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The enactment of Depositories Act in August 1996 paved the way for establishment of
NSDL, the first depository in India. This depository promoted by institutions of national
stature responsible for economic development of the country has since established a
national infrastructure of international standards that handles most of the securities held
and settled in dematerialised form in the Indian capital market.Using innovative and
flexible technology systems, NSDL works to support the investors and brokers in the
capital market of the country. NSDL aims at ensuring the safety and soundness of Indian
marketplaces by developing settlement solutions that increase efficiency, minimise risk
and reduce costs.
In the depository system, securities are held in depository accounts, which is more or less
similar to holding funds in bank accounts. Transfer of ownership of securities is done
through simple account transfers.


The Central Government has introduced the New Pension System (NPS) with effect from
January 1, 2004. The new pension system covers, at present, new entrants to Central
Government services (excluding Defence Forces) and is expected in due course to be
available to all other citizens of India. Under the new pension system, CRA will be
required to maintain subscriber accounts and issue a unique Permanent Retirement
Account Number (PRAN) to each subscriber. In this system, deductions towards NPS
will be made from subscriber’s salary on monthly basis and equal amount of contribution
will be made by the Government. The accumulated amount will be reflected in his/her
Permanent Retirement Account while he/she is working and shall use the accumulations
at retirement to procure a pension for the rest of his/her life. Subscribers in this system
shall enjoy certain facilities and rights including portability across jobs and locations,
choices of selection of Pension Funds and investment schemes, freedom to switch
between service providers and nationwide access.
NSDL has built necessary infrastructure for providing CRA services to various
stakeholders. CRA has gone operational from June, 2008. CRA would manage NPS
Contribution Accounting Network (NPSCAN) related data until it is separated from the
CRA applications. The NPS is expected to evolve over a period of time to include
unorganized sector, self employed persons and any other citizen of India on a voluntary
basis. The record keeping function of unorganized sector shall be decided by PFRDA /
GoI independently in due course.

Role of CRA in NPS system

a)The recordkeeping, administration and customer service functions for all subscribers of
the New Pension System will be centralised and performed by the CRA.
b)The CRA will issue unique Permanent Retirement Account Number (PRAN) to each
subscriber, maintain database of all PRANs and record the transactions related to each
subscriber’s PRAN
c)The CRA shall be responsible for receiving funds and instructions from subscribers
through the nodal offices, transmitting such instructions and funds to the appointed
Pension Fund Managers, trustee Bank, Annuity Service Provider effecting switching
instructions received from subscribers
d)The CRA will provide periodic consolidated Statement Of Transaction (SOT) to each
subscriber and discharge such other duties and functions as may be determined by the
guidelines, directions and regulations issued by the PFRDA from time to time
e)The CRA will be responsible to maintain absolute confidentially of all records, data and
information. CRA shall produce all this information as and when called for by PFRDA
f)The CRA will be responsible for timely transfer of subscriber contributions
information, timely allocation of these funds by PFs, and accurately crediting and
reporting allocation of units into each PRAN.


Main Features and Architecture of the New Pension System

 The new pension system would be based on defined contributions. It will use the
existing network of bank branches and post offices etc. to collect contributions. There
will be seamless transfer of accumlations in case of change of employment and/or
location. It will also offer a basket of investment choices and Fund managers. The new
pension system will be voluntary.
 The system would, however, be mandatory for new recruits to the Central Government
service (except the armed forces). The monthly contribution would be 10 percent of the
salary and DA to be paid by the employee and matched by the Central Government.
However, there will be no contribution from the Government in respect of individuals
who are not Government employees. The contributions and returns thereon would be
deposited in a non-withdrawable pension account. The existing provisions of defined
benefit pension and GPF would not be available to the new recruits in the central
Government service.
 In addition to the above pension account, each individual can have a voluntary tier-II
withdrawable account at his option. Government will make no contribution into this
account. These assets would be managed in the same manner as the pension. The
accumlations in this account can be withdrawn anytime without assigning any reason.
 Individuals can normally exit at or after age 60 years from the pension system. At exit,
the individual would be required to invest at least 40 percent of pension wealth to
purchase an annuity. In case of Government employees, the annuity should provide for
pension for the lifetime of the employee and his dependent parents and his spouse at the
time of retirement. The individual would receive a lump-sum of the remaining pension
wealth, which she would be free to utilize in any manner. Individuals would have the
flexibility to leave the pension system prior to age 60. However, in this case, the
mandatory annuitisation would be 80% of the pension wealth.
 There will be one or more central record keeping agency (CRA), several pension fund
managers (PFMs) to choose from which will offer different categories of schemes.
 The participating entities (PFMs, CRA etc.) would give out easily understood
information about past performance & regular NAVs, so that the individual would able to
make informed choices about which scheme to choose.

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