Pension
fund regulator Pension Fund Regulatory and Development Authority (PFRDA) has
come out with guidelines for NRI investment in the national pension system or /
NPS. Such NRI contributions can be either from an NRE (non-resident rupee) or
NRO (non-resident ordinary) account/local source.
When
the pension / annuity is to be paid to an NRI, it would be in local currency
only (rupees). There will be no restriction on repatriation of pension, whether
it is paid as an annuity or in lump sum, the regulator said.
Provisions
of the income-tax act, 1961 would be applicable to it, subject to amendments.
“The
rules for exit or / withdrawal for NRIs would be the same as those for residents
under the PFRDA (exit and withdrawals under the national pension system)
regulations, 2015,” the Govt notification said.
An
NRI aged between 18 & 60 on the date of submission of application and
complying with the extant KYC norms can open an NPS account.
However,
only individual NPS accounts can be opened at present, as there is no provision
for opening a joint account, PFRDA said.
An
NRI will have the option of choosing a pension fund manager and can pick an
investment mix as per his / her risk appetite as is the case under the ‘all
citizen model’ of NPS.
The
selected pension fund manager will invest the fund in various classes of
securities such as equity (E), corporate bonds (C) and/or government securities
(G) as per the guidelines prescribed by PFRDA.
The
guidelines are likely to prompt public and private sector banks that have NRI
accounts to try and draw NRI funds into NPS. So far, NRIs have mostly stayed
away from NPS due to ambiguity in regulations, but the recent RBI clarification
is expected to help facilitate such flows.
In
the Union budget 2015-16, finance minister Mr. Arun Jaitley had announced Rs.
50,000 extra income-tax rebate on investments made in NPS, making it an
attractive option.
If
the NRI channel is tapped well, it can boost the NPS kitty, now pegged at Rs.
88,000 crore.
NPS
is an accessible, low-cost and portable retirement savings account where the
subscriber contributes to his/her own account.
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