A new guideline regarding the National Pension System (NPS) has been issued by the Pension Fund Regulatory and Development Authority (PFRDA), the government organisation that operates the NPS, on February 21, 2024.
As per this new norm, two-factor authentication has been introduced in the Central Recordkeeping Agency (CRA) system. A subscriber can log in to NPS only through the Aadhaar authentication along with their existing user ID and login password. This feature will be effective from April 1, 2024.
Typically, CRAs are responsible for centralised recordkeeping, administration, and customer service functions for all NPS subscribers. At present, there are three licenced CRAs in the country.
As per the circular issued by PFRDA, the decision is aimed at protecting the interests of all subscribers and parties in the CRA system. Now, logging into the CRA system can be done only through Aadhaar-based authentication.
The PFRDA informed that nodal offices, including their affiliated autonomous bodies under the central and state governments, currently use password-based logins to access the CRA for NPS transactions. Now, with the use of Aadhaar-based authentication, the entire logging process will become stronger and more secure.
Generally, NPS is a retirement plan in which government and private sector employees can invest. The unique factor about NPS is that investments are made in it for long-term duration, and after 60 years, an individual gets the option of a pension with a lump sum payment.
Earlier in 2004, this system was introduced only for government employees. However, it was opened for private employees in 2009.
Additionally, amendments were introduced in the NPS Trust Regulations that are aimed at simplifying the provisions related to the appointment of trustees, their terms and conditions, the holding of meetings of the board of trustees, and the appointment of chief executive officers.
The NPS Trust, which was established by the PFRDA to manage assets and funds under NPS, is regarded as the registered owner of all assets under the NPS architecture. The subscribers are the beneficial owners of the securities, assets, and funds under NPS.
The amendments to the Pension Fund Regulations have an objective to simplify the provisions associated with the governance of pension funds by the Companies Act, 2013, and enhance disclosure by pension funds.
Additional amendments include clarity of the roles of the sponsor of the pension fund, inclusion of the name ‘pension fund’ in the name clause, and the requirement for existing pension fund(s) to comply with these provisions in a timeframe of 12 months.
In addition, the pension fund is required to constitute additional board committees, such as an audit committee and a nomination and remuneration committee.
In her budget speech, the finance minister had called to simplify, ease, and reduce the cost of compliance while requesting financial sector regulators to carry out a comprehensive review of existing regulations.
Rajiv is an independent editorial consultant for the last decade. Prior to this, he worked as a full-time journalist associated with various prominent print media houses. In his spare time, he loves to paint on canvas.
