On January 14, 2025, the Pension Fund Regulatory and Development Authority (PFRDA) issued a comprehensive Master Circular for Points of Presence (PoPs) under the National Pension System (NPS), NPS-Lite, and Atal Pension Yojana (APY).
The circular consolidates existing instructions and lays out new advisories that PoPs must follow to ensure smoother operations and better service delivery to subscribers.
Key Highlights from the Master Circular
Regulatory Framework
The circular is issued under the powers granted by the PFRDA Act, 2013, and consolidates instructions issued in multiple earlier circulars. These instructions are now merged into a single document, ensuring clarity and ease of compliance for PoPs. The document also clarifies that any actions taken under rescinded circulars will remain valid as if those circulars were still in effect.
Important Advisories for PoPs
Subscriber Registration Improvements
To reduce the high number of rejections in subscriber registration forms, PoPs are advised to thoroughly check applications before submission. Common reasons for rejections include:
- Invalid or missing registration details
- Incomplete or incorrect personal information
- Missing PAN or Nomination details
PoPs should ensure all required fields are completed accurately and encourage subscribers to provide a mobile number and email address for effective communication.
Digital Onboarding & Bank Account Verification
The PFRDA has emphasized the importance of digital onboarding for NPS. PoPs can now obtain digital consent from applicants using either a digital signature or Aadhaar e-Sign. Additionally, the penny drop verification method will be used to verify the applicant’s bank account details, improving accuracy and security in the process.
Strengthening Contribution Collection
PoPs are urged to implement robust checks and controls when collecting NPS contributions to ensure no unaccounted funds are collected. All contributions must be linked to the subscriber’s unique PRAN (Permanent Retirement Account Number) to avoid discrepancies and facilitate proper reconciliation.
Third-Party Contributions in Tier II Account Disallowed
From now on, third-party contributions to Tier II NPS accounts are prohibited. Only the account holder’s own funds, sourced from their legitimate bank account, will be accepted. Subscribers must also declare that their contributions are made from their own bank account, ensuring transparency and preventing misuse.
Discontinuation of Credit Card Payments for Tier II Accounts
The facility of using credit cards for Tier II NPS contributions has been discontinued since August 3, 2022. PoPs are instructed to stop accepting credit card payments for these accounts to maintain financial discipline and safeguard subscriber interests.
Avoiding Remittance Rejections
There has been an increase in remittance rejections when exiting NPS or withdrawing from APY, often due to incorrect bank account details. PoPs are reminded to verify withdrawal forms thoroughly to avoid issues like invalid IFSC codes, closed accounts, or dormant bank accounts. Accurate data entry is crucial for the timely transfer of funds.
Compliance with the Weapons of Mass Destruction Act
PoPs must also ensure compliance with Section 12A of the Weapons of Mass Destruction and their Delivery Systems (Prohibition of Unlawful Activities) Act, 2005. This includes adhering to procedures for screening financial transactions to prevent the financing of illegal activities related to weapons of mass destruction.
Submission of Annual Certificate
All PoPs are required to submit an annual certificate to the PFRDA, as mandated under the PFRDA (Point of Presence) Regulations, 2018. This must be submitted by October 31st of each year to maintain their registration status.
The Circulars also contains :
