Pension Fund Regulatory and Development Authority has issued broad guidelines
India's pensions regulator in India has allowed members of the Employees' Provident Fund (EPF) option to move their retirement savings to the National Pension System (NPS) giving effect to a proposal mooted by the government two years ago in the Union Budget for 2015-16, an offcial statement said on Tuesday.
"With the NPS gaining
momentum vis-a-vis other retirement products and a number of queries
being raised on the transfer of amounts from recognised
Provident/Superannuation Funds to NPS, Pension Fund Regulatory and
Development Authority (PFRDA) has clarified the process through a
circular dated March 6, 2017," a Finance Ministry statement here said.
As the rules, a member looking to transfer funds from EPF to NPS must have an active NPS Tier-I account, which can be opened either through the employer where NPS is implemented or online through eNPS on the NPS Trust website.
The amount transferred from a recognised Provident Fund or superannuation fund to NPS would not be treated as income of the current year and, as such, would not be taxable.
"Further, the transferred recognised Provident Fund/Superannuation Fund
will not be treated as contribution of the current year by
employee/employer and accordingly the subscriber would not make Income Tax claim of contribution for this transferred amount," the statement said.
How to go about it
The subscriber must approach the concerned PF office where their account
is, through her or his employer and request to transfer their savings
to an NPS account.
"The recognised Provident Fund/Superannuation Fund Trust may initiate
transfer of the Fund as per the provisions of the Trust Deed read with
the provisions of the Income Tax Act, 1961," it added.
In case of a government or
private sector employee, the employee should request the recognised
provident or superannuation fund to issue a letter to his present
employer mentioning that the amount was being transferred from the
recognised fund to the NPS Tier
I account of the employee. This should be recorded by the present
employer or POP as the case may be, while uploading the amount.
While the return on EPF savings this year is expected to be 8.65%, the NPS offers multiple asset allocation options and fund managers for its members to choose from, with varying rates of returns.
So in essence, the subscriber should have an active NPS Tier-1 account.
The present employer ie the nodal office while uploading the fund has
to mention the transfer from PF/superannuation fund in the remarks
column while uploading. The upload has to be made as per request letter
of the ex-employer. In case of private sector employees, including
subscribers covered under All Citizen’s Model NPS, the employees should
request the recognised PF/superannuation fund to issue a letter to the
present employer/PoP as the case may be mentioning that amount is being
transferred from the PF/Superannuation fund to be credit in the NPS account of the employee/individual Tier-I account.
Source: http://www.business-standard.com
