Pension plans provide financial security and stability during old age when people don't have a regular source of income. Retirement plan ensures that people live with pride and without compromising on their standard of living during advancing years. Pension scheme gives an opportunity to invest and accumulate savings and get lump sum amount as regular income through annuity plan on retirement.
According to United Nations Population Division World's life expectancy is expected to reach 75 years by 2050 from present level of 65 years. The better health and sanitation conditions in India have increased the life span. As a result number of post-retirement years increases. Thus, rising cost of living, inflation and life expectancy make retirement planning essential part of today's life. To provide social security to more citizens the Government of India has started the National Pension System.
REGULATOR AND ENTITIES FOR NPS
Pension Fund Regulatory and Development Authority (PFRDA) : Pension Fund Regulatory and Development Authority (PFRDA)is an autonomous body set up by the Government of India to develop and regulate the pension market in India.
Point of Presence (POP) : Points of Presence (POPs) are the first points of interaction of the NPS subscriber with the NPSarchitecture. The authorized branches of a POP, called Point of Presence Service Providers (POP-SPs), will act as collection points and extend a number of customer services to NPS subscribers. The Pension Fund Regulatory and Development Authority (PFRDA) has authorized 58 institutions including public sector banks, private banks , private financial institutions and the Department of Posts as Points of Presence (POPs) for opening the National Pension System (NPS) accounts of the citizens.
Central Recordkeeping Agency (CRA) : The recordkeeping, administration and customer service functions for all subscribers of the NPS are being handled by the National Securities Depository Limited (NSDL) , which is acting as the Central Recordkeeper for theNPS.
Annuity Service Providers (ASPs) : Annuity Service Providers (ASPs) would be responsible for delivering a regular monthly pension to the subscriber after exit from the NPS.
BENEFITS OF NPS
Some of the benefits of the National Pension System (NPS) are:
- It is transparent - NPS is transparent and cost effective system wherein the pension contributions are invested in the pension fund schemes and the employee will be able to know the value of the investment on day to day basis.
- It is simple - All the subscriber has to do, is to open an account with his/her nodal office and get a Permanent Retirement Account Number (PRAN).
- It is portable - Each employee is identified by a unique number and has a separate PRAN which is portable i.e., will remain same even if an employee gets transferred to any other office.
- It is regulated - NPS is regulated by Pension Fund Regulatory and Development Authority, with transparent investment norms & regular monitoring and performance review of fund managers by NPS Trust.