Pension fund Regulatory and Development Authority Role and Functions
- The Government of India had, in the year 1999, commissioned a national project dubbed “OASIS” (an acronym for old age social and income security) to investigate policies relating to old age income security in India. Based on the OASIS report’s recommendations, the Government of India implemented a new Defined Contribution Pension System for new entrants to Central/State Government employment, with the exception of the Armed Forces, which replaced the current Defined Benefit Pension System. The Interim Pension Fund Regulatory & Development Authority (PFRDA) was founded on August 23, 2003, by a decision of the Government of India, to promote, develop, and regulate the Indian pension industry. The contributory pension scheme was announced by the Government of India on December 22, 2003, and is now known as the National Pension scheme (NPS), with effect from January 1, 2004. The NPS was later expanded to all inhabitants of the nation on a voluntary basis beginning May 1, 2009, including self-employed professionals and those in the unorganized sector.
- The Pension Fund Regulatory & Development Authority Act was approved on September 19, 2013 and announced on February 1, 2014. PFRDA regulates NPS, which are subscribed to by workers of the Government of India, state governments, private institutions/organizations, and the unorganized sector. The PFRDA oversees the orderly expansion and development of the pension market.
- Role and Functions
- The preamble of the PFRDA says that the authority’s purposes are “to promote old age income security by establishing, developing, and regulating pension funds, to protect the interests of subscribers to pension fund schemes, and for matters connected therewith or incidental thereto.”
- PFRDA is headquartered in New Delhi, with regional offices around the nation.
- Promote pension systems in the nation by nurturing both required and voluntary pension schemes to suit the old age income demands of retired workers.
- The PFRDA oversees and governs the National Pension System, including tier 1 and layer 2.
- PFRDA is responsible for hiring numerous intermediary entities, such as Pension Fund Managers and the Central Record Keeping Agency (CRA).
- Educating the general public and stakeholders on the necessity of pensions.
- Training for intermediaries in the mission of popularizing and teaching people about the value of pensions.
- Addressing issues about different pension programs throughout the nation.
- Addressing and resolving conflicts among different intermediaries, such as banks, as well as between clients and intermediaries.
- Central Record-Keeping Agency (CRA)
- Administration and record-keeping of all information of consumers enrolled in the National Pension System.
- Issuing PRAN (Permanent Retirement Account Number) to consumers with National Pension Scheme savings plans. Acting as an intermediary between PFRDA and other institutions such as Pension Funds and Trustee Banks.
- Monitoring the contributions of NPS members and informing different intermediaries about it
- Providing frequent and updated PRAN statements to all subscribers on a regular
- Overseeing the settlement of cash deposited and the subsequent units allocated to subscribers
- Pension Fund Managers (PFMs) perform key duties as listed below.
- Pension Fund Managers are fundamentally required to invest and manage money of subscribers registered in the national pension system.
- Investment of subscriber contributions in accordance with PFRDA laws and recommendations.
- Maintain accounts and records of investments and the movement of money.
- Building a portfolio of consumers that opt for automatic fund allocation
- Regular reporting to the PFRDA.
- Public publication of financial information from time to time in accordance with recommendations established by PFRDA
- Point of Presence Agencies (PoP)
- The third and most visible institution of the PFRDA is the Point of Presence Agencies. The following are the functions it conducts.
- Receive and analyze the completed application form and KYC evidence provided by clients who register for the NPS program.
- To validate KYC papers as necessary.
- To collect and verify NPS payments made by subscribers via different means such as cash, demand draft, checks, and so on.
- To deduct and collect NPS application fees and provide receipts to subscribers.
- To upload contribution files of subscribers into the Central Record-Keeping Agency system.
- Maintain records of all transactions for different NPS accounts of consumers.
- Carry out changes in subscriber information as requested by subscriber.
- Handle inquiries and complaints about donations made to NPS and other similar requests.
- Trustee Bank
- This is one of the PFRDA’s intermediates. This agency fulfills the following tasks:
- Receives NPS payments from all around the nation via zonal and regional offices.
- Verifies the amounts paid by zonal offices.
- Fund transfers with discrepancies are returned to the zonal office or bank concerned, and proper transfers are sought.
- Prepares Fund Receipt Information by combining all monies received at NPS.
- Transfer monies in accordance with CRA’s instructions for settlement of payments for different entities.
- Reconcile daily balances according to CRA.
- Maintain records of donations made by nodal offices, as well as other related documentation.
- Custodian
- Maintains accounting for customer-held securities and assets.
- Collecting accrued benefits for securities and assets
- Acting as a Domestic Depository and executing tasks linked to the same
- Informing on the activities that are to be taken or have been taken by issuer of securities
- Maintains and reconciles records of services