rs.2,000/- Rs.2,000/- Minimum contribution in a financial year Rs.6,000/- Rs.2,000/- Minimum frequency of contributions per 1 1 financial year While servicing these accounts domestically, the Towards this end, an online platform for registration contribution criteria remain the same as applicable to of subscribers and receipt of contribution under the existing NPS accounts under the All Citizen Model. National Pension System (eNPS) through NPS Trust at www.npstrust.org.in has been developed. Through Once the NRI status of the subscriber changes to this platform, a prospective subscriber can register for Resident status, the subscriber will have to inform the NPS; contribute to his/her Permanent Retirement same to CRA/POP for updating the same in the CRA Account. Further, the subscribers who already have an system. NPS account can make contributions through eNPS eNPS Online Platform directly. A prospective subscriber can visit NPS Trust website www.npstrust.org.in and select NPS Online In light of “Digital India” campaign on promoting e- menu to register and contribute to NPS. While governance for providing last mile connectivity registering, a Subscriber will provide his/her name & through extensive use of ICT (Information and Permanent Account Number (PAN) details which will Communications Technology) platforms, PFRDA has be validated online with the Income Tax Department. been pursuing the development and Subscriber will then select the Bank (through which operationalization of online transaction facilities for KYC verification to be done), fill up the personal the prospective as well as existing subscribers of NPS. 56details and upload photograph & signature. After www.npstrust.org.in . Banks viz. Allahabad Bank, filling up of details, the Subscriber will make Bank of India, Bank of Maharashtra, Oriental Bank of contribution through net banking from the account of Commerce, South Indian Bank, State Bank of the selected Bank. Once payment is made, PRAN will Travancore, State Bank of Hyderabad, State Bank of be provided online to the subscriber. The details Patiala, Tamilnad Mercantile Bank and United Bank of submitted by the subscriber will be sent through CRA India have provided the facility of online KYC system to the selected Bank for KYC verification. After verification. PFRDA has advised all other Bank POPs verification of KYC by the Bank, the PRAN will to join the eNPS platform and provide online become active and operational. Subscriber will be verification of KYC for the customers of their Banks required to print the form, paste photograph, affix willing to open NPS account online. Through this signature and submit the physical form to CRA within facility, it is expected that the subscriber will have a specified period while continuing contributing multiple advantages like seamless onboarding online. experience where he need not visit a Point of Presence and can register from anywhere through an internet Subscriber can make subsequent contribution online connection, contribute with minimum cost of through net banking /debit card/credit card at any transaction and reduction in errors resulting from time and the same will be credited in the subscriber's various manual activities. As on March 31, 2016, 39,147 PRAN account on T+2 basis. The complete accounts have been opened through eNPS. information about eNPS is available in PFRDA website www.pfrda.org.in and also on NPS Trust website 57Part -IV PART IV 4.1 Functioning of Pension Advisory various Regulatory Regimes within the domain of Committee pension sector. To begin with, the Committee suggested harmonizing the investment guidelines Section 45 of PFRDA Act provides for constitution of a within NPS across Government and Private Sector i.e. loosening the guidelines for Govt. sector to allow more Pension Advisory Committee with representations play to the Pension Fund managers in asset classes like from employees, associations, subscribers, commerce equity. & industry, intermediaries and organisation engaged in pension research to advise the Authority on matter 3. The restriction of allowing Pension funds only from the public sector to manage the funds of Government relating to the making of regulations or as may be employee subscribers may be done away with. referred to it. The Authority amended the Pension Advisory Committee on August 31, 2015 with 4. On the road to Prudent investor regime, the Regulator may, in the interim allow introduction of a composition as at Annexure II. During the year under few new schemes to test the risk appetite of the reference, the Pension Advisory Committee meetings subscribers and build their confidence in asset classes took place i.e. on May 22, 2015 and March 14, 2016 at perceived to be riskier viz Equity through the life cycle New Delhi. fund approach. While the existing life cycle fund shall continue to be the one with maximum investment in 4.2 Performance of various committees set up equity pegged at 50% (option LC50), more life cycle under sub-section (2) of section 49 funds (at least two more to begin with) may be introduced. A committee was formed by PFRDA in the month of September 2014 under the chairmanship of Sh. G.N. 5. The broad road map for moving to prudential Bajpai for review of investment guidelines for NPS investor regime, based on principles defined above schemes in private sector. The committee has would be as follows: submitted its report in April 2015 and the main Phase I recommendations of the committee are as under: a) Allowing private sector PFs to manage the funds of 1. Moving from Directed investment regime to the the Government sector employees prudent investor regime which should be based on following principles: b) Harmonization of the investment guidelines of the government and private sector. a) Harmonization of the Investment Guidelines for Private and Govt. Sector c) Shift away from the fixed income fixated investment pattern and allowing more play to pension fund b) Review of ceiling for each asset class managers in equity through following measures: c) Expanding the universe of instruments under each l Allowing investment in equity to the extent of 50% Asset Class by Government sector employees/ NPS lite d) Adding new Asset Classes subscribers. e) Allowing the entire corpus of NPS to be managed by l Allowing floating of life cycle funds with equity both private and public sector funds. cap at 75%. Moving away from passive investment to active investment in equity. 2. Harmonizing the investment mandates across 58l Allowing investments in shares, which have of independent financial advisors may be developed derivatives in any stock exchange. who could offer this product as a part of this financial planning. l Expanding the universe of investment of equity to NSE 100. 7. A fixed and variable component in the management fee of PFs may be introduced, with pension funds d) Allowing investments in equity both through being incentivized to quote lowest fixed fee in the bid. primary and secondary market. Allowing investment However, the variable fee shall depend upon other in Mortgage backed securities, Covered notes, CPs, performance indicators viz relative Returns generated CDs etc. e) Allowing investments in Infrastructure Trust 8. A dynamic and comprehensive asset-liability Funds. management module, which could include, among f) Removal of limits on SDLs under “G” others, prudential duration gap limits, prudential limits for interest rate sensitivity and a structural g) Introduction of new asset classes within overall cap liquidity framework may be prescribed by the of 5% of the portfolio. regulator to efficiently manage the Asset Liability l Real estate through REITS Management to meet the payouts at least cost to the system at the time of exit of the subscribers. l Alternative Investment Funds ( AIF) registered with SEBI 9. For generating healthy competition and meeting the standard of transparency, a framework for disclosures Phase II about the performance of pension funds disclosing a) Raising the ceiling on equity to 75% returns generated, risk management parameters, which includes a judicious mix of returns generated b) Further loosening ceilings on AIFs, REITS, INFRA- viz Risk adjusted returns, Yield to Maturity (YTM), REITS and Tracking Error besides risk parameters, impact on safety of funds viz Concentration (Issuer & Industry), c) Introduction of IDRs Liquidity, Credit Quality, and Maturity profile has d) Allow CBLO in both Corporate bonds and been recommended. Government bond 10. Institutionalisation of professional organizations of e) Allow Repo and Reverse Repo. analysts, retirement advisors or consumer protection forums aimed at analyzing the data, comparisons, and f) Introduce commodity trading viz bullion through evaluation of the Pension funds' performance for the Gold ETFs with ceilings of 1% benefit of subscribers and also for evolving Phase III benchmarks. a) No ceilings on asset classes 11. To develop a contiguous pension system involving collection, investment, fund management, record b) Only a negative list of assets and instruments based keeping and pay outs for orderly growth of the on the experience of last 5 years pension sector, any Scheme aimed at accumulation of c) Some prudential ceilings viz concentration ceilings funds for providing old age income security by way of etc or risky and volatile asset classes/ instruments. annuity, or pension etc. shall be registered and regulated by PFRDA. 6. PFs may be allowed to market the NPS product. The PFs may canvass the product while the actual on- 12. The tax treatment of EET for NPS compares boarding may be done through the PoPs. Also, a cadre unfavorably with Govt. employees joining prior to 59Part -IV 1.04.2004 - wherein commutation of pension is allowed Regulations, 2015 exemption from taxation at the time of retirement and 2. Pension Fund Regulatory and Development all other long term saving instruments such as mutual Authority (Pension Fund) Regulations, 2015 funds, LIC, PPF, GPF etc which enjoy tax benefits at the time of withdrawal. In order to ensure development of 3. Pension Fund Regulatory and Development the pension sector in general and NPS in particular, it is Authority (Custodian of Securities) Regulations, 2015. essential that distortions across financial instruments 4. Pension Fund Regulatory and Development and group of assesses are resolved and appropriate Authority (Exits and Withdrawals Under the National fiscal incentives are provided. Pension System) Regulations 2015 4.3 Regulations made or amended These regulation prescribed for the eligibility criteria for the registration and selection of the entities - CRA, During the year 2015-16, the regulations with respect PF, Custodian etc., their functions, roles and to CRA, Pension Fund, Custodian of securities, Exit responsibilities, provision for their operations, and Withdrawals were notified. compliance with regulations and the penalties in case of default by them. 1. Pension Fund Regulatory and Development Authority (Central Recordkeeping Agency) 60PART V Organizational matters of the Pension Fund Regulatory and Development Authority 5.1 Constitution of PFRDA Board 46th Authority Meeting held through Circulation 47th Authority Meeting held on August 1, 2015 Section 4 of the PFRDA Act provides for the 48th Authority Meeting held on September 12, 2015 composition of the Authority consisting of a Chairperson, three whole time members, and three 49th Authority Meeting held through Circulation part-time members to be appointed by the Central 50th Authority Meeting held on November 6, 2015 Govt. As on 31.03.2016 the composition was as under: 51st Authority Meeting held on December 18, 2015 (i) Chairman 52nd Authority Meeting held on Feb 6, 2016 Shri Hemant G. Contractor is the first Chairman to head the statutory Pension Fund Regulatory and 53rd Authority Meeting held on Mar 19, 2016 Development Authority (PFRDA) after notification of Several important decisions as per the PFRDA Act PFRDA Act in 2014. He joined PFRDA in October 2014. were taken during the Board meetings. Prior to joining PFRDA he was the Managing Director, State Bank of India. 5.3 Staff Strength in PFRDA (ii) Whole-Time Members As on March 31, 2016 the staff strength of PFRDA is 49 1. Sh. R.V. Verma, Whole-time Member (Finance) from out of which 47 are in officer cadre. 13.05.2014 till date. One officer is presently posted on deputation to 2. Dr. Badri Singh Bhandari, Whole-Time Member National Pension System Trust as Chief Executive (Economics) from 16.05.2014 till date. Officer. Further, out of 46 officers in PFRDA, 6 officers (iii) Part-Time Members are presently reporting to Chief Executive Officer, NPS Trust till the regular staff is deployed in NPS Trust. 1. Ms. Vandana Sharma, Joint Secretary, Department of Pension and Pensioner's Welfare from December 5.4 Setting up of SC/ST Cell and OBC Cell in 12, 2014 till date. PFRDA 2. Ms. Annie George Mathew, Joint Secretary, Department of Expenditure from December 12, 2014 To implement Government instructions on welfare of till date. SC/ST/PWD employees, a cell has been set up in 3. Dr. Shashank Saksena, Economic Adviser, PFRDA. A DGM grade officer has been nominated as Department of Financial Services from January 30, Liaison Officer for SCs/STs/PWDs. Also, a separate 2015 till date. cell for welfare of OBCs has been set up in PFRDA. A DGM grade officer has been nominated as Liaison 5.2 Meetings of the Authority Officer for OBCs. Ten Meetings which includes matters decided through 5.5 Committee for Prevention of Sexual circulation of the Authority were held during financial Harassment at Workplace year 2015-16. A Committee for prevention of Sexual Harassment at 44th Authority Meeting held on April 06, 2015 workplace is in place for receiving complaints, holding 45th Authority Meeting held on May 14, 2015 enquiry etc. in accordance with the Sexual Harassment 61Part -V of Women at Workplace (Prevention, Prohibition and differently abled people. The website is available Redressal) Act, 2013. bilingually to cater the need of Hindi speaking people. b) E-Office 5.6 Staff Welfare Committee The days of large file rooms, rows of filing cabinets and A Staff welfare Committee has been constituted in the mailing of documents is fading fast. Today, most PFRDA to identify and organize various staff welfare organisations store digital versions of documents on activities. The Committee will help evolve measures servers and storage devices. These documents become for securing and preserving good relations amongst instantly available to everyone in the organisation, the employees and also between employees and the regardless of their geographical location. management. A DGM grade officer has been Organisations are able to store and maintain nominated as Chairperson of the Staff Welfare tremendous amount of historical data economically, Committee. and employees benefit from immediate access to the documents they need. Storing data is only a benefit if 5.7 Training of employees in PFRDA that data can be used effectively. In order to address these issues PFRDA is in the process of implementing During the financial year 2015-16, 3 officers were e-office for day to day work. Introduction of e-office nominated by PFRDA for trainings/workshops on will ensure efficiency and effectiveness in discharge of various subject area, like Domestic Enquiry, its regulatory functions besides improving ease of Disciplinary Action & Discipline, RTI Act 2005 and working and reducing time in disposal of cases. Global Financial Markets. 5.9 Promotion of Official Language 5.8 Information Technology PFRDA has set up an Official Language Cell to Information technology has become a vital and implement the official language policy of Government integral part of every organization. Information of India and ensure the implementation of Rajbhasha Technology (IT) provides an opportunity for Act, 1963 and Rajbhasha Rules, 1976 and to promote organizations to improve their efficiency and Hindi in PFRDA. Communications received in official effectiveness, and even to gain competitive advantage. language are also replied in official language. All PFRDA is constantly applying Information regulations framed by PFRDA are bilingual. Keeping Technology in all spheres of its activity to optimize in view the large customer base of NPS consisting of outcomes. various sections of the society, the contents available in a) PFRDA Website English are being translated into Hindi for the benefit of customers. PFRDA build and maintain relationships by disseminating organisational information and 5.10 Implementation of Right to Information promoting two-way communication through IT and Act ITES. The importance of the Internet and websites as tools for public relations can hardly be PFRDA is implementing the Right to Information Act, overemphasised. PFRDA's website is typically 2005. There is a dedicated cell to process the dedicated to NPS subscribers and intermediaries. All applications received under the Right to Information new information about policy and changes, Act, 2005 which is under Central Public Information regulations and amendments etc. can be found on it. Officer. As provided in the RTI Act, PFRDA has an PFRDA's website is built as per the guidelines for official as the Appellate Authority (AA) where appeals Indian Government Websites and accessible through can be made against an order of the CPIO. laptops, desktops and smart phones and suitable for Section 4 of the RTI Act casts obligation on every public 62authority to make certain disclosures. The focus of the unorganized sector. All subscribers under NPS- disclosure is transparency in the working and lite/Swavalamban between the age of 18-40 years are functioning of PFRDA. In this regard, PFRDA has put eligible to shift to Atal Pension Yojana. During the in place various functions, duties, powers and duties financial year 2015-16, PFRDA has received a grant of of its officers, rules, regulations, manuals etc. All the Rs. 173.00 crore under the scheme, towards relevant acts, regulations are available on PFRDA Government co-contribution, Incentive to service website. PFRDA had notified 14 regulations covering providers and other promotional activities. various intermediaries, subscriber grievances etc. in The accounts of the authority for the financial year the last financial year, after extensive stakeholder 2015-16 have been finalized as per the Pension Fund consultation and also through the meeting of the Regulatory and Development Authority (Form of Pension Advisory committee constituted under Annual Statement of Accounts and Records) Rules, Section 45 of the PFRDA Act, 2013. 2015. The accounts were approved by the PFRDA During the year 2015-16, 351 applications and 8 first Board in its 56th Board meeting held on July 22, 2016. appeals were received till March 31,2016 interalia The Balance Sheet and Income & Expenditure regarding opening, transfer, withdrawal & exit from Accounts of PFRDA along with Schedules forming NPS, APY scheme and relating to PoPs statement of part of the financial statements are placed at Annexure individual pension accounts etc. All the applications III. and appeals were replied/disposed within the In accordance with the provisions of the PFRDA Act stipulated time as prescribed under RTI Act, 2005 and 2013 and on approval of the Board, the accounts of maximum information as is available was given to the PFRDA for the financial year 2015-16 will be applicants in the spirit of the RTI Act, 2015. forwarded to the Comptroller and Auditor General of Any citizen can request for information under RTI by India for audit. making an appropriate application in writing with the prescribed fees to the Central Public Information Officer, Pension Fund Regulatory and Development Authority, First Floor, Chatrapati Shivaji Bhawan, B- 14/A, Qutab Institutional Area, New Delhi 110016. 5.11 Accounts of PFRDA During the financial year 2015-16 PFRDA received a grant of Rs.22.49 crores from Government of India. To encourage the workers of unorganized sector to voluntarily save for their retirement, the Central Government had announced a co-contributory pension scheme 'Swavalamban' in the Union Budget 2010-11. PFRDA has been mandated by the Government to implement the Swavalamban scheme all over the country. During the financial year 2015-16, PFRDA has received a grant of Rs. 250.64 crore under the scheme, towards Government co-contribution, Incentive to Aggregators and other activities. Further, Atal Pension Yojna was announced in the budget speech for the FY 2015-16 for persons belonging to 63Part -VI PART VI Any critical area adversely affecting the interest of subscribers NPS is at a disadvantage compared to other completely tax free as the other schemes mentioned pension/provident fund schemes such as EPF PPF, above are, and therefore suffers in comparison. There CPF (Contributory Provident Fund) Schemes in so far is a need to provide a level playing field to NPS vis-à- as tax treatment of the retirement corpus is concerned. vis other competing products with respect to While 40 per cent of the accumulated retirement employer's contribution and tax treatment of the corpus when withdrawn as lump sum on partial and final withdrawals. superannuation is exempt from tax, it is not 64PART VII Any other measure taken by the Authority to protect the interest of subscribers to the National Pension System and other pension schemes under the Act PFRDA has taken various steps at the policy as well as superannuation or 60 years. The funds during operational level to make NPS more subscribers this period remain invested in the system. friendly. In addition to this, additional tax benefits l The Statement of Transactions (SOT) being made available exclusively to NPS has given a fillip to sent by CRA to the existing subscribers has the scheme. This is further expected to result into a been modified to reflect the returns of the substantial increase in the subscriber base by end individual subscriber since the date of account March 2016. opening and also the return generated during The following steps have been taken in the recent past the last financial year. for the convenience of the subscriber: l To facilitate and operationalize the deposit of l The investment guidelines for NPS have been additional contribution of Rs.50,000/- to avail revised to expand the investment avenues for of the additional tax benefit under Section 80 optimization of the returns. CCD(1B), Government Subscribers already covered under NPS have been provided the l Partial withdrawal upto 25% of subscriber's facility to deposit voluntary contributions in own contribution for specific purposes like their Tier I account through any POP-SP. higher education of children, marriage of Government employee covered under old children, construction of house and specified pension scheme can also avail this tax benefit illness have been allowed to the NPS by opening individual Tier I account through subscribers after completion of 10 years in any POP-SP and contributing to the same. NPS. Also this has been enabled through eNPS. l NPS Private Sector subscribers can continue l ·Online reset of password and facility to contributing beyond 60 years upto 70 years of change mobile no. and email Id has been age. provided to all the NPS subscribers. l NPS Subscriber can defer the withdrawal of l SMS alerts on balances in the NPS account lump sum amount upto the age of 70 years and being sent to the subscribers on quarterly basis, also have the option to defer purchase of in addition to regular monthly alerts on annuity upto 3 years from the date of contribution and other changes in the PRAN. 65Annexure Annexure I - List of POPs 64Annexure II Composition of Pension Advisory Committee (PAC) and issues discussed during PAC meetings 1. Mr. D.V.S.S.V. Prasad, Chief Executive Officer, Fixed Income Money Market and Derivatives Association of India 2. Ms. D. Vijayalakshmi, Chair Professor- Life, National Insurance Academy, Pune 3. Mr. G. N. Bajpai, Chairman, National Pension System Trust 4. Mr. Gagan Rai, Managing Director & CEO, NSDL e-Governance Infrastructure Limited 5. Mr. Leo Puri, Director, The Association of Mutual Funds in India 6. Dr. L H Manjunath, Executive Director, Shree Kshethra Dharmasthala Rural Development Project 7. Mr. Kulin Patel, Senior Actuary and Director – Client Account Management, Towers Watson, Gurgaon 8. Ms. Meghana Baji, Chief Executive Officer, ICICI Prudential Pension Funds Management Co. Ltd 9. Mr. M V Tanksale, Chief Executive, Indian Banks' Association 10. Mr. R. Sridharan, Managing Director, The Clearing Corporation of India Ltd 11. Mr. Raghavendra Lal Das, Chief General Manager-in-Charge, Human Resource Management Department, Reserve Bank of India 12. Mr. Shailendra Kumar, Managing Director & CEO, SBI Pension Funds Pvt. Ltd 13. Mr. Sumantra Guha, Chairman of the Committee of Banking, Insurance and Pension of the Institute of Chartered Accountants of India. 14. Ms. Trishaljit Sethi, Deputy Director General (Establishment), Postal Directorate 15. Principal Secretary, Finance, Government of Rajasthan The Chairperson and the members of the Authority shall be the ex officio Chairperson and ex officio members of the Pension Advisory Committee. The following agenda items were taken up for discussion in the Fourth Meeting of PAC: · Confirmation of Minutes of Third Meeting of the Pension Advisory Committee held on 9th December 2014 · Marketing of NPS by Pension Funds · Valuation of Portfolio of NPS · Valuation Process and Methodology under NPS · Minimum Assured Returns Scheme under NPS · Guidelines for Asset Liability Management under NPS The following agenda items were taken up for discussion in the Fifth Meeting of PAC: · Amendment to Pension Fund Regulatory and Development Authority (Pension Fund) Regulations 2015. · Exploring the possibility of selection of POPs for promotion of NPS through competitive bidding process on the pattern of RSBY · Pension Fund Regulatory and Development Authority (Retirement Adviser) Regulations, 2016 · Auto Enrolment to pension in India 66Annexure Annexure III 66Annexure 6768Annexure 6970Annexure 71PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY SCHEDULE 4 ATTACHED TO AND FORMING PART OF BALANCE-SHEET AS AT 31.03.2016 SECURED LOANS AND BORROWINGS ( U n it – I n d i a n R u p ee) Particulars Current year Previous year 1. Central Government - - 2. State Government - - 3. Financial Institutions (a) Term Loans - - (b) Interest accrued and due - - 4. Banks (a) Term Loans -Interest accrued and due - - (b) Other Loans (specify) -Interest accrued and due - - 5. Other Institutions - - 6. Debentures and Bonds - - 7. Others - - TOTAL - - Note : Amount due within one year Place: New Delhi Date : 30.06.2016 Manju Bhalla Chief Accounts Officer Dr. B.S. Bhandari R.V. Verma Hemant G. Contractor Member Member Chairperson 72Annexure PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY SCHEDULE 5 ATTACHED TO AND FORMING PART OF BALANCE-SHEET AS AT 31.03.2016 UNSECURED LOANS AND BORROWINGS (Unit–Indian Rupee) Particulars Current year Previous year 1. Central Government - - 2. State Government - - 3. Financial Institutions - - 4. Banks (a) Term Loans - - (b) Other Loans (specify) - - 5. Other Institutions - - 6. Debentures and Bonds - - 7. Fixed deposits - - 8. Others (specify) - - TOTAL - - Note : Amount due within one year Place: New Delhi Date : 30.06.2016 Manju Bhalla Chief Accounts Officer Dr. B.S. Bhandari R.V. Verma Hemant G. Contractor Member Member Chairperson 73PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY SCHEDULE 6 ATTACHED TO AND FORMING PART OF BALANCE-SHEET AS AT 31.03.2016 D EFERRED CREDIT LIABILITIES ( U n i t – In d i a n R upee) Particulars Current year Previous year 1. Acceptances secured by hypothecation - - of Capital Equipment and Other Assets 2. Others - - TOTAL - - Note : Amount due within one year Place: New Delhi Date : 30.06.2016 Manju Bhalla Chief Accounts Officer Dr. B.S. Bhandari R.V. Verma Hemant G. Contractor Member Member Chairperson 74Annexure PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY SCHEDULE 7 ATTACHED TO AND FORMING PART OF BALANCE-SHEET AS AT 31.03.2016 CURRENT LIABILITIES AND PROVISIONS (Unit–Indian Rupee) Particulars Current year Previous year CURRENT LIABILITIES 1. Acceptances - - 2. Sundry Creditors & Payables 6,321,184 5,319,078 3. Advances Received 7,200,000 7,125,000 4. Interest Accrued but not Due on : (a) Secured Loans / Borrowings - - (b) Unsecured Loans / Borrowings - - 5. Statutory Liabilities : (a) Overdue - - (b) Others 272,403 180,557 6. Other Current Liabilities (a) Unutilised grant as at 31st March payable to GOI 3,175,972,328 128,695,686 (b) Others 31,988 31,988 TOTAL 3,189,797,903 141,352,308 PROVISIONS 1. For Taxation 2. Gratuity 10,656,583 - 3. Trade Warranties / Claims - - 4. Accumulated Leave encashment - - 5. Pension Contribution Payable 279,151 530,911 6. Leave salary payable 283,746 373,357 7. Others (specify) - - TOTAL 11,219,480 904,267 GRAND TOTAL 3,201,017,384 142,256,576 Place: New Delhi Date : 30.06.2016 Manju Bhalla Chief Accounts Officer Dr. B.S. Bhandari R.V. Verma Hemant G. Contractor Member Member Chairperson 75PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY SCHEDULE 8 ATTACHED TO AND FORMING PART OF BALANCE-SHEET AS AT 31.03.2016 FIXED ASSETS (Unit–Indian Rupee) GROSS BLOCK DEPRECIATION NET BLOCK Cost/ Cost/ On DESCRIPTION Valuation Additions Deductions Valuation As at For the Deductions Total upto As at the As at the As at during during the beginning Current previous As at the Year during the year end beginning the year year of the Year Year year year- end year of the year FIXED ASSETS 1. Land : (a) Freehold (b) Leasehold 2. Buildings : (a) On Freehold Land (b) On Leasehold Land (c) Ownership Flats / Premises (d) Superstructures on Land not belonging to the entity 3. Plant Machinery & Equipment 4. Vehicle 1,037,399 - - 1,037,399 677,039 54,054 - 731,093 306,306 360,360 5. Furniture & Fixtures 4,726,233 657,289 2,605,240 2,778,281 2,601,066 137,056 1,521,979 1,216,142 1,562,139 2,125,167 6.Office equipments 3,073,092 286,857 134,645 3,225,304 1,657,013 231,764 79,229 1,809,548 1,415,756 1,416,079 7. Computer/ Peripherals 8,721,585 743,224 - 9,464,809 8,265,740 728,837 - 8,994,577 470,232 455,846 8. Electrical Installations 159,322 1 29,915 129,408 124,796 4,703 26,734 102,765 26,643 34,526 9. Library Books 124,112 5,150 - 129,262 124,112 5,150 - 129,262 - - 10. Other Fixed Assets TOTAL OF CURRENT YEAR 17,841,743 1,692,521 2,769,800 16,764,464 13,449,766 1,161,564 1,627,943 12,983,387 3,781,077 4,391,978 PREVIOUS YEAR 17,614,003 1,059,989 832,249 17,841,743 12,588,931 1,160,392 299,557 13,449,766 4,391,977 5,025,072 Capital Work-in-progress Total 3,781,077 4,391,978 Note to be given as to cost of assets on hire purchase basis included above. Place: New Delhi Manju Bhalla Date : 30.06.2016 Chief Accounts Officer ` Dr. B.S. Bhandari R.V. Verma Hemant G. Contractor Member Member Chairperson 76Annexure PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY SCHEDULE 9 ATTACHED TO AND FORMING PART OF BALANCE-SHEET AS AT 31.03.2016 INVESTMENTS FROM EARMARKED/ENDOWMENT FUNDS ( U n it – I n d i a n R u pee) Particulars Current year Previous year 1. Government securities - - 2. Other approved securities - - 3. Shares - - 4. Debentures and Bonds - - 5. Subsidiaries and Joint ventures - - 6. Fixed Deposits 14,000,000 - 7. Others (to be specified) - - TOTAL 14,000,000 - Place: New Delhi Date : 30.06.2016 Manju Bhalla Chief Accounts Officer Dr. B.S. Bhandari R.V. Verma Hemant G. Contractor Member Member Chairperson 77PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY SCHEDULE 10 ATTACHED TO AND FORMING PART OF BALANCE-SHEET AS AT 31.03.2016 INVESTMENTS-OTHERS (Unit–Indian Rupee) Particulars Current year Previous year 1. Government securities - - 2. Other approved securities - - 3. Shares - - 4. Debentures and Bonds - - 5. Subsidiaries and Joint ventures - - 6. Others (to be specified) - - TOTAL - - Place: New Delhi Date : 30.06.2016 Manju Bhalla Chief Accounts Officer Dr. B.S. Bhandari R.V. Verma Hemant G. Contractor Member Member Chairperson 78Annexure PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY SCHEDULE 11 ATTACHED TO AND FORMING PART OF BALANCE-SHEET AS AT 31.03.2016 CURRENT ASSETS, LOANS AND ADVANCES (Unit–Indian Rupee) Particulars Current year Previous year A. CURRENT ASSETS 1. Inventories : (a) Stores and Spares - - (b) Loose Tools - - (c) Stock-in-Trade Finished Goods - - Work-in-Progress - - Raw Materials - - 2. Sundry Debtors : (a) Debts Outstanding for a period exceeding six months - - (b) Others 30,585 58,418 3. Cash in hand 20,000 20,000 4. Bank Balances : (a) with Scheduled Banks : (i) On Current Accounts - - (ii) On Time Deposit Accounts - - (iii)On Savings Bank deposit Accounts 3,309,125,616 167,794,017 (b) with Non-Scheduled Banks : (i) On Current Accounts - - (ii) On Time Deposit Accounts - - (iii)On Savings Bank deposit Accounts - - 5. Post office-Savings Accounts - - 6. Others - - TOTAL ( A ) 3,309,176,201 167,872,435 B. LOANS, ADVANCES AND OTHER ASSETS: 1. Loans: (a) Staff 592,388 756,486 (b) Other Entities engaged in activities/objectives - - similar to that of the Entity (c) Others (specify) - - 2. Advances and Other Amounts Recoverable in cash or in kind or for value to be received: (a) On Capital Account - - (b) Prepayments 991,904 539,805 (c) Security Deposits 318,000 318,000 (d) Others 90,296,293 165,323,484 3. Income Accrued : (a) On Investments from Earmarked/ Endowment Funds - - (b) On Investments – Others - - (c) On Loans and Advances - - (d) Others (includes income due unrealized₹ ______) - - 4. Claims Receivable - - TOTAL ( B ) 92,198,585 166,937,775 GRAND TOTAL (A) + (B) 3,401,374,786 334,810,210 Place: New Delhi Date : 30.06.2016 Manju Bhalla Chief Accounts Officer Dr. B.S. Bhandari R.V. Verma Hemant G. Contractor Member Member Chairperson 79PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY SCHEDULE 12 ATTACHED TO AND FORMING PART OF INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDING AT 31.03.2016 INCOME FROM SALES/SERVICES (Unit–Indian Rupee) Particulars Current year Previous year (1) Income from Sales (a) Sale of Finished goods - - (b) Sale of Raw Material - - (c) Sale of Scraps - - (2) Income from Services (a) Labour and Processing Charges - - (b) Professional/Consultancy Services - - (c) Agency Commission and Brokerage - - (d) Maintenance Services (Equipment/Property) - - (e) Others (Specify) - - TOTAL - - Place: New Delhi Date : 30.06.2016 Manju Bhalla Chief Accounts Officer Dr. B.S. Bhandari R.V. Verma Hemant G. Contractor Member Member Chairperson 80Annexure PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY SCHEDULE 13 ATTACHED TO AND FORMING PART OF INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDING AT 31.03.2016 GRANT / SUBSIDIES ( U n i t – I n d i a n R u p ee) Particulars Current year Previous year Irrevocable Grants and Subsidies Received 1. Central Government 4,461,300,000 2,260,000,000 2. State Government - - 3. Government agencies - - 4. Institution / Welfare bodies 100,000,000 300,000 5. International Organisations - - 6. Others (specify) - - TOTAL 4,561,300,000 2,260,300,000 Place: New Delhi Date : 30.06.2016 Manju Bhalla Chief Accounts Officer Dr. B.S. Bhandari R.V. Verma Hemant G. Contractor Member Member Chairperson 81PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY SCHEDULE 14 ATTACHED TO AND FORMING PART OF INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDING AT 31.03.2016 FEES / SUBSCRIPTIONS (Unit–Indian Rupee) Particulars Current year Previous year 1. Entrance Fees - - 2. Annual Fees /Subscriptions - - 3. Seminar /Program Fee - - 4. Consultancy Fees - - 5. Licence fees - - 6. Others (specify) - - TOTAL - - Place: New Delhi Date : 30.06.2016 Manju Bhalla Chief Accounts Officer Dr. B.S. Bhandari R.V. Verma Hemant G. Contractor Member Member Chairperson 82Annexure PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY SCHEDULE 15 ATTACHED TO AND FORMING PART OF INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDING AT 31.03.2016 INCOME FROM INVESTMENTS (Income on Investments from Earmarked/Endowment Funds transferred to Funds) (Unit–Indian Rupee) Investment from Investment - Others Earmarked Fund Particulars Current Previous Current Previous year year year year 1. Interest (a) On Govt. securities - - - - (b) Other Bonds/Debentures - - - - (c) Others 916,182 29,986 - - 2. Dividend (a) On Shares - - - - (b) On Mutual Funds - - - - (c) Others - - - - 3. Rents - - - - 4. Others (specify) - - - - TOTAL 916,182 29,986 - - Transferred to Earmarked/Endowment Funds Place: New Delhi Date : 30.06.2016 Manju Bhalla Chief Accounts Officer Dr. B.S. Bhandari R.V. Verma Hemant G. Contractor Member Member Chairperson 83PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY SCHEDULE 16 ATTACHED TO AND FORMING PART OF INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDING AT 31.03.2016 INCOME FROM ROYALTY, PUBLICATION ETC. (Unit–Indian Rupee) Particulars Current year Previous year 1. Income from Royalty - - 2. Income from Publications - - 3. Others (specify) - - TOTAL - - Place: New Delhi Date : 30.06.2016 Manju Bhalla Chief Accounts Officer Dr. B.S. Bhandari R.V. Verma Hemant G. Contractor Member Member Chairperson 84Annexure PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY SCHEDULE 17 ATTACHED TO AND FORMING PART OF INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDING AT 31.03.2016 INTEREST EARNED (Unit–Indian Rupee) Particulars Current year Previous year 1. On Term Deposits Accounts (a) with Scheduled Bank - - (b) with Non Scheduled Bank - - (c) with Institutions - - (d) Others - - 2. On Savings Bank Deposit Accounts: (a) with Scheduled Bank 14,069,189 11,661,304 (b) with Non Scheduled Bank - - (c) Post Office Savings Accounts - - (d) Others - - 3. On Loans: (a) Employees / Staff 5,476 10,982 (b) Others - - 4. Interest on Debtors and Other Receivables - - TOTAL 14,074,665 11,672,286 Tax deducted at source to be indicated Place: New Delhi Date : 30.06.2016 Manju Bhalla Chief Accounts Officer Dr. B.S. Bhandari R.V. Verma Hemant G. Contractor Member Member Chairperson 85PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY SCHEDULE 18 ATTACHED TO AND FORMING PART OF INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDING AT 31.03.2016 OTHER INCOME (Unit–Indian Rupee) Particulars Current year Previous year 1. Profit on Sale / Disposal of Assets (a)Owned Assets - - (b)Assets acquired out of grants or received free - - of cost 2. Export Incentives Realized - - 3. Fees for Miscellaneous Services 153,225,800 11,593,630 4. Miscellaneous Income 442,769 97,649 TOTAL 153,668,569 11,691,279 Place: New Delhi Date : 30.06.2016 Manju Bhalla Chief Accounts Officer Dr. B.S. Bhandari R.V. Verma Hemant G. Contractor Member Member Chairperson 86Annexure PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY SCHEDULE 19 ATTACHED TO AND FORMING PART OF INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDING AT 31.03.2016 INCREASE/(DECREASE) IN STOCK OF FINISHED GOODS AND WORK IN PROGRESS (Unit–Indian Rupee) Particulars Current year Previous year (a) Closing Stock - Finished Goods - - - Work-in-progress - - (b) Less : Opening Stock - Finished Goods - - - Work-in-progress - - Net Increase/(Decrease) [a-b] - - Place: New Delhi Date : 30.06.2016 Manju Bhalla Chief Accounts Officer Dr. B.S. Bhandari R.V. Verma Hemant G. Contractor Member Member Chairperson 87PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY SCHEDULE 20 ATTACHED TO AND FORMING PART OF INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDING AT 31.03.2016 ESTABLISHMENT EXPENSES (Unit–Indian Rupee) Particulars Current year Previous year 1. Salaries and Wages 80,642,422 83,635,227 2. Allowances and Bonus - - 3. Contribution to Provident Fund - - 4. Contribution to Pension 4,809,853 5,244,273 5. Staff Welfare expenses - - 6. Expenses on Employee’s Retirement and Terminal - - Benefits 7. Leave Salary 93,648 555,895 8. Tution fees reimbursement - - 9. Medical Reimbursement 610,151 690,020 10. Gratuity Contribution 10,656,583 - 11. Others (Specify) - - TOTAL 96,812,657 90,125,415 Place: New Delhi Date : 30.06.2016 Manju Bhalla Chief Accounts Officer Dr. B.S. Bhandari R.V. Verma Hemant G. Contractor Member Member Chairperson 88Annexure PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY SCHEDULE 21 ATTACHED TO AND FORMING PART OF INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDING AT 31.03.2016 OTHER ADMINISTRATIVE EXPENSES (Unit–Indian Rupee) Particulars Current year Previous year 1. Purchases - - 2. Labour and processing expenses - - 3. Cartage and Carriage inwards - - 4. Electricity and Power 4,312,574 4,018,375 5. Water charges 170,900 34,510 6. Insurance 467,323 784,335 7. Repair and Maintenance 6,349,059 4,672,831 8. Excise Duty - - 9. Rent, Rates and Taxes 40,828,179 27,197,816 10. Vehicles Running and Maintenance 7,858,008 10,185,767 11. Postage, Telephone and Communication 3,907,259 3,322,435 charges 12. Printing and Stationary 3,196,718 1,097,278 13. Traveling and Conveyance expenses 5,085,894 5,850,259 14. Expenses on Seminar/Workshops/Meetings and 28,451,172 1,391,128 conferences 15. Subscription expenses - - 16. Expenses on Fees - - 17. Auditors Remuneration - - 18. Hospitality expenses - - 19. Professional Charges 13,074,110 9,039,339 20. Books and Periodicals 89,966 90,052 21. Recruitment expenses 40,304 - 22. Provision for Bad and Doubtful Debts/Advances - - 23. Incentive to Aggregator 148,946,432 249,585,820 24. Swavalamban Government Contribution 833,317,068 2,759,468,000 25. Swavalamban promotion - - 26. Incentive to Point of presence - - 27. Irrecoverable balances Written off - - 28. Packing charges - - 29. Freight and Forwarding expenses - - 30. Distribution expenses - - 31. Advertisement and Publicity expenses 225,726,821 35,203,527 32. Membership Fees 419,713 1,531,010 33. Staff Welfare 732,426 449,744 34. Consultancy Expenses 1,204,665 1,226,593 35. APY Promotion 50,000,000 - 36. Incentive under APY 161,944,730 - 37. Sitting Fees 75,000 - 38. Others (Specify) - - TOTAL 1,536,198,321 3,115,148,818 Place: New Delhi Date : 30.06.2016 Manju Bhalla Chief Accounts Officer Dr. B.S. Bhandari R.V. Verma Hemant G. Contractor Member Member Chairperson 89PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY SCHEDULE 22 ATTACHED TO AND FORMING PART OF INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDING AT 31.03.2016 EXPENDITURE ON GRANT SUBSIDIES ETC. (Unit–Indian Rupee) Particulars Current year Previous year 1. Grants given to Institutions/Organisations /National 1,400,000 5,500,000 Pension System Trust 2. Subsidies given to Institutions / Organizations - - 3. Others (Specify) - - TOTAL 1,400,000 5,500,000 Place: New Delhi Date : 30.06.2016 Manju Bhalla Chief Accounts Officer Dr. B.S. Bhandari R.V. Verma Hemant G. Contractor Member Member Chairperson 90Annexure PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY SCHEDULE 23 ATTACHED TO AND FORMING PART OF INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDING AT 31.03.2016 INTEREST (Unit–Indian Rupee) Particulars Current year Previous year 1. On Fixed Loans - - 2. On Other Loans - - 3. Bank charges 1,361 5,297 4. Others (Specify) - - TOTAL 1,361 5,297 Place: New Delhi Date : 30.06.2016 Manju Bhalla Chief Accounts Officer Dr. B.S. Bhandari R.V. Verma Hemant G. Contractor Member Member Chairperson 91PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY SCHEDULE 24 ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDING AT 31.03.2016 SIGNIFICANT ACCOUNTING POLICIES 1. Basis of accounting and preparation of financial statements The financial statements of the Authority have been prepared in accordance with the Pension Fund Regulatory and Development Authority (Form of Annual Statement of Accounts and Records) Rules, 2015. The financial statements have been prepared on accrual basis under the historical cost convention except for Swavlamban schemeand Atal PensionYojna(APY) maintained onpaymentbasis,beingthe schemeofGovernment of India . 2. Government Grants Government grants are accounted on realisation basis. 3. Fixed Assets Fixedassets arestated at their originalcost includingtaxes andother incidentalexpenses related to acquisition. 4. Depreciation 4.1 Depreciationisprovidedonthe written downvalue methodasperrates specifiedin The Income tax Act 1961. 4.2 Assets costing Rs. 5,000/- or less each are fully provided. 5. Retirement benefits Provision for gratuity is provided as per Authority scheme. The liability for gratuity at the year end is computed on the assumption that employees are entitled to receive the benefit as at each year end. Place: New Delhi Date : 30.06.2016 Manju Bhalla Chief Accounts Officer Dr. B.S. Bhandari R.V. Verma Hemant G. Contractor Member Member Chairperson 92Annexure PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY SCHEDULE 25 ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDING AT 31.03.2016 CONTINGENT LIABILITIES AND NOTES TO ACCOUNTS 1. Contingent Liabilities There is no contingent liability of the Authority as at 31.03.2016. 2. Current Assets, Loans & Advances The Current assets,Loansandadvances have a valueonrealisationequalat least to the aggregate amount shown in the Balance Sheet. 3. Taxation In view ofthe clause34 ofThe PensionFund Regulatory andDevelopment Authority Act 2013, the Authority shall not be liableto paywealth-tax, income-tax or anyother tax in respect of its wealth, income, profits or gains derived. Accordingly, no provision for the same has been provided in the books of accounts. 4. The unutilised Government grants as on 31.03.2016 has been shown under the head Current Liabilities and Provisions as per recommendation of CAG auditor. 5. Fixed assets transferred by Seventh Central Pay Commission and Expenditure Management Commissionwithout anyconsideration has been recognisedat a nominal value of Rs.1/- for each block of assets in the books of accounts. 6. Correspondingfiguresforthe previousyearhasbeenregrouped/rearranged,wherever necessary. 7. The schedule1to 25areannexedto andformanintegral part ofthe Balancesheetas at 31.03.2016 and the Income and Expenditure account for the year ended on that date. Place: New Delhi Date : 30.06.2016 Manju Bhalla Chief Accounts Officer Dr. B.S. Bhandari R.V. Verma Hemant G. Contractor Member Member Chairperson 93