NPS Structure for Government Employees: The Central Government has created a well-organized NPS structure for government employees associated with New Pension Scheme.
That’s why government employees do not face any problem from opening the account to the withdrawal of money deposited in their NPS account.
If we see the NPS structure, there is not much difference for Central or State Government Employees or working in public or corporate sector.
So, we can say that this pension scheme is the same for all the people, whether they central/state government employees or corporate employees or other individuals.
But when it comes to its operation, there is a difference in some of the rules of this scheme for central government, state government employees and common citizens.
The New Pension Scheme for Central Government Employees has also been extended to Central Autonomous Bodies (CABs).
Similarly, the New Pension Scheme under the State Government has been extended to the State Autonomous Bodies (SABs) under the State Development Authority.
So let’s know how is the NPS structure for central government employees.
Read also: New Pension Scheme for Central Government Employees Important NPS Tax Benefits for Government Employees
NPS Structure for Government Employees:
Here we have given information about the offices that play a role in the opening of the account of a government employee and allotment of PRAN under the New Pension Scheme.
DDO(Drawing and Disbursing Officer)-
Under the New Pension Scheme, it is the responsibility of the concerned DDO to deduct from the salary of government employees for their contribution in Tier-I. After that it is also the responsibility of DDO to upload that deduction through Pay Bill.
DDO also initiates the process of allotment of PRAN to an employee. It works by verifying the Subscriber Registration Form received by the employees and sending it to the concerned PAO.
PAO(Pay and Accounts Officer)-
The salary distribution of employees in all government department or government organization is monitored by the PAO attached to those departments or organization.
If the PAO affiliated to any department or organization receives the NPS Subscriber Registration Form of any employee of that department or organization, then it is his responsibility to verify the Subscriber Registration Form received and send it to the concerned Nodal Officer.
Reconciliation of deductions for Tier-I with the salary of employees of a government office is also done by the PAO attached to that office.
If after tallying all the data is found to be correct then he uploads the same in CRA website.
Nodal Officer-
The role of Nodal Officers is also very important under NPS, as they are the main interface for the customers.
The job of the Nodal Office is to receive the Subscriber Registration Form and send it to the CRA for allotment of PRAN.
Apart from this, receiving applications related to changes in customer details, withdrawal from customers and after verification, forward them to the CRA for further processing.
Central Recordkeeping Agency(CRA):
After receiving the Subscriber Registration Form of an employee from any Nodal Officer, CRA allots PRAN (Permanent Retirement Account Number) to the said employee on the basis of the details given in that form.
It is the responsibility of the CRA to keep records, carry out the functions of administration and customer service for all the customers under the New Pension Scheme.
The CRA maintains the database along with keeping a record of the transactions related to each PRAN.
In this way we can say that a multi-level system works under the NPS structure and that is why it is working smoothly for the government employees as well as the common man.
Important differences between NPS for government employees and common citizens:
We have mentioned earlier that under the New Pension Scheme, its basic structure remains the same for all the Subscribers. Whether he is a Central Government employee or a State Government employee or a common citizen.
But for all these there is a difference in some rules and procedure of New Pension Scheme.
So let’s know that for government employees and common citizens
Difference in registering in NPS-
It is mandatory for any government employee to open a Tier-I account under NPS.
As soon as he gets a job in any government department, he has to fill the Subscriber Registration Form and submit it to his respective DDO along with the necessary documents.
After that the employee has no role to play for further action. Finally, when the PRAN Kit of the employee is sent by the CRA, it is the responsibility of the DDO to hand over his PRAN Kit to the said employee.
The process of registration changes for ordinary citizens. He can register himself under NPS in two ways and can open his account in Tier-I.
The first is the offline process – under this the customer can get the Subscriber Registration Form from any POP-SP (Point of Presence – Service Providers).
After that, by filling that form, you can submit it to your nearest POP-SP along with the necessary documents. After the further processing is completed, the PRAN card is sent by the CRA to the correspondence address of that person.
If a person is opening an NPS account from any bank and if the said person does not have a bank account with that bank, then he also has to submit KYC.
The second is the online process in which the customer has to visit the website of eNPS .
After going to the option of NPS given here, fill the required personal details and submit it. After this the PRAN is allotted by the CRA.
Difference in the amount of contribution in NPS accounts:
There is also a huge difference in the process of contributing to NPS accounts by a government employee and a common citizen.
Contribution is made every month to the Tier-I account of a government employee, i.e. by both the employee and the government.
The contribution given by the employee is 10% of the sum of his Basic Pay and DA and 14% of the sum of Basic Pay and DA of the employee is given by the government.
But the Tier-I account of an individual is contributed only by him, the government does not contribute to it. Every month this contribution is minimum Rs.500 in Tier-I and Rs.250 in Tier-II.
Differences in the process of contributing to NPS accounts:
It is the work of the concerned DDO to deduct from the salary for the contribution in Tier-I account of government employees every month.
After that the details of this deduction are sent to the concerned PAO along with the salary bill. The details are uploaded by the PAO to the CRA system.
As soon as these details are received by the CRA, he credits the money in the NPS account of the employee.
But it does not take such a long process for a common citizen to contribute to the NPS account. He can easily deposit money in his Tier-I account online.
In case of NPS for public, the process can be initiated manually.
Difference in selection of fund manager under NPS:
While filling the Subscriber Registration Form, any government employee has the option to choose his preferred fund manager. He can choose his preferred fund manager from among 8 fund managers.
But if he does not exercise this option, the money to be credited to his Tier-I account will be transferred to the predefined three fund managers LIC Pension Fund Limited, SBI Pension Funds Pvt. Limited and UTI Retirement Solutions Limited in a certain ratio.
Similarly, while opening an account, an individual has to choose his/her preferred fund manager who will manage his/her investments.
But if that person does not choose any fund manager then SBI Pension Fund Private Limited will act as the default pension fund manager as per the Pension Fund Regulatory and Development Authority (PFRDA). That is, it will invest the money contributed in that person’s NPS.
Difference in option of asset allocation under NPS:
After selecting the fund manager, the option of asset allocation has to be selected.
There are four types of asset classes under NPS- i) E-Equity ii) C-Corporate Debt iii) G – Government Bonds iv) A-Alternative Investment Funds.
There are also two options to select them – Active Choice and Auto Choice.
Under Active Choice, a common subscriber gets the option to invest the funds of his NPS in any of the above four assets.
But there are three options E, C and A not present in the Active Choice for government employees. Government employees have to invest their NPS funds only under Auto Choice.
There are also three types of options under Auto Choice –
i) LC 75- A maximum of 75% of the total asset can be invested in Equity.
ii) LC 50 – Maximum 50% of the total asset can be invested in Equity.
iii) LC 25 – A maximum of 25% of the total asset can be invested in Equity.
In all these three options also, government employees can invest only in the last two i.e. LC 50 and LC 25.
Further, in case of individual NPS option, where the entire contribution can be transferred to the fund managers, for government employees only incremental flow (fresh money) is allowed to be transferred to the new fund managers.
Summary:
- There is a well-organized NPS structure for government employees under which DDO, PAO, Nodal Officer and CRA come.
- The DDO works to verify the NPS Subscriber Registration Form received by its office staff and send it to the concerned PAO.
- Like the DDO, the PAO also verifies the received Subscriber Registration Form and sends it to the Nodal Officer.
- The Nodal Office sends the Subscriber Registration Form to the CRA for further processing and allotment of PRAN.
- Finally the CRA allots the PRAN based on the details given in that form and sends a PRAN Kit to the DDO of the employee concerned.
- The process of allotment of PRAN for government employees is different from that of ordinary citizens.
- There are three fund managers predefined for a government employee- LIC Pension Fund Limited, SBI Pension Funds Pvt. Limited and UTI Retirement Solutions Limited.
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