Karvy Computershare Pvt. Ltd.
Karvy Computershare Pvt. Ltd. – Central Record-keeping Agency
PFRDA
Standard Operating Procedure (SOP) for Account Maintenance
Version 1.1
Contents
1. Overview .......................................................................................................................................................... 2
2. Freezing of Accounts........................................................................................................................................ 5
2.1 Conditions for Freezing of Accounts (Minimum Contribution) ................................................................. 6
2.2 Process Steps for Freezing of Accounts ...................................................................................................... 6
3. Unfreezing of Accounts.................................................................................................................................... 7
4. Rebalancing of Units ........................................................................................................................................ 7
5. CRA Charges...................................................................................................................................................... 9
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1. Overview
The National Pension System (NPS) was introduced by the Government of India to enable its citizens (in the
Government/All-citizen/Corporate sector) to effectively plan for their retirement through reasonably safe and
market based returns. Periodic contributions from the subscribers (and their employers – for
Government/Corporate sector), are invested in Pension Funds chosen by the subscriber from the approved
list. On attaining superannuation, part of the accumulated wealth can be withdrawn lump-sum and the balance
can be invested in an “Annuity” with a registered ASP (Annuity Service Provider), so that the subscriber gets
regular monthly pension from the Annuity purchase. There are other regulations regarding withdrawal, under
various circumstances. Each subscriber is registered with the CRA and is allotted a PRAN (Permanent
Retirement Account Number). This ID is used to track all his/her transactions, contributions, change of details,
scheme preferences etc.
NPS is operated through various intermediaries at various stages, as given below:
1. Registration of subscribers – Application is submitted by the Subscriber and routed through Nodal
Offices – to CRA. Permanent Retirement Account is created in the CRA system and PRAN is allotted to
the subscribers by the CRA.
2. Deposit of contribution is made by Subscribers to the Nodal Offices (Contribution is deducted from the
salary by the Nodal Offices, for Government employees). The funds are remitted by Nodal Offices to
the Trustee Bank, with details being uploaded in the CRA system by the Nodal Offices.
3. Transfer of funds from Trustee Bank to PFM (as selected) – On reconciliation & as per settlement
instructions from CRA
4. Changes in subscriber details (address, scheme preference etc.) - are intimated by Subscribers – routed
through Nodal Offices – to CRA system. In case of changes in scheme preference etc., new instructions
are accordingly implemented in the daily settlement run by CRA.
5. On Exit/ withdrawal - Application is submitted by Subscribers and routed through Nodal Offices – to
CRA. On processing, CRA gives instructions to the PFM to transfer the funds to the Trustee Bank. The
Trustee Bank would transfer the lump-sum withdrawal to the Subscriber’s Bank account and the
‘Annuity’ amount to the ASP. The subscriber would thereafter receive monthly payouts from the ASP.
Hence, the various intermediaries in the functioning of the NPS system are:
1. Nodal Offices – They are the main interface for subscribers. Their functions include:
a. Receiving applications for registration / changes in details / withdrawals from subscribers,
verification and forwarding of the same to CRA for processing
b. Receiving contributions from subscribers and upload of contribution details in the CRA system
c. Deposit of funds (contributions) with Trustee Bank and reconciliation thereof with the details
uploaded
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The Nodal Offices- for various models/sectors – are as given below:
Model/Sector Registration/change Transfer & uploading of Over-seeing
requests/withdrawals contributions Nodal
& receipt Offices
contributions
of
For Central DDO, PAO PAO Pr.AO
Government
employees:
For State Government DDO, DTO DTA (Centralised mode) DTA
employees:
DTO (De-centralised mode)
DTA & DTO (Quasi centralized
mode)
For ‘All Citizen’ model: POP-SP & POP POP (Centralised mode) POP
POP-SP (De-centralised mode)
POP & POP-SP (Quasi
centralized mode)
For Corporate model: CHO/CBO/POP CHO/POP POP
2. Trustee Bank – Their functions include:
a. Receipt of funds from Nodal Offices for contribution deposit and reconciliation thereof with
the details uploaded in the CRA system
b. Transfer of funds to PFMs as per settlement instructions from CRA
c. On withdrawal, transfer of funds to Subscriber’s bank account (lump-sum portion of
withdrawal)
d. On withdrawal, transfer of funds to ASP (the annuitized portion)
3. Pension Fund Manager (PFM) – Their functions include:
a. Receipt of funds from Trustee Bank and investment thereof as per subscribers’ preference b.
Updation of NAV etc.
c. On withdrawal, transfer of accumulated wealth to the Trustee Bank, as per instructions from
CRA.
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4. Annuity Service Provider (ASP) – Their functions include:
a. Receipt of funds from Trustee Bank and instructions from CRA, for investment in annuity for
subscribers, on withdrawal
b. Maintaining annuity scheme with the subscribers thereafter (monthly payouts, queries etc.)
5. Central Record-keeping Agency (CRA) – Their functions include registration and interface with all
intermediaries and recording all transactions i.e.:
a. Registration of Nodal Offices
b. Registration of Subscribers
c. Running settlement on upload of contribution details by Nodal Offices and funds receipt
confirmation by Trustee Banks
d. Settlement instructions to Trustee Banks to transfer funds to PFMs
e. Processing change requests / withdrawals
f. Instructions to Trustee Banks/PFMs/ASPs on withdrawal
g. Providing interface to subscribers for checking status of applications/grievances etc. and
providing Statement of Account to the subscribers.
This document deals with the procedure for subscribers’ account maintenance, i.e., Freezing of accounts due
to non-payment of minimum contribution, unfreezing, CRA charges etc.
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ACRONYMS USED:
Acronym Description
ASP Annuity Service Provider
CBO Corporate Branch Office
CHO Corporate Head Office
CRA Central Record-keeping Agency
DDO Drawing & Disbursing Officer
DTA Directorate of Treasuries & Accounts
DTO District Treasury Office
I-PIN Internet Personal Identification Number
NPS National Pension System
PAO Pay & Accounts Office
PFM Pension Fund Manager
POP Point of Presence
POP-SP POP Service Provider
Pr.AO Principal Accounts Office
PRAN Permanent Retirement Account Number
T-PIN Tele-query Personal Identification Number
2. Freezing of Accounts
As per PFRDA guidelines, every subscriber has to make a minimum contribution to his NPS account every year.
In case any subscriber fails to make such minimum contribution, the CRA system would “Freeze” his account,
i.e., all further transactions would be prevented from occurring in the account.
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2.1 Conditions for Freezing of Accounts (Minimum Contribution)
The Permanent Retirement Account of a subscriber is frozen, if the minimum contribution criteria are not met
by him. These criteria are given below:
Minimum Contribution for Tier I account.
A subscriber is required to make at least one contribution transaction in a financial year. Minimum
amount per contribution is Rs.500/-. This requirement does not apply to Government/Corporate
subscribers. A minimum contribution of Rs.1000/- should be made in each financial year.
Minimum Contribution for Tier II account.
1. There is no minimum contribution requirement for Tier II account.
2. If a Tier I for a PRAN is frozen, the Tier II account is also kept in “Freeze” status even if it meets the
required criteria.
2.2 Process Steps for Freezing of Accounts
The process steps for freezing of accounts, are given below:
1. At the end of every financial year, a job will run in the CRA system, to check if the conditions for
account freeze as mentioned in section 2.1, are applicable to any account(s).
2. The conditions will be checked for both Tier 1 and Tier 2 accounts. In case Tier 1 Account is frozen,
then Tier 2 account will also be frozen.
3. Email intimation will be sent to the concerned subscriber(s) intimating that the account status has
been changed to “Frozen.” Instructions for “Unfreezing” the account would also be provided.
4. The subscriber’s account will also be “Frozen”, under the following circumstances:
a) In case of Withdrawal on Superannuation or Premature Exit, where the lump sum amount
has been withdrawn and paid to the subscriber and the balance portion is still lying in
his/her account, waiting for transfer to ASP, the account is “Frozen”- to prevent any further
transactions in it.
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b) In case family pension (FPS) is being paid to the family of a deceased member, the account
may be frozen (“Lien Marking”)- as explained in Clause 6(e) of PFRDA (Exits & Withdrawals
under NPS) Regulations 2015.
c) Where the subscriber’s account falls under any of the cases covered in Clause 6 of the
PFRDA (Exits & Withdrawals under NPS) Regulations 2015, i.e. in case of seizure,
attachment, assignment, pledge etc. of the amount in the NPS account, made with the
prior approval of the NPS Trust or where the Pension wealth is withheld by the
President/State Governor for any pecuniary loss to State/Central Government etc.
5. An alert will be sent to the subscriber by SMS/email one month before the account is due for
“freezing” and also on the “freezing” of the account.
3. Unfreezing of Accounts
A subscriber’s account could be changed to “Freeze” status, due to non-payment of minimum contribution.
When this happens, no further transactions would be allowed for that PRAN. This can be rectified, i.e., the
account can be “Unfrozen” by the subscriber, on payment of minimum contribution and penalty charges.
The detailed steps for unfreezing of account(s), are given below:
1. An account can be unfrozen by:
Payment of minimum contribution of Rs. 500/- together with a penalty of Rs. 100/- along with
the unfreeze request (as per PFRDA circular - PFRDA/CIR/2014/7/PDEX/13 dated 27.10.2014)
2. The subscriber needs to submit a duly filled physical request as per the format provided by PFRDA
(form UOS-S10) to the associated POP-SP only.
3. POP-SP will check the total unfreeze amount payable by the subscriber by querying for that
Subscriber’s Details in the “Unfreezing” option under the “Account Maintenance” menu in the CRA
system.
4. On upload of contribution information in the CRA system, the status of the accounts will be changed
to “Active”.
5. Email intimation will be sent to the subscriber intimating that the account has been “un-frozen” and
that the status has been changed to “Active”.
4. Rebalancing of Units
Rebalancing of units is reorganizing of accrued benefits by changing the balance in the allocation of funds. This
is done every financial year by the CRA system to maintain the asset allocation selected by the subscriber.
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This is explained with an example: In case a subscriber has invested Rs. 50,000 into E-50%, C-30%, G-20% and
NAV for those categories are Rs.10, Rs. 15 and Rs. 16 respectively, then the number of units held by the
subscriber would be 2500, 1000 and 625 respectively.
In the next financial year, if the NAV changes to Rs. 17, Rs. 13 and Rs. 20 respectively, then the total amount
would become Rs. 68000 and the category wise amount in ‘E’, ‘C’ & G would be Rs. 42500, Rs. 13000, and Rs.
12500. However, the investment is ‘E’ category crosses 50%. In such a case, rebalancing will be done and
adjusted with C and G category thereby enabling the subscriber to have/maintain the allocation percentages
between the three categories (E, C & G) match the allocation preference selected by him/her (“Master Asset
allocation”). The Total amount will be recalculated as per % and units in all three schemes will be rebalanced
For example:
Master Asset allocation:
E C G
50% 30% 20%
Scenario:
FY 2016 Balance FY 2017 Balance
FY2016 E C G FY2017 E C G
Amount 25000 15000 10000 Amount 42500 13000 12500
NAV 10 15 16 NAV 17 13 20
Units 2500 1000 625 Units 2500 1000 625
Scheme % 62.50% 19.12% 18.38%
After Rebalancing FY 2017 Balance
FY2017 E C G
New Amount 34000 20400 13600
NAV 17 13 20
New Units 2000 1560.2307 850
Scheme % 50% 30% 20%
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The following process is followed for rebalancing of units.
1. At the end of every financial year, a job is run in the CRA system to rebalance units for every active NPS
account.
2. Based on the investment amount and the asset allocation into E, C, A & G (In example A category is
not reflecting) category, rebalancing of units is done. Rebalancing is also done for “Auto Choice”
Investment Option, to comply with the changes in asset allocation percentages applicable to the
subscriber, with the change in his/her age every year.
3. The asset allocation percentage and current NAV is calculated and accordingly investment into a
particular category is made. This takes effect after the settlement is run on the first settlement day of
the next financial year.
4. An email/Statement of Account - transaction is sent to the subscriber, giving the category-wise
balances.
5. CRA Charges
CRA’s charges for maintenance of permanent retirement would include charges for maintenance of
electronic information of the balances in PRA, (it is PRAN or PRA) for incorporating changes to PRA
details received by the CRA in electronic form, for sending annual account information once in a year
in printed form etc.
CRA Charges are collected through Redemption of Units, for individual subscribers.
For Government sector, the CRA charges would be paid separately by the Nodal Offices.
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