The Pension Fund Regulatory and Development Authority i.e. PFRDA has announced a major change for customers of the National Pension System, which will facilitate the settlement process. Now PFRDA has provided same day settlement service to NPS subscribers. The biggest benefit of this change will be that if the subscriber invests before 11 am on any day, the money will be invested on the same day and he will get the benefit of the net asset value (NAV) of the same day.
This new system will be implemented from July 1. Previously, contributions received by Trustee Bank were invested on the next day (T+1), i.e. contributions received today were invested on the next day. PFRDA has advised Points of Presence and Nodal Offices to adhere to these new deadlines to ensure immediate benefits to customers.
This is the rule
This move by the Pension Fund Regulatory and Development Authority will bring NPS towards parity with mutual funds. With this, NPS account holders will get the benefit of same-day NAV, which will be helpful in growing their money. Investments made in mutual funds till 3 pm get the benefit of same-day NAV. On the day the market falls, people usually want to invest in more units. With the implementation of same-day settlement in NPS, this investment option will also become attractive. This change by the PFRDA will ensure that trustee banks invest NPS contributions received till 11 am on the same day.
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These things must be taken into account
The government has changed the withdrawal norms of the Employees’ Pension Scheme, 1995. Following this amendment, employees with less than 6 months of contributory service will also be able to withdraw money from the EPS account. There are thousands of EPS 95 members in the country who exit the scheme midway despite the rule of continuously contributing to the scheme for 10 years to get a pension. So far, only members who have contributed for 6 months or more could avail this withdrawal benefit. In such a situation, members who exit the scheme after contributing for less than six months do not get any retirement benefit.
