Pension norms for non-govt employees
Beginning April 1, 2009, individuals above 18 years will have three options for managing their pension plan.business Updated: Feb 18, 2009 10:36 IST
Beginning April 1, 2009, individuals above 18 years will have three options for managing their pension plan. The Pension Fund Regulatory and Development Authority on Tuesday, declared the investment guideline for New pension Scheme for the unorganised sector employees.
For those who are not finance savvy, there would be a default option, and this will be done as per the defined investment guidelines as proposed by the expert group chaired by Deepak Parekh.
The schemes also provide the option to switch the fund manager once a year without any switch-over charges.
Choice E — This is a high return high risk category where one can invest up to 100 per cent in equities — into the companies listed in the Benchmark index at NSE Nifty 50.
Choice G — This is a low risk low return category where the money will be invested in government securities and bank fixed deposits.
Choice C — Medium return with investments mostly in government and corporate bonds.
Default option — will invest 65 per cent of your money in equities incase you are below 35 years of age. Once you are 35 years old, your equity contribution will be reduced by 2.5 per cent every year.
When you reach age 65 years, your contribution in equity will be capped at 10 per cent. “We are considering of keeping a minimum annual contribution of Rs 6000. As the regulatory experience increases with NPS, equity funds may even be allowed to be actively manage,” said D Swarup, PFRDA chairman. PFRDA is also considering to introduce a premature withdrawal clause. "A contributor can withdraw funds only for meeting critical illness liabilities or for a residential property,” added Swarup.
The PFRDA has shortlised 6 fund managers for managing the schemes and 23 distributors mostly banks and asset management companies for distributing the scheme.
A new subscriber to the scheme will be charged Rs 40 for initial registration and Rs 20 for every service.
“The maximum entry age is 55 years. The exit age is 60 years. You can stay invested upto 70 years,” said Swarup.