In a bid to increase the penetration of National Pension Scheme (NPS), PFRDA has launched a pilot run of online account opening facility for investors who wish to subscribe to National Pension Scheme (NPS).
NPS is a voluntary pension scheme launched by PFRDA which aims to provide pension to people in both the organized and unorganized sectors. Unlike employees’ provident fund or PPF, NPS gives investors greater control and flexibility and that too at very low cost.
Central Recordkeeping Agency is providing this facility. Investors can log on to NSDL website to open an eNPS account. However, Aadhaar number is mandatory to open such an account because the system requires Aadhaar for KYC.
Subscribers need to choose a pension fund manager and pay minimum initial investment amount of Rs.500 to open an account after which they will receive a Permanent Retirement Account Number (PRAN). Subscribers are required to send hard copy of the auto-generated form along with the supporting documents within three months to NSDL.
Subscribers can open both Tier I account (non-withdrawal account) and Tier II account (savings account which works like an open ended equity fund; however, Tier I is mandatory to open this account) through this service. That means existing investors can open tier II account directly.
Hemant G Contractor, Chairman PFRDA, had said at a recently held CII Insurance Summit that PFRDA was about to launch online account opening facility for investors. However, he did not mention about this pilot run.
Cafemutual has back-tested this facility and found it worthwhile. However, subscribers may face difficulties if they upload a different photograph other than Aadhaar’s identity picture.
Currently, NPS has assets under management of over Rs.94,000 crore of which Rs.7,000 crore has come from newly launched social security scheme called Atal Pension Yojana (APY).
