Tuesday, November 8, 2011

The New Pension System

The New Pension System


Pensioners of Ministries of Railways and Defence are governed by their respective pension rules having their independent administrative set up. The employees working in the establishments belonging to the class of industries/ other establishment listed in the schedule appended to EPF & MP Act.1950 are covered under EPS Scheme administered by Ministry of Labour. Further, the pensionary matters of those who joined/ would join Central Government on or after 1.1.2004, are dealt by Ministry of Finance (Department of Financial Services) under New Pension scheme.

Prior to 2004, only about 12-13 percent of the total workforce was covered by any normal social security system. In order to establish a robust and sustainable social security arrangement in the country, the New Pension System (NPS) was introduced by the Government from January 1, 2004 for new entrants to the Central Government service, except the Armed Forces and was extended to the general public from May 1, 2009 on a voluntary basis. Based on individual choice, it is envisaged as a low-cost and efficient pension system backed by sound regulation.

On joining Government service, an employee is allotted a unique Personal Pension Account Number (PPAN). This unique account number remains with the subscriber always and from any location even if he/she changes employment. The PPAN provides two personal accounts, viz. a mandatory Tier-I pension account, and a voluntary Tier-II savings account.

To clarify the difference between Tier-I and Tier-II account, it may be stated that in Tier-I employees joining Government service since January 1, 2004 are mandated to contribute 10% of basic+DA into NPS account. Withdrawing of savings from this account is not allowed till attainment of 60 years of age. The monthly contributions and savings in this account, subject to a ceiling to be decided by the government, will be exempt from income tax. These savings will only be taxed at the time of withdrawal. On retirement a subscriber under Tier-I account will be able to withdraw 60% of his/her savings as a lump sum and the balance 40% will go to purchase an annuity scheme from a life insurance company of his/her choice, from which he/she will draw a monthly pension for life. On the other hand Tier-II account is simply a voluntary savings facility for contributions and savings with no facilities for tax advantages. But the subscriber is free to withdraw savings under Tier-II as per his/her wishes.

Investment of the Fund

The NPS Trust was established by PFRDA on 27 February, 2008. The composition of the Trust is given below:-

1. Sh Yogendra Narain Chairman
2. Sh. N>R> Rayalu Trustee & CEO
3. Sh Umraomal Purohit Trustee
4. Sh. G. N. Bajpai Trustee
5. Sh. Naresh Dayal Trustee

NPS was operational for the Central Government Employees (except defense forces) joining the service on or after 1.1.2004. Subsequently the State Governments have also started joining the NPS. Three Fund managers as mentioned below were appointed to manage the Funds of the Government employees with effect from 1.1.2008:-

(i) SBI Pension Funds Private Limited;
(ii) UTI Retirement Solutions Limited;
(iii) LIC Pension Fund Limited.

As the NPS was opened up for all citizens of India with effect from 01 May 2009, the interim PFRDA appointed six Pension Fund Managers to manage the funds of the new subscribers as follows:-

(i) SBI Pension Funds Private Limited;
(ii) UTI Retirement Solutions Limited;
(iii) ICICI Prudential Pension Funds Management Company limited;
(iv) Kotak Mahindra Pension Fund Limited;
(v) IDFC Pension Fund Management Company Limited;
(vi) Reliance Capital Pension Fund Limited.

Agreements with all the Pension Fund Managers have been signed. Agreement has also been signed with the Stock Holding Corporation of India Ltd. (SHCIL) who acts as custodian of investment Instruments.

A quarterly review of the Pension Fund managers is carried out by the NPS Trust to review and evaluate the performance of the Fund Managers and make suggestions for improvement.

The NPS provides various investment options and choices to individuals to switch over from one option to another or from one fund manager to another, subject to certain regulatory restrictions. The Pension Fund Managers (PFMs) manage three separate schemes consisting of three asset classes, namely (i) equity, (ii) Government securities and (iii) credit risk-bearing fixed income instruments, with the investment in equity subject to a cap of 50 per cent. The fund managers will invest only in index funds that replicate either the Bombay Stock Exchange (BSE) sensitive index or National Stock Exchange (NSE) Nifty 50 index. The subscriber will have the option to decide the investment mix of his pension wealth. In case the subscriber is unable/unwilling to exercise any choice regarding asset allocation, his contribution will be invested in accordance with the “auto choice” option with a predefined portfolio.

The funds of the Central Government subscribers under NPS were invested in specific financial instruments by the pension fund managers with effect from (w.e.f.) 02 April, 2008 and State Government subscribers w.e.f. 01 May, 2009. The performance of the three pension fund managers for the Central Government employees indicate that the returns on subscribers’ contributions under NPS ranged between 16.38% and 8.05% during the period 2008-09 to 2010-11. For the period 2009-10 and 2010-11, the returns in Tier-I of NPS for unorganized sector workers ranged between 12.52% and 1.82% for the Government securities, 12.66% and 4.02% for the corporate bonds and 25.94% and 7.95% for equity. Details of year-wise return since inception in percentage terms is as under:

Year Central Government Employees State Government Employees
Highest Return Lowest Return Highest Return Lowest Return
2008-09 16.38 12.38
2009-10 12.27 8.88 6.34 5.94
2010-11 8.45 8.05 11.34 9.88


The Interim PFRDA, set up as a regulatory body for the pension sector, pending the passage of the Bill in Parliament, is engaged in consolidating the initiatives taken so far regarding the full NPS architecture and expanding the reach of the NPS distribution network. The full NPS architecture comprising a Central Recordkeeping Agency (CRA) viz. The National Securities Depository Limited (NSDL), 3 Pension Fund Managers (PFMs), Trustee Bank viz. Bank of India (BOI), Custodian viz. Stock Holding Corporation of India Ltd. and NPS Trust, has been put in place and is fully operational. Provisions for making the Authority financially autonomous have been made by the Government through the PFRDA Bill, 2011.

The Bill

The Pension Fund Regulation and Development Authority Bill, 2005 (PFRDA Bill) was introduced in Lok Sabha in March, 2005 and the official amendments in January, 2009. However the Bill lapsed on dissolution of the 14th Lok Sabha. In the Budget for the year 2011-12, the Government has announced its proposal to move the revised PFRDA Bill. The Department related Standing Committee on Finance, to whom the revised Bill was referred for examination, presented the report to Parliament on 30 August, 2011. A provision has been made in the Bill for ensuring financial autonomy of the PFRDA.


NPS Lite has been developed with the objective of providing old age income security to various economically disadvantaged sections of society. These will be availing various features in NPS-Lite through their representing institutions. Such institutions selected/designated by PFRDA are called “aggregators‟. Aggregators shall be responsible for – (i) Registration of designated offices of the Aggregator, (ii) Subscriber Registration, (iii) Regular Contribution Uploading, (iv) Subscriber Servicing and (v) Grievance Handling. Besides policy/guidelines governing the aggregators are being issued from time to time. The NPS-Lite architecture may best be illustrated as:-


The Government of India is extremely concerned about the old age income security of the working poor and is focused on encouraging and enabling them to join the NPS. To address this problem, the Union Finance Minister has made the following announcements in the Budget Speech for the year 2010-11:

“ To encourage the people from the un-organized sector to voluntarily save for their retirement and to lower the cost of operations of the New Pension Scheme (NPS) for such subscribers, Government will contribute Rs. 1000 per year to each NPS account opened in the year 2010-11. This initiative, “Swavalamban” will be available for persons who join NPS, with a minimum contribution of Rs. 1000 and a maximum contribution of Rs. 12000 per annum during the financial year 2010-11. The scheme will be available for another three years. Accordingly, I am making an allocation of Rs. 100 crore for the year 2010-11. It will benefit about Rs. 10 lakh NPS subscribers of the un- organized sector. The scheme will be managed by the interim Pension Fund Regulatory and Development Authority.

I also appeal to the State Governments to contribute a similar amount to the scheme and participate in providing social security to the vulnerable sections of the society.”

The Finance Minister has formally launched the Swavalamban Scheme on 26.09.2010 at Jangipur (West Bengal). The PFRDA will implement the Swavalamban Scheme through a network of Aggregators, such as, Government agencies, Life Insurance Corporation Housing Finance Ltd. or NGOs.

In accordance with the recommendations of the Committee to ‘Review Implementation of Informal Sector Pension’ (CRIISP), the benefit of government co-contribution under Swavalamban Scheme has been extended from three to five years for all subscribers of Swavalamban who enroll during 2010-11 and 2011-12. Also the NPS has already been included in the Financial Inclusion strategy by grant of Rs. 50 crore to PFRDA by the National Bank for Agriculture and Rural Development (NABARD), which is the nodal agency for implementation of the scheme of ‘Financial Inclusion Task Force’.

Response of the States

The NPS has been well received by the State Governments/UT Administrations which have notified similar schemes for their employees under the ambit of the NPS. The PFRDA has been working with all the States to enable them to log on to the NPS architecture with ease. NPS Trust and CRA have been in continuous dialogue with State Governments/Union Territories for facilitating their entry into the NPS. About 22 States/UTs have already signed agreements with CRA and the NPS Trust. However, till December 24, 2010, only 16 State Governments/UT Administrations have registered their Nodal offices and subscribers with CRA, out of which 4 States / UTs have not initiated fund / data upload.

On the issue of response to the scheme from some states being relatively weak in terms of upload of funds to the NPS architecture, the Ministry has clarified in reply to Unstarred Question No 3991 given in Lok Sabha on 03.12.2010 that such shortcomings are internal to the states/UT administrations concern.

The Finance Minister had, in his Budget Speech and also in his series of meetings with the Chief Ministers of the State Governments, appealed to all the State /UT Governments to consider a scheme similar co-contributory pension schemes of Swavalamban for the workers of un-organized sector. In response to the appeal of the Finance Minister, two states, namely Haryana and Karnataka have already announced co-contributory schemes for specific occupational groups for the workers in the un-organized sector promising to contribute Rs. 1200 per annum over and above the subscribers’ contribution and the contribution of the Central Government under Swavalamban Initiative. It is expected that many more States may join the Central Government initiative giving this a truly national character and this would help in addressing the challenge of meeting old age income security of the entire population of the working poor.

Efforts are under way to extend the reach of the NPS to new segments like Central and State autonomous bodies and the organized sector and introduce micro pension initiatives focusing on a low cost model of the NPS to be implemented through SHGs and similar bodies. More than 250 Central autonomous bodies have evinced interest in joining the NPS. Several State Government autonomous bodies and undertakings are in dialogue with the PFRDA for extending the NPS to their employees.


The recent global financial turmoil raised many issues about governance of financial intermediaries and awareness of investors. Investor awareness is a prerequisite for investor protection. In fact, investor protection and education are two sides of the same coin. Neither of the two can have the desired impact in isolation. A simultaneous and co-ordinated effort on both fronts would help investors take well informed financial decisions besides protecting their interests and ensuring orderly conditions in markets. Greater effort, therefore, is needed for investor education and promoting investors’ protection. In order to popularize NPS amongst the investors including employees working in private sector, the interim PFRDA has put in place a Financial Literacy programme to create investor awareness and create adequate publicity amongst the target groups. The programme includes:

(i) Setting up of a website (pfrda.org.in)
(ii) Dedicated help desk with a toll free number, which helps disseminate information on NPS and responds to the queries of the prospective clients
(iii) Print and media campaign to popularize the NPS.

As a result of the efforts made in regulation, implementation and other publicity measures, the NPS is currently available for all citizens including workers in the unorganized sector, through nearly 4866 service provider (SP) branches of 35 Points of Presence (PoP). The PFRDA has also recently appointed the Department of Posts as PoP in addition to seven other financial institutions which will expand the PoP-SP network by more than five times. Thus NPS implementation in the Central Government has stabilized with more than 23 lakh subscribers already registered under the NPS upto 03 August, 2011 including 7.9 lakh of the Central Government, 7.7 lakh of the State / UT Governments, more than 40,000 workers of central autonomous bodies, about 43,000 workers of un-organized sectors, around 9,000 from corporate sector and about 7.3 lakh NPS-Lite subscribers.

Parliament Questions raised by Members on the NPS

Sl No. Heading and Specific points raised Question No/Date
1. NPS for all citizens- proposals for launching the NPS for all 957/10.07.2009
2. NPS- reasons for failure and steps taken therefrom 1942/17.07.2009
3. Discrepancy in NPS- steps taken 3874/31.07.2009
4. Management of Pension Funds- release of guidelines for management of the funds 336/20.11.2009
5. New National Pension Scheme- publicity measures, results, minimum returns 2617/12.03.2010
6. New Pension System- roping in PSUs 4616/23.04.2010
7. New Pension System- role of NDSL, details of amount collected, accounts active and not active, amount invested in market linked pension schemes, NAV, withdrawal, expansion of reach 5736/30.04.2010
8. Contributory Pension Scheme- conditions, number of accounts, amount accumulated, payments pending and settled 6816/07.05.2010
9. Proposals to Popularize NPS- steps to popularize, request of PFRDA to Govt 924/30.07.2010
10. New Pension Scheme- transparency relating to NAV and transactions 3346/13.08.2010
11. New Pension Scheme- review of pension in informal sector; corpus fund 4509/20.08.2010
12. Pension Scheme for the Poor- scope, time 5157/27.08.2010
13. National Pension Scheme for Poor Persons- steps to bring poor persons under NPS 1770/19.11.2010
14. New Pension Scheme- states’ response, guidelines for depositing contribution by states, appointment of managers 1752/19.11.2010
15. NPS-Lite- lauching 2896/26.11.2010
16. Pension to Plantation and NREGA Workers- schemes proposed to be incorporated to help the workers 3991/03.12.2010
17. New Pension Scheme- overhaul of the system 4070/03.12.2010
18. Unitization of NPS- possibility of scam due to pendency of unitization, reversion to old pension scheme, also about those who shifted employment 1584/04.03.2010
19. New Pension Scheme- reluctance of employees to join, steps 233/11.03.2011
20 Implementation of NPS-benefits accrued to each category of subscribers, recommendations of committee 2274/12.08.2011
21. Unitization of NPS-also withdrawal of those who shifted employment 268/18.08.2011
22. Exposure of NPS Fund- action taken to popularize in private sector, provision of higher return with moderate risk 3970/26.08.2011
23. DA Relief under the NPS- also safeguarding NPS from inflationary trends 4018/26.08.2011

Challenges and Outlook

Pension reforms in India have generated widespread interest internationally. Lower level of literacy among the workers in un-organized sectors, very low level of financial literacy among these target groups, non-availability of even moderate surplus of their income with the workers in un-organized sector to save for their retired life and, so far, lukewarm response from most of the State / UT Governments for a co-contributory scheme for Swavalamban are the major challenges in universal inclusion of poorer sections of Indian society and to address the public policy objective of addressing the longevity risks among the workers in un-organized sectors.

Thursday, September 22, 2011

an old film

watched some scenes of rudaali, found a new site http://www.bhupenhazarika-news.blogspot.com/

Wednesday, September 14, 2011

cricket vs. football

Cricket vs Football
taken from http://sarthakg.wordpress.com/2010/06/19/cricket-vs-football/

If you are a football fan, read it to get a bite of reality. If you are a cricket fan, read it to be proud on cricket.

Most people would believe that football is far more superior game than cricket. It might beat cricket when it comes to the size of the ball, but in other areas.. think again!

1. Even the shortest version of cricket is twice as longer than any football match, thus providing entertainment for longer duration of time!

2. In football, for 90minutes you wait and wait for a goal which may or may not happen. But in cricket there is some action-a six, four, bowled, run out- on virtually every ball. Thus, providing more reasons to cheer!

3. Football provides just one time slot (ie half time) for advertisers, while in cricket there are atleast 40 time slots (in T20 format). And then, if its IPL you can have ads in between deliveries also. Thus, making it more commercially viable!

4. In football, for majority of the time you are shown just one camera angle. But in cricket, broadcasting is a challenge! You need cameras in every corner of the ground, you require technologies like hawk-eye, speedometer, snicko-meter, zoomer, hotspot. Thus making cricket more technologically advance!

5.All commentator do in a football match “Kaka.. Kaka to ronadinho, to giberto, passes it to Julio…”. (Thanks, vuvuzella, now they are not required to do even this much!). While in cricket, you have to analyze each and every delivery or if its IPL, tell the whole world about the MRF blimp hanging in the sky. Thus, making the job of commentators tougher and more professional!

6. Cricketers get full clothes to wear along with safety gears like helmet, pads, ell guard, chest guard. While footballers only get a small nicker to wear. Thus clearly showing that cricketers are richer and very well fed!

Also Read:
•14 players and 1 God who made us the World Champions
•Sachin God Tendulkar: Top 50 Quotes describing Him
7. In terms of weekly salary to players, IPL is ranked No.2 in the world after NBA, while EPL is at 4. Again showing cricketers are richer than footballers!

8. Talking about popularity, here is some stats- Total population of 32nations participating in football: 1541millions. Population of just 3 cricket frantic nations (India, Pakistan, Bangladesh): 1572millions. Clearly, cricket is popular among more people!

9. The word “football” is not even recognized worldwide (in USA, football means rugby!) while there no such confusion with cricket.

10. Football doesn’t enjoy the privilege of three different formats.

11. Nobody would disagree on this. Cricket is by far the gentlest of gentlemen’s game when compared with football.

That was a desperate attempt of cricket fan to put cricket is the same league as football. But we all know what the reality is. Cricket is still a sport played by handful of nations. The revenue generated by ManU alone is more than total revenue of all IPL teams multiplied by 10. Even in its religious hub India, the capacity-wise largest stadium is not of cricket, but of football.

One could only hope that one day cricket would beat football! For the time being, Kookuburra is too small in comparison with Jabulani!!

Monday, August 22, 2011

Light denied

When I consider how my light is spent
Ere half my days in this dark world and wide,
And that one talent which is death to hide
Lodg’d with me useless, though my soul more bent
To serve therewith my Maker, and present
My true account, lest he returning chide,
“Doth God exact day-labour, light denied?”
I fondly ask. But Patience, to prevent
That murmur, soon replies: “God doth not need
Either man’s work or his own gifts: who best
Bear his mild yoke, they serve him best.
His state Is kingly; thousands at his bidding speed
And post o’er land and ocean without rest:
They also serve who only stand and wait.”

Friday, August 19, 2011

Thursday, July 7, 2011

Colors of the North East

The Transition zone between the Indian, Indo-Malayan and Indo-Chinese biogeographic regions.
Located between 22 and 30 degrees North and 89 and 97 degrees East
The North East India spreads over an area of 2,62,370 square kilometers.
Surrounded by a length of about 2000 kilometers of international border.
Home to 3.24 crore people of which the tribals constitute about 1.8 crore
Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland, Sikkim and Tripura
There are about 483 different tribes, classifiable into about 130 major groups in the states
The North East India presents a myriad of cultures and colors.
The depth of green from the tea gardens, much like the cultural richness of Assam
Is beyond expression even from the tip of Bhupen Hazarika’s flute.
The smoky blue hills, splendid white Churches and students converged in Shillong
Are struggling to find expression even in the melodious chorus of the Shillong Chamber Choir.
Gentle and sparkling in orange in the glow of the evening sun, Tripura’s Neermahal Water Palace
Is a legacy of the kingdom of Tripura, a story of splendor and opulence.
Watched over by the Kanchenjunga and the Himalayan ranges Sikkim and Arunachal Pradesh
The seat of the Karmapas and the Mahayana form of Buddhism
The temples and monasteries spiritually dazzle in yellow, green, orange and blue
Beyond the heavenly peaks of Naga hills and gently rolling hills of northern Manipur
The wide expanse of valley is home to an amazing array of exotic cuisines and traditions.
You can waste time marveling the white kurta clad men and women painted in cream.
The most fascinating items are still tucked away in the hill side.
Popularly known as ‘song bird of the north-east’ Mizoram prides itself of her singers
Reverberating the silent music of the foggy blue mountains
To explain the true dimension of North East India
That prides itself of the Cherapunji, the Keibul Lamjao, the Ras Lila
The Siroy Lily and the 550 varieties of orchids and of course the Horn Bill
It’s said that no adjective is appropriate enough and no picture expressive enough
In view of the rich flora and fauna and certainly lack of preservation effort
Conservation International (CI) a body that strives to ensure a healthy and productive planet for us all.
Has identified the region as one among the 34 Global Biodiversity Hotspots on earth.

Thursday, March 17, 2011

May God Save the Japanese!

If there is no island called Japan, if there is no race called the Japanese, if there is no fortitude, a car or an LCD TV might still remain a distant dream. Even as the Indian middle class parted with a bulk of their savings in exchange for inefficient cars, bikes and electronic and household goods, destiny had planned a different fate. May be that’s karma. May be not. A new age had dawn on the Indian sub-continent. And that was the early 1980s.
The coming of Suzuki with its flagship model, the Maruti 800 has revolutionized the traffic scene in India since 1985. That year is more a landmark in the history of empowerment of the middle class Indians, than in automobile history. The erstwhile traffic scene lorded over by the ambys (ambassaddor cars) of Hindustan Motors Company, peppered with the Bajaj Chetaks, Bajaj Supers and Lambretta scooters was steadily dominated by the more efficient and affordable 800 cc cars. A new club of confident and happy middle class thrown up by the Maruti-Suzuki partnership was born. The possibility of owning a four wheeler at affordable price continued to inspire Government servants in India thenceforth. One day I was riding my Yamaha gladiator when tiny drops of rain began to lash me. I reached home completely drenched. I checked out from a car dealer the price of a cheapest car in his show room. He politely chose to hang up the phone and call me later. Meanwhile I checked all my sources for a possible amount I could gather up at short notice. Then a call came and I was told that I could own Maruti-Suzuki 800 at an amount slightly more than two lakh Indian Rupees. Suddenly I realized that a car is within affordable range. That was 20 years since the coming of the Japanese car maker in India.
The value for money offered by the Japanese Company had since thrown the erstwhile car makers on the defensive. As they didn’t have the courage to launch a competition, they watch! Even the western car makers, who had been casting hungry eyes on the Indian market, became thoughtful. At last they decided to fine tune their engineering skills and reason with the Indian middleclass. Thus the General Motors, the Fiat Company and even the Ford Motors started to roll out low budget cars albeit with so much skepticism. And as a net result, there was a bloodless coup in the Indian market; the Indian consumer overthrew King Amby. Today partnership with a Japanese automobile company has become something like a pre-requisite to have a place in the Indian Market. A segment of Indians that has benefitted from such equation is the youngsters which had called off the longtime friendship with the Yejdis and rajdoots. In fact the youngsters who had been charmed by the sleeker, sportier, more efficient and cheaper bikes from Japan, had since considered products of Hindustan Motors or Bajaj as relics of the past. On the other hand the Hitachis, the Sonys, the Panasonics and a host of other Japanese companies with their electronic goods products made the voices of favorite singers like Lata Mangeskar and Keshore Kumar more melodious. Even movie stars like Padmini and Mithun Chakraborty appeared even more glamorous on the screens of a Sony or Panasonic television sets. And all the credits go to the Japanese ingenuity.
The number of staff working in the companies operating in the country had been more or less fixed. But the coming of the Japanese companies apart from offering highly efficient goods at affordable prices, has since thrown up a myriad of opportunities for skilled and unskilled labor.
I have been praying for new innovations and breakthroughs in car making business before my car has outlived its utility. If the west has something to offer, well and good, but I have a feeling that something better should be there in the East.
I never knew that the tectonic plate of the Pacific was so fragile. And following the colossal earth quake on that fateful Friday, waves of dreadful tsunamis rushed toward the shores of the island. The next moment all you see was the multitudes of dexterous hands that had been working tirelessly in the making and packaging of the much coveted automobile parts lifelessly sticking out amid the horrific tangle of wood and rubble, no complaints! Even shipping containers obviously destined for harbors in developing countries like India piled up disorderly along the devastated coastline. My God!

Sunday, January 30, 2011