Response to stakeholders or Public Comments on  PFRDA (Operationalisation of Unified Pension Scheme under National Pension System) Regulations, 2025

PFRDA (Operationalisation of Unified Pension Scheme under National Pension System) Regulations, 2025 S. No. Proposed Regulations Stakeholder/ Public comments Response (Reg No.) 1 2. Definitions. - 1. Illustrative example on calculation of Benchmark 1. Illustrative examples as to computation of d)- “Benchmark Corpus may be provided in regulations. benchmark corpus under different scenarios are Corpus” provided under Schedule III. 2. Guidance as to how missing credit shall be treated in respect of officials having regular service, may be 2. Regulation 12 provides for the manner of provided in the regulations. computation of benchmark corpus including the manner of treatment of missing contributions. e)- “Default pattern” “Default Pattern” under UPS shall be same as that of As per Regulation 2(e) Default pattern of under NPS to avoid confusion and mismatch in IC and investment of the individual corpus shall be as BC. It will further, lead the employee to take informed determined by the Authority. decision. Regulation 11 of PFRDA (Operationalisation of Unified Pension Scheme under National Pension System) 2025 provides for investment choices to subscribers (including LC-25 and LC-50) and choice of pension fund including choice of default pattern. 2 4. Exercise of option and 1. The value of benchmark corpus vis a vis 1. The benchmark corpus value shall be computed enrolment under unified Individual Corpus as on the date of exercise of once a person gets enrolled under UPS. As per Pension Scheme Regulation 11(11), the information of individual option should be informed to the individuals for corpus and the benchmark corpus of a UPS taking informed decision. Subscriber shall be available in the UPS PRAN account statement on a monthly basis.PFRDA (Operationalisation of Unified Pension Scheme under National Pension System) Regulations, 2025 2. Regulation 3(2) provides for timelines within 2. Timelines may be clearly specified. Sufficient which eligible employee can exercise choice of UPS option. With respect to past retirees under time to be given for submitting forms and life NPS on or before 31st March 2025 and existing certificates like in OPS. Central Government employee in service as on 1st April 2025, the option shall be exercised within 3 months from 1st April 2025 or within such extended timelines if any, allowed by the Central Government. With respect to a new recruit in the Central Government services joining on or after 1st April 2025, the option shall be exercised within 1 months from 1st April 2025 or within such extended timelines if any, allowed by the Central Government. 3. As per para 2(i)(b) of the UPS Notification dated 24th January 2024 and regulation 13(1)(b), 3. The availability of option for “Compulsory” UPS benefits are available to employee who has retired officials may be included. retired under the provisions of Fundamental Rule 56 (j) (which is not a penalty under Central Civil Services (Classification, Control and Appeal) Rules, 1965). 4. Only legally wedded spouse in case of deceased 4. As per para 2(iv) of the UPS Notification dated UPS subscriber is mentioned. The availability of 24th January 2024 and regulation 15, the family option to the legal heir of the deceased official, may payout is only admissible and payable to a legally be included. wedded spouse as on the date of superannuation or voluntary retirement or retirement under Fundamental Rules 56(j) (which is not treated as penalty under Central Civil ServicesPFRDA (Operationalisation of Unified Pension Scheme under National Pension System) Regulations, 2025 (Classification, Control and Appeal) Rules, 1965), as may be applicable, and who is surviving the deceased subscriber. 3 8. Assured Payout 1. Regulations may allow a UPS Subscriber to 1. As per para 4 of the Notification dated 24th transfer funds from NPS account to their UPS January 2025, the outstanding NPS corpus in the employees PRAN shall be transferred to the Individual corpus on or before superannuation to employee’s individual corpus under the UPS. make good the shortfall, if any. 2. Provision for Final Withdrawal is available 2. There is no mention of lumpsum withdrawal at the under Regulation 15(2) of PFRDA time of superannuation of UPS subscriber in the (Operationalisation of Unified Pension Scheme notification issued by GOI. under National Pension System) 2025. 4 16. Investment of 1. UPS is worked around the benchmark corpus, 1. Regulation 11 of PFRDA (Operationalisation individual corpus PFRDA may consider giving UPS subscribers more of Unified Pension Scheme under National Pension System) 2025 provides for the investment choice for the individual corpus investments based of individual corpus. on risk appetite and to generate optimum returns, such as allowing for option to select one PFM for As per sub-regulation 3 thereof, a UPS Subscriber each ‘G’, ‘C’ and ‘E’ type schemes, option for LC- may choose any one of the pension funds 75, allowing subscriber to change the choice of registered with the Authority or may choose investment (along with the pension fund) preferably default pattern. twice a year. As per sub-regulation 5 thereof, a UPS subscriber Further, cap to invest in Equity may also be has an option to change the choice of pension fund increased to 100% along with Investment option in once in a financial year and investment choice Mid & Small Cap Funds as well. twice in a financial year.PFRDA (Operationalisation of Unified Pension Scheme under National Pension System) Regulations, 2025 2. The comparison of IC & BC should be disclosed 2. As per sub-regulation 11 thereof, the as on 31st March of a FY in the month April of the information of individual corpus and the benchmark corpus of a UPS Subscriber shall be following FY. available in the UPS PRAN account statement on a monthly basis 5 19. Central 1. A reference may be made regarding whether there As per regulation 24 (1), UPS shall be Recordkeeping Agency will be a single CRA or multiple CRAs. implemented through NPS architecture, by such of the intermediaries registered with the Authority, namely National Pension System Trust, Pension 2. Existing infrastructure for OPS should be Fund, Central Recordkeeping Agency, Trustee leveraged for the payout phase of UPS as CRA and Bank and Custodian of Securities and the other agencies are well suited for a defined registration granted by the Authority under the Act contribution pension ecosystem but may not be for and in terms of specific regulations shall enable assured/defined benefit portion of the UPS. such intermediaries to undertake activities under UPS, during the tenure of such registration. 3. One of the functions of CRA shall be obtaining Regulation 26 may kindly be referred to. appropriate life certificates including digital life certificates; 6 23. Partial Withdrawals on medical grounds should not affect the As per the Notification dated 24th January 2025, Withdrawal Assured pension amount. assured payout is contingent on various factorsPFRDA (Operationalisation of Unified Pension Scheme under National Pension System) Regulations, 2025 including Individual corpus being equal to the benchmark corpus. As per the scenario 5 under the annexure appended to the said notification, the benchmark corpus shall be worked out considering no partial withdrawal. Under Regulation 11 (9) of the PFRDA (Operationalisation of Unified Pension Scheme under National Pension System) 2025, any shortfall in the individual corpus as compared to benchmark corpus), may be replenished by the UPS subscriber at any point of time before or on superannuation or retirement, in order to be eligible to receive assured payout. Regulation 18 provides for the limits, frequency and grounds for which partial withdrawal is allowed. 7 17. Intermediaries and The nodal offices of the Central Government As per regulation 24 of PFRDA Entities implementing including Pay and Accounts Officer, Drawing and (Operationalisation of Unified Pension Scheme UPS. Disbursing Officer, Cheque Drawing and under National Pension System) 2025, besides the Disbursing Officer and Head of office shall also in termediaries under the NPS architecture, the be part of the implementation process. nodal offices of the Central Government including Head of Office, PAO, DDO and CDDO shall be part of the implementation process. 8 24. Lumpsum Lump sum withdrawal being calculated on individual Under Regulation 15(2), UPS Subscriber or the Withdrawal corpus or benchmark corpus, whichever is less legally wedded spouse, as the case may be, shall [Regulation 8(2)] may be mentioned under this have an option to effect final withdrawal of an regulation as well. amount not exceeding sixty percent. of the individual corpus or benchmark corpus, whichever is lower.PFRDA (Operationalisation of Unified Pension Scheme under National Pension System) Regulations, 2025 9 25. Withdrawal Deferment of benefits under UPS may be allowed as Under regulation 19(3), the UPS Subscriber, at Process available in NPS to avoid effect of market volatility. superannuation or voluntary retirement or retirement under Fundamental Rules 56(j) (which is not treated as penalty under Central Civil Services (Classification, Control and Appeal) Rules, 1965), as may be applicable, shall authorise the transfer of the value of units in the individual corpus to the pool corpus, which shall not exceed the value of the benchmark corpus. 10 28. Payment of benefits 1. Computation of representative annuity be done on 1. Regulation 22 provides for the formula for to Superannuated or 40% of the individual corpus may be considered. computation of Monthly Top-up amount including Retired Employees computation of Representative annuity amount. under National Pension The computation of representative annuity amount System for such person shall be based on the annuity rate declared by the Authority, utilising such percentage of the individual corpus under NPS Tier I annuitized at the time of exit from NPS. [Representative Annuity Amount = Individual Corpus x(1-FW%) x (Representative Annuity Rate)/(12 x 100).] 2. Funding for the arrears and for prior retirees top- 2. As per para 2(ix) of the UPS notification dated ups going forwards needs to come from the Pooled 24th January 2025 and regulation 7(1)(i), pool corpus, which the government should consider corpus shall comprise of additional Government making a one-off contribution. If a separate one-off contribution of an estimated 8.5% of (basic pay + Dearness Allowance) of all employees who have estimated contribution is not made by the chosen the UPS option on an aggregate basis, for Government, then there will be an immediate strain supporting assured payout under UPS scheme. on the pooled fund from day one.PFRDA (Operationalisation of Unified Pension Scheme under National Pension System) Regulations, 2025 3. The National Pension System Trust shall, after 3. Regulation 25 provides that the National Pension System Trust shall authorise release of due verification authorize payment of the lumpsum UPS benefits, after due verification of UPS Payout payment, as contained in UPS Payout order from Order issued by the PAO of the Central pool corpus. Government; . 11 31. Fees and Individual corpus shall be subject to fees and charges, Regulation 30 provides that the fees and charges Charges or be borne by government. It may be made explicit for the services rendered by the intermediaries if fees under UPS shall be same as NPS, or not. shall be in the mode and manner, and subject to such limits, as approved by the Authority. CRA shall be entitled to recover the charges in respect of services to UPS subscribers in the payout phase from Pool Corpus, within the limits approved by the Authority.PFRDA (Operationalisation of Unified Pension Scheme under National Pension System) Regulations, 2025 S. Miscellaneous Stakeholder / Public comments Observations No. 1 The regulations are silent as to the IC and BC in case As per Regulation 19(3) the UPS Subscriber, at superannuation or voluntary of Voluntary retirement from date of retirement to the retirement or retirement under Fundamental Rules 56(j) (which is not treated date of as penalty under Central Civil Services (Classification, Control and Appeal) superannuation i.e. whether individual corpus remains Rules, 1965), as may be applicable, shall authorise the transfer of the value invested with no further contribution until of units in the individual corpus to the pool corpus, which shall not exceed superannuation date? the value of the benchmark corpus. Or it moves to the pooled corpus at retirement date, and any shortfall from the benchmark corpus at retirement date is made good then? S. No. Intermediary comments received as part of Active Stakeholder Consultation Observations 1 1. Investment of pool corpus by all 11 PFs so as to reduce concentration risk; 1. Under Regulation 10(1), the Pool Corpus Different investment pattern for the corpus surrendered to the pool corpus by the shall be allocated to such pension fund(s) as determined by the Central Government, who subscriber on superannuation / retirement in lieu of assured payment; Regulation shall invest the funds in accordance with the 15(1) - In sub-regulation (1), where it states that the pool corpus shall be allocated investment pattern and related aspects thereto, to such Pension Fund(s) as determined by the Central Government. Does Pension as approved by the Central Government. The Fund mean all the Ten Pension Fund Player in the Industry including Private Players. Authority shall, subject to such instructions, In sub-regulation (1) last line, where it states that the Investment decisions for the issue investment guidelines which the pension Pool Corpus shall solely rest with Central Government. The First line and the last funds shall adhere to. line are contradictory; Clarity sought on control over investment strategy, criteria for selection of pension funds and public disclosure requirements while managing the pool corpus particularly whether the selection of pension fund would be on the AUM threshold or the Fund performance;PFRDA (Operationalisation of Unified Pension Scheme under National Pension System) Regulations, 2025 2. Please refer regulation 11- “Investment 2. Whether subscribers will have to choose 3 Pension Funds (as in the case of of Individual Corpus. – (1) UPS Subscriber Default Scheme under NPS) or they will have the option of choosing from all 11 shall have an option to choose the pension Pension Funds, registered with the Authority; fund and the investment pattern including a default pattern in accordance with the guidelines issued by the Authority, for the investment of contributions made in the individual corpus under UPS. (2) UPS Subscriber shall have the choice of default pattern of pension fund(s) and default investment; or (3) A UPS Subscriber may choose any one of the pension funds registered with the Authority. Provided that a UPS subscriber not exercising such choice of pension fund shall be deemed to have opted for default pattern as determined by the Authority. …” 3. Inclusion of Balanced Life Cycle Fund and LC 75 as investment options for UPS 3. Regulation 11 inter alia provides for the Subscribers, since historical data shows that the probability of negative return in investment choices available to a UPS Subscriber. long term in case of equity investment is low;PFRDA (Operationalisation of Unified Pension Scheme under National Pension System) Regulations, 2025 4. Regulation 2(d) – Details sought regarding methodology of computing/arriving at 4. Regulation 12 provides for the manner and the benchmark corpus. Simplified methodology will provide operational clarity to all methodology for computation of benchmark Corpus value. In addition, illustrative the participants as well as to the subscribers; examples as to working of benchmark corpus under different scenarios are provided under Schedule III. 5. Regulation 2(h) – Clarification sought whether Legal heir or Nominee in addition 5. Regulation 16 provides that family payout to Legally wedded Spouse would be considered for receipt of UPS Benefits. Inclusion besides other benefits that get vested in the UPS subscriber, shall be payable to the legally of Legal heir or Nominee in addition to the spouse will ensure smooth transfer of wedded spouse of such deceased subscriber as funds of the subscribers without lengthy and time-consuming legal complications; on the date of superannuation or retirement under Fundamental Rules 56(j) (which is not treated as penalty under Central Civil Services (Classification, Control and Appeal) Rules, 1965), as may be applicable. 6. Regulation 14(3) provides that this 6. Regulation 7 - Clarity on the Lumpsum Payment whether the same will be Lumpsum Payment shall be in addition to the provided in addition to the accumulated funds or if it will be distributed as part of assured payout payable to the UPS subscriber the existing accumulated funds sought; and shall not affect the quantum of assured payout and shall be payable upon superannuation or voluntary retirement or retirement under Fundamental Rules 56(j) (which is not treated as penalty under Central Civil Services (Classification, Control and Appeal) Rules, 1965), as may be applicable. 2 1. Choice of Investment patterns: Govt. subscribers should not be given more 1. As per regulation 2(1)(e), default pattern means such choice of pension fund(s) and of investment choices which have higher equity exposure; investment pattern(s), as may be determinedPFRDA (Operationalisation of Unified Pension Scheme under National Pension System) Regulations, 2025 by the Authority in respect of individual corpus under UPS, from time to time. 2. As per regulation 11, a UPS subscriber 2.Default Scheme: The Government subscribers who are already in Default Option shall have an option to choose the pension under NPS, and choose to shift to UPS, should by default, continue in Default Option fund and the investment pattern including a under UPS, for all safety and security reasons; Default option: The three Pension default pattern in accordance with the Fund managers under the default option in NPS score over others as far as their core guidelines issued by the Authority, for the strength & technical criteria are concerned and therefore, these PFMs should be the investment of contributions made in the only choice for managing the Individual fund under Default UPS Option; individual corpus under UPS. 3. As per regulation 10, the Pool Corpus shall 3. Movement from NPS to UPS: Movement from NPS to UPS on account of change in be allocated to such pension fund(s) as Investment Pattern and change in Pension Fund Manager may lead to market determined by the Central Government, who disruptions. Hence a change of Fund Manager and Investment pattern is not suggested shall invest the funds in accordance with the for subscribers under the Default Option in NPS moving to UPS; PFM for Pool Fund: investment pattern and related aspects thereto, Management of Pension Funds under Pool account should be entrusted with existing as approved by the Central Government. The PFMs under the NPS default scheme. Authority shall, subject to such instructions, issue investment guidelines which the pension funds shall adhere to. 3 Role of NPS Trust may be reformulated to ensure/ facilitate/ be an oversight/ Regulation 25 provides for the activities that the National Pension System Trust shall monitoring role. NPS Trust may also be permitted to delegate its activities to any undertake for implementation of UPS. other entity; 4 1. Drafting change suggested in Regulation 3(1)(c) - ‘Legally wedded spouse’ 1. Regulation 3 provides that UPS option shall be available inter alia to the legally wedded reference is with respect to deceased NPS Subscriber and not deceased UPS spouse in case of a subscriber who has subscriber; superannuated or retired and has demised prior to exercising the option for UPS. 2. Form C1 (UPS Payout order) may include details of lumpsum payment amount and 2. Regulation 20 specifies details to be provided under UPS Payout order. As per sub-PFRDA (Operationalisation of Unified Pension Scheme under National Pension System) Regulations, 2025 the difference of corpus in the individual corpus under Unified Pension Scheme as regulation (1), the benefits payable to a UPS compared to the corpus under default pattern; Further, Email address of the Legally Subscriber shall be recorded by the respective PAO in a UPS Payout Order as provided in Wedded Spouse may be included in this form as well; Form B1, B2, B3, B4, B5 or B6 in Schedule I, as may be applicable, and sent to the National Pension System Trust through CRA. 3. Regulation 7 - Different terminology for ‘Lumpsum Payment’ or ‘Lumpsum 3. Provision for Final Withdrawal is available Withdrawal’ may be considered to avoid confusion and errors at the end of the Nodal under Regulation 15(2) of PFRDA (Operationalisation of Unified Pension Offices. They suggest usage of the term ‘Lumpsum Withdrawal from Individual Scheme under National Pension System) Corpus’; 2025. 4. Regulation 10 - The Authority to communicate the applicable Dearness Relief to 4. Regulation 17 provides that Dearness relief National Pension System Trust, from time to time; as declared by the Central Government from time to time, shall be payable on the admissible payout and family payout, as the case may be. Regulation 21(2) provides that the NPS Trust shall ensure payment of monthly payout from the Pool Corpus to the bank account of the UPS Subscriber and periodic release of applicable dearness relief. 5. Under Regulation 25(4), the National 5. Regulation 18(4) - Instead of verification of UPS Payout order, National Pension Pension System Trust shall authorise release System Trust may ensure verification as this is in keeping with their role as a of UPS benefits, after due verification of UPS monitoring agency under the NPS architecture; Payout Order issued by the PAO of the Central Government;PFRDA (Operationalisation of Unified Pension Scheme under National Pension System) Regulations, 2025 6. Regulation 23- Amount that can be withdrawn between two consecutive partial withdrawals may also be covered; Regulation 29(3) - once the claim form (B1) along 6. Regulation 18 may kindly be referred to. with documents has been submitted to the HOO, option of partial withdrawal should be disabled; 7. Drafting change suggested in Regulation 28(3) by addition of portion in bold: with 7.The computation of representative annuity respect to computation of Monthly top-up amount, the computation of representative amount for such person shall be based on the annuity rate declared by the Authority, annuity shall be based on the annuity rate applicable, utilising hundred percent of the utilising such percentage of the individual individual corpus, available in the PRAN… ‘plus partial withdrawals, if any and corpus under NPS Tier I annuitized at the time less voluntary contributions, if any’; of exit from NPS. [Please refer regulation 18]. 8.Regulation 29(6) - The contribution though is credited by the Nodal Office on the last day of the retiring month. However, the same gets reflected in the PRAN only 8.Please refer to different illustrative scenarios on T+1/T+2 days. This contribution may be allowed to be adjusted from the first under Schedule III. payout to the subscriber. 5 1. Addition of definitions of Family, Family payout, Payout holder; 1. Definition of Family Payout is given under regulation 2(f). 2. Definition 2(f) - Definition of Head of office needs to be strictly as per DFPR; 3. Definition 2(l) - The UPS payout order issued by the PAO on the basis of 2. For definition of Head of office, please refer verification of details provided by HOO to be added; regulation 2(g). 4. Regulation 24(3) – The rule should specifically mention that the payment related information flows from CRA to HOO; 3. For definition of UPS Payout order, please 5.Role of Head of Office/DDO/PAO needs to be clearly distinguished; refer regulation 2(o). 4. Part B of FORMs (B1, B2, B3, B4, B5, B6) General suggestions – appended to Schedule I provides for the filing Why shall PAO issue payout order when all the management, verification is done by up the details recorded in the CRA System. the NPS Trust.PFRDA (Operationalisation of Unified Pension Scheme under National Pension System) Regulations, 2025 5. For roles of Head of Office/DDO/PAO, please refer inter alia regulation 6, 20, 23, 24.