PFRDA introduces OTP based authentication for paperless NPS on boarding

Pension Fund Regulatory and Development Authority (PFRDA) is mandated to promote old age income security i.e. pension in India and to protect the interests of subscribers of pension systems and schemes. As part of its developmental mandate and to increase the outreach of National Pension System (NPS), PFRDA has taken series of steps to ensure ease of NPS on boarding through various convenient modes. 

In its endeavor to provide digital solutions, PFRDA has already enabled opening of online NPS Account in a paperless manner through e- signature. In order to further facilitate ease of NPS Account opening, the subscribers are now permitted to open their NPS account through One Time Password (OTP) also.

In this process, the customers of banks (registered as POPs- Points of Presence), who wish to open NPS Account through internet banking of the respective banks, can open    NPS Accounts using OTP received on their registered mobile number.  

However, for opening of NPS Accounts through non internet banking digital mode, through POPs (Banks as well as Non - Bank POPs), OTP received on their registered mobile number and email can be used for paperless NPS Account opening.

Post completion of KYC, POPs have to submit the NPS Subscriber's data/information to Central Record Keeping Agencies (CRAs) along with his photo and image of signature with an undertaking that the KYC/AML guidelines/rules have been duly complied with.

POPs and CRAs have been advised by PFRDA to provide the required functionality of OTP based authentication. This process would ensure seamless account opening, end to end digitization and optimizing of investment returns by deposit of contributions in a faster way.

PFRDA administers more than 3.60 crore subscribers under National Pension System with an aggregate Asset under Management (AUM) of more than Rs. 4.55 lac crore. Out of total subscribers, 2.25 crore subscribers are under Atal Pension Yojana (APY). 

7 Benefits of National Pension System (NPS)

Pension Fund Regulatory and Development Authority (PFRDA)

1. Flexibility: Subscribers has control over the choice of asset class (Active or Auto choice) and the Pension Fund Managers (PFMs) or Pension Funds who manages the investments. Subscribers can switch the Pension Fund once in year and the investment option or asset class twice in a year.

2. Dual benefit of Low Cost and Power of compounding: NPS carries the benefit of being the lowest cost pension product in the world. The overall costs in NPS are the lowest due to economies of scale in operations of the system architecture.

Also, accumulation of the retirement corpus over a period of time gets accelerated on account of the compounding effect and nominal charges borne by the subscriber.

3. Tax benefits:

(a) On subscriber’s contribution: Own contributions are eligible for tax deduction u/s 80 CCD (1) upto 10% of basic + DA or up to 20% of Gross Income for self-employed within the overall ceiling of Rs. 1.50 Lacs u/s 80 CCE

(b) On employer’s contribution: Contributions made by employer are allowed as deduction u/s 80CCD(2) while computing total income of the employee. However, the amount of deduction is restricted to 14% of salary in case of Central Govt. employees and 10% in any other employees (otherwise 20% of gross total income).

NPS provides additional tax benefit u/s 80CCD 1(B) on contribution in NPS account subject to a maximum investment of Rs 50,000. Thus, investing in NPS, a subscriber can get a tax benefit of Rs two lakhs (1,50,000+50,000).

4. Safety (Regulated & Monitored): NPS is regulated by Pension Fund Regulatory and Development Authority (PFRDA) which is established through a statute. PFRDA prescribes the investment norms and monitors the performance of the entire system.

5. Simple and transparent: NPS is simple to open and operate. A subscriber can open an account with any one of the Point of Presence or through eNPS and get a Permanent Retirement Account Number (PRAN).

6. Portable: The NPS account (PRAN) is unique and the subscriber can transfer the pension account across employment and locations while changing his/her employer or on relocation.

7. Online Access: Subscriber can access and operate the pension account online through web based interface or through the mobile application.

PFRDA allows Aadhaar based offline paperless KYC (Know Your customer) verification process for NPS On-boarding

PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY

Date: May 27, 2020

PFRDA allows Aadhaar based offline paperless KYC (Know Your customer) verification process for NPS On-boarding

               PFRDA, in its endeavor to facilitate ease of enrollment of subscribers, constantly enables various modes of NPS on boarding through various channels such as e-NPS and POPs (Points of Presence). 

2.               Now PFRDA permits e NPS/Points of Presence to use the off line Aadhaar of the prospective subscribers (Applicant) with their consent for opening NPS Accounts. The Aadhaar based offline paperless KYC verification eliminates the need to provide the physical copy of Aadhaar. As per this new process, an applicant can download the password protected Aadhaar XML file in the off line mode by accessing UIDAI portal through eNPS and share the same for his KYC. The facility can also be availed for opening NPS accounts through Points of Presence (POP), which are offering this facility. In this process, the KYC details are in machine-readable XML format, which is digitally signed by UIDAI allowing eNPS/ POPs to verify the demographic contents of the file and certify the same to be authentic. The identity and address of the applicant can be verified in the process.

3.               The process enables immediate activation of NPS account due to instant KYC verification and also facilitates immediate deposit of NPS contribution by the subscriber.