Expanded Guidelines on Reinvestment of Returned & Pending NPS/APY Transactions
The Pension Fund Regulatory and Development Authority (PFRDA) has introduced expanded guidelines to ensure that NPS and APY subscribers do not lose out on market-linked returns due to failed or pending transactions. This follows an earlier policy from February 2023 which allowed the reinvestment of funds returned due to incorrect bank details.
Why the Change?
Initially, reinvestment was only permitted for funds that failed to credit due to incorrect bank account details. However, many other scenarios exist where funds remain pending in the system after exit or withdrawal authorization, preventing subscribers from benefiting from market growth. These new guidelines aim to cover those additional scenarios.
New Eligible Transactions for Reinvestment
The Central Record Keeping Agency (CRA) is now authorized to reinvest the following types of transactions back into a subscriber’s Permanent Retirement Account Number (PRAN):
- Failed Bank Credits: Transactions that fail due to closed accounts, invalid IFSC codes, or frozen/dormant statuses.
- Annuity Cancellations (FLC): Proceeds returned by Annuity Service Providers (ASPs) due to "Free Look Period Cancellations" exercised by the subscriber.
- Non-NPS Cases: Annuity cancellations related to Old Pension Schemes (OPS) or Family Pensions.
- Administrative Holds: Amounts held by the CRA for quality monitoring or pending clarifications.
- Legal/Dispute Holds: Funds withheld due to ongoing legal matters or disputes regarding withdrawal requests.
- Specific Withdrawals: Returned transactions from Tier II withdrawals, Partial withdrawals, and Death withdrawal cases.
The Reinvestment Process
The CRA will wait for a period of 30 days from the date the funds are credited to the NPS Trust withdrawal account. During this window, the CRA will attempt to contact the subscriber or Nodal Office via SMS and email to obtain the correct documentation for a bank credit.
If no response or valid documents are received within those 30 days, the CRA will automatically reinvest the amount into the subscriber's PRAN based on their existing investment choices and pension fund allocation.
Download Official Circular
For more detailed information, you can download the full PFRDA circular PDF below:
Download PDF CircularAre you a Central Government Employee?
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