OCI ADDED IN NPS
What’s in news?
PFRDA has now permitted Overseas Citizen of India (OCI) to enroll in National Pension Scheme (NPS) at par with Non-Resident Indians.
- The Overseas Citizenship of India (OCI) is an immigration status permitting a foreign citizen of Indian origin to live and work in the Republic of India indefinitely.
- The OCI was introduced by “The Citizenship (Amendment) Act, 2005” and launched during the Pravasi Bharatiya Divasconvention held in Hyderabad in late 2005.
- Some of OCI may prefer to continue investing in India from their local income sources but they can’t because they don’t have any provision in the NPS.
- Because as these individuals did not retain India citizenship and therefore did not qualify as NRIs, they were not allowed to invest in NPS.
- Through a circular issued on October 29, The Pension Fund Regulatory and Development Authority (PFRDA) has added one more category of investors – Overseas Citizen of India (OCIs) can enroll to invest in NPS tier-1 accounts.
- Before this notification, OCIs could not invest in NPS.
- Investing into NPS-Tier-1 account was already allowed for Non-resident Indians.
- Benefits: OCIs will be able to take advantage of the NPS investment avenue and associated income tax benefits.
National Pension System (NPS):
- National Pension System (NPS) is a government-sponsored pension scheme launched in 2004 for government employees.
- In 2009, the scheme was open to all – Organized as well as Unorganized. NPS are not mandatory and are voluntary in nature.
- In May 2011, the scheme was extended to the corporates.
- In October 2015, the scheme was extended to the Non-Resident Indians.
- Eligibility: Any Indian citizen between 18 and 60 years can join NPS.
- This system is managed by Pension Fund Regulatory and Development Authority (PFRDA).
- The subscribers at the time of retirement can withdraw the money in the form of lump sum withdrawal or annuity payments.
- It is mandatory for the subscriber to open Tier-I account. On the other hand, Tier-II account is optional.
Subscribers count in the scheme:
- 18 crores of subscribers crossed under the NPS and Atal Pension Yojana.
- 66 lakh government employees have enrolled.
- 2 lakh subscribers from private sector.
- 6,812 entities registered as corporations.
Tier 1 account:
- It is the basic annuity or the retirement account and is the basic account for the subscribers of NPS.
- The subscriber is allotted a unique PRAN (Permanent Retirement Account Number) while opening this account.
- The account was lock in for up to 3 yearse., no withdrawals were allowed for the initial 3 years. After that 25% of amount is allowed for withdrawal.
Tier 2 account:
- The account serves like a regular bank savings account from which regular transactions in the form of deposits and withdrawals can be made.
- The account was not subject to the mandatory withdrawal rules like a tier 1 account.
Pension Fund Regulatory and Development Authority (PFRDA):
- A pension regulatorof India, is a statutory body initially, which was established on 2003.
- The Authority became a Central Autonomous Body after passage of PFRDA Act in 2013.
- Purpose: To regulate, promote and ensure orderly growth of the NPS and the pension schemes to which this Act applies.
- PFRDA s regulating and administering the National Pension System (NPS), the Atal Pension Yojana (APY).
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