How to Shift NPS Account
An employee of an organization is very likely to contribute towards EPF. However, that is no the only option. He or she may contribute to NPS or National Pension Scheme as well. Just as in case of EPF, one may encounter a nightmarish problem while changing job. The problem is – ‘how does one shift the NPS account while changing job?’ In case this problem is giving you sleepless nights, here is the information that you so badly need. Continue reading to learn about the process in details and of course, some bonus information that might come in handy!
An Attempt to Quickly Understand How NPS Works
NPS or National Pension Scheme, as the name suggests, allows people to invest in the scheme and accumulate a retirement corpus over the entire working life time. However, a person can always change his or her job at least once during the entire service tenure. It may happen that a person actually changes jobs multiple times. When it comes to NPS investments, the government has laid down the requirement that no more than 1 NPS account can be maintained by a single person.
No matter in which sector the person is working in, there can be only and only one NPS account. Now, a person has the freedom from switching jobs. This switch can take place from one state government job to another state government job. It can be switch from a corporate job to a central government job. Or it can be switch from a central government job to a corporate job. A person can switch between a corporate job and state government job as well. So, this job switching options are not really restricted.
Now, what about the NPS account? It may happen that a person was a state government of central government employee and decided to invest in NPS. Later, he or she decided to quit the government job and move to a private sector job. In such a situation, NPS can still be maintained because it entails the concept of ‘All Citizen Model’. Despite the switch from the government sector to a private sector, all the person needs to do is contribute a minimum of Rs. 1000 so that the NPS account stays active. There is absolutely no need to close NPS account if you end up working for a new employer who is not offering NPS investments as an option.
A person who subscribes for National Pension Scheme gets a subscriber ID or subscriber number. This ID is known as PRAN or Permanent Retirement Account Number. This number by definition needs to be unique for every subscriber of NPS and that no more than one PRAN can be allocated to a single person. This PRAN or subscriber ID comes with the benefit of portability from government to private sector or private sector to government sector. Since only one PRAN is assigned to every NPS subscriber, it is more like PAN or Permanent Account Number. You must already know that you can have only and only one PAN. You also now that PAN can be used in every sector and every department. It is sector and department independent. Similarly PRAN or Permanent Retirement Account Number is also sector and department independent and is valid when produced in any state or central government office or in any private sector office. So, if a person who is an NPS subscriber, joins a new job, he or she will be able to use allocated PRAN everywhere.
NPS Sectors or Models
Okay, we have learned that NPS account can be switched from any sector to another sector. This raises the question, are there different NPS models or NPS sectors. The answer is YES. We will take a tabular view of the same in this section but before that, here is a quick fact for you…
Atal Pension Yojana or APY and National Pension Scheme or NPS have together amassed more than 1 crore subscribers in India. Together the total asset managed under these two schemes today stands as 1 lakh crore! That’s quite a number to deal with.
Okay, we are done with the fact. Now let us turn our focus to NPS models. Did you know that NPS is basically a government scheme? However, it was later spilled over to the private sector as well. After that, the scheme received another extension wherein, he or she is employed or self-employed can actually open NPS account. This gave rise to three models of NPS. Let us take a tabular view at the models:
|Government sector model||Central Government||For central government employees it became mandatory to invest in NPS since January 1, 2004. However, this rule was applicable for every new employee of central government. There was an exception however. It was not made mandatory for Armed Forces personnel. Interestingly, central government also pays or contributes the exact same amount as contributed by the employee. So, if you are a central government employee and you contribute INR 1000 a month towards NPS, the government will add another INR 1000.|
|State Government||Initially, it was not mandatory for state government to join NPS. As a matter of fact, there is no such mandate even today. However, all state governments actually decided to join NPS. For instance, in April 2003, Tamil Nadu government decided to adopt NPS. Maharashtra did the same in November 2005. Kerala came in late in year 2013-2014. As far as state government employees are concerned, all employees are required to contribute towards NPS. This is kind of a mandatory rule.|
|Private or corporate sector model||Initially NPS was not available for employees of corporate sector. However, the Corporate National Pension Scheme was introduced in year 2011 in month of December. The regulatory body that introduced the corporate sector model is known as Pension Fund Regulatory and Development Authority of PFRDA. This again is a contributory pension fund wherein not only the employee contributes towards NPS but also the employer contributes a certain amount. Good thing about this model is that the contributions made by the employee is counted as investments under section 80C and are eligible for tax benefits keeping in mind the external limit of Rs. 1,50,000 investments in total. The amount contributed by the employer is also the income of the employee but that amount too get tax benefits or deductions of up to 10%. These deductions are in addition to 80C deductions. These deductions take place over DA and Basic Pay. The employer on the other hand can show these contributions in balance sheet as business expenses and claim tax benefits.|
|All citizen model||In 2009 on May 1, NPS was made available to every Indian citizen. One can voluntarily invest in NPS as opposed to compulsory contributions as found in case of central and state government employees. The basic requirement however is that the Indian citizen willing to invest in NPS cannot be less than 18 years old and cannot be above the age of 60 years at the time of applying for NPS. These applications are to be submitted at POP or Point of Presence or POP-SP, that is Point of Presence-Service Provider.|
|NPS Lite – model for unorganized sector||The Indian government realized that saving for retirement is the basic requirement for all people whether they come from organized sector or unorganized sector. However, the problem with NPS was that it was designed for organized sector. So, the government came up with NPS Lite model where people working in unorganized sector can actually contribute towards NPS and secure their retirement days. The scheme has provisions for contributions from government. However, government will contribute no more than INR 1000 in a year. For that to happen, person opting for NPS needs to invest a minimum of INR 1000 in a year and maximum of INR 12000 in a year. So basically, NPS Lite addresses the needs of people belonging to low income group. People in this group will be represented by what is known as the Aggregators. The Aggregators will be responsible for helping with subscribe registration, maintenance of subscribers and transferring the contributions made to towards NPS Lite. Willing people will have to approach an Aggregator for opening NPS Lite account and they need to be at least 18 years old but cannot exceed the age of 60 years. Contributions towards NPS Lite can be made only and only up to the age of 60 years. This NPS Lite program is also known by the name Swavalamban Scheme.|
One interesting thing to note here:
The NPS Lite or Swavalamban Scheme was later transferred into APY or Atal Pension Yojana on 1st June, 2015. People who already joined NPS Lite were automatically transferred to Atal Pension Yojana unless and until they decided to opt out of the pension scheme altogether.
Now that we have seen the different models of NPS, let us go through different other information that you will find handy.
What is NPS Nodal Office?
Pension Fund Regulatory and Development Authority of PFRDA is the apex body when it comes to overlooking existing pension schemes or introducing new schemes. However, this body never keeps and maintains records of all deposits made by subscribers of various pension schemes. This job has been handed over to another body known as the CRA or Central Record Keeping Agency.
All money deposited by subscribers go to their respective accounts which are known as Permanent Retirement Account or PRA. Then, each account is assigned a unique identification number known as PRAN or Permanent Retirement Account Number. This unique identification number ensures that details of a particular account are quickly pulled out from the database and also, it ensures that no single person holds multiple accounts under a single scheme.
Now that’s the top structure of NPS. What’s below that?
Below the CRA is the Nodal Office. Interestingly however, a Nodal Office is actually a collection of various government offices such as the DDO or DTO or similar equivalent offices.
In between the CRA and the Nodal Office sits another body known as the CRA-FC. CRA-FC stands for CRA Facilitation Center. The job of this body is to facilitate the Nodal Office and help it with submission of application forms, PRAN allotment, submitting applications from subscribers for changes such as signature or photograph etc.
A Nodal Office under the Union Government is different from the Nodal Office under the state government. However, their functions remain the same.
|Central Government Nodal Office||State Government Nodal Office|
|In case of Union Government, the Nodal Office comprises of PrAO, PAO and DDO. The PrAO stands for Principal Accounts Office, PAO stands for Pay and Accounts Office and DDO stands for Drawing & Disbursing Office.||In case of State Government, the Nodal Office includes DTA, DTO and DDO. DTA stands for Directorate of Treasuries and Accounts. DTO stands for District Treasury Offices and DDO stands for Drawing & Disbursing Office.|
The Nodal Offices will have a registration number. These numbers are unique and gets allotted only when the offices are registered successfully with the CRA. The CRA allots these unique registration numbers.
NPS to eNPS – Is That a Possibility
NO! This is not an option. NPS account, under no circumstances, be shifted to eNPS. This means that if you are shifting, eNPS cannot become your target POP. If you really want eNPS to be your POP, you will have to open an account through the eNPS portal. However, you will have an option of contributing to your NPS account using the eNPS portal if you want to do so.
EPF to NPS Shift – A Quick Look
In the Union Budget of 2015, the Union Government came up with a proposal wherein a person can shift from EPF or Employees Provident Fund to NPS or National Pension Scheme. It was actually a proposal but work is in progress. There is an act called the Employees’ Provident Fund & Miscellaneous Provisions Act. A legislation was made with necessary amendments to the act so as to allow shifting from EPF to NPS. The legislation is currently with the Ministry of Law. Once the legislation is passed by the law ministry, shifting from EPF to NPS will be allowed. Until that happens, all you can do is either withdraw your money from your EPF account or you can simply let the EPF account sit and earn interests without contributing to the EPF account.
What will happen if the legislation is passed? Well, in that case, interested people will be allowed to enjoy the following things:
- One-time switch from EPF account to NPS.
- Money in EPF account will be transferred to NPS account with 30 days from the date of application.
- The person will then have one time chance to move back to EPF if he or she wishes too.
However, there will be a few shortcomings:
- This amendment bill never addresses one issue. An employee doesn’t directly deposit money to EPF account. A certain amount is deducted from his or her monthly salary for the purpose of EPF deposit and the remaining is handed over to the employee. After transferring from EPF to NPS, the monthly deductions may continue. Whether such deductions will continue or not has not been clarified. Also, it has not be clarified what will happen to the deducted money if EPF deductions continue.
- Once the person wishes to revert back to EPF from NPS, he or she will no longer be allowed to go back to NPS.
- Once the person reverts back to EPF, the person will be counted as a new entrant in EPF. So, any previous benefits that he or she might have accrued over the tenure of earlier EPF will no longer be given to him or her.
Shifting NPS Account Within the Same Government
Here is one possible scenario of a change in job – a person works with Central Government in a specific sector and then moves to a different sector but still stays with Central Government. The same can happen to a state government employee. Again, an employee can move from Central Government to a State Government or vice versa.
In such a job change scenario, shifting NPS is very easy because it only changes the sector but not the authority body under which a person is working (in this case government – Union or a State). This means that only the Nodal Office will change but everything else remains unchanged. In such a case, all that the NPS subscriber needs to do is to give the existing PRAN to office of the new sector where he or she will be moving.
The new office will then notify CRA-FC, which will help to update the information in the CRA system and upload the NPS contributions to the changed location. What will actually happen is that PRAN will simply be unlinked from previous sector and will be linked in the new sector the very moment the NPS contribution gets successfully credited. The new office will also have to feed the updated information about the employee into the CRA system. That’s all!
Form ISS for NPS Shifting
Moving from one department to another department of the same government (Central or State) of moving from one government to another (switching between central and state governments) is basically known as Inter Sector Shift or ISS. Thus, one needs to get the ISS Form for this shift. Without this form, the shifting cannot be done. One can easily grab the ISS Form from this link or this link. Also, this form can be manually collected from already existing POP-SP
There are the line of events that will take place once the form is at hands of the subscriber:
- Subscriber fills in all details of the shift that will happen that is changing job from one sector to another (government to government or government to corporate or corporate to government).
- Subscriber will attach necessary documents supporting the shift.
- The form along with the documents will be manually submitted by the subscriber to the target Point of Presence – Service Provider (POP-SP).
- The target POP-SP will provide an acknowledgment. This acknowledgment will be stamped by the target POP-SP.
- Once the changes are made and implemented, the subscriber will be notified.
However, prior to making an application for shifting NPS, the subscriber needs to make sure of the following points:
- The PRAN is active. It cannot stay in a deactivated state.
- Employer information, PRAN and salary details are to be input correctly in the form because these information will be updated in CRA database.
Using Form ISS for Shifting NPS
As we mentioned, the Form ISS (the actual name is Form ISS-I) is necessary for. This form can be manually collected from existing Point of Presence – Service Provider or it can be downloaded from the links provided above. Once the form is in hand, the subscriber needs to:
- Provide the address and full name of the subscriber.
- Details of the existing Point of Presence – Service Provider (POP-SP) is to be provided.
- Details of target Point of Presence – Service Provider (POP-SP) is to be provided.
- The PRAN is to be given.
- A photocopy of the PRAN card is to be attached along with the form.
Apart from these details, the subscriber needs to provide declaration across all the sectors that will be involved in this shift. A proper verification will be conducted after the details are provided by the subscriber. Once the verification is successful, the POP-SP will accept the shifting application. Upon acceptance, an acknowledgment receipt number will be handed over to the subscriber. This receipt number will consist of 17 digits. The digits in the receipt number will have special meaning which are mentioned below:
- The first two digits of the receipt represent the nature of the request made using the form. In case of a shifting request, the number is 19.
- The seven digits that follow represent the POP-SP’s registration number.
- The last 8 digits are merely running sequence.
An example of the receipt number will be 19700000300000002. In this example, 19 is the shifting request, 7000003 is the registration number of a POP-SP and the last 8 digits, that is 00000002 is basically a running sequence.
The receipt number will be on the acknowledgment paper. This paper simply means that the POP-SP has accepted your shifting request. The acknowledgment will have a seal from the POP-SP and one of the authorized persons of the POP-SP will sign it.
The Form ISS-I will also have a set of instructions which will give the details of the documents that are to be provided along with the application form. Read the instructions properly and provide the necessary documents. Without proper documents, the application will not be accepted.
Shifting of NPS Between Government Sectors
What are the possible shifts between government sector?
Here they are…
- A person shifts from one department to another department while working for Union or Central Government.
- A person shifts from one department to another department which working for a State Government.
- A person shifts from Union Government to a State Government.
- A person shifts from a State Government to Central Government.
The process for this shifting is very simple. Here are the steps you need to follow:
- Get hold of the Form ISS-I.
- Fill up the form properly as described in the section above.
- Attach all necessary documents that you need to provide (found in the instructions section of the form).
- Submit the form to the new Nodal Office (that is the target Nodal Office).
Once the Nodal Office receives the application, a verification will take place. Post verification, an acknowledgment will be given and then the Nodal Office will start or initiate the shifting process. That the Nodal Office will do is take the PRAN, find out the amount of accumulated fund and then link the PRAN to the new sector and shift the funds as well. When that is completed, you will receive a notification.
Shifting of NPS to Government Sector from Corporate Sector
In this scenario, the steps are different. It is a possibility that a person working in a corporate world gets a government job (either a Union Government job or a State Government Job). In such a scenario, the following details are to be furnished in the Form ISS-I:
- Details of the employment like joining date, retirement date etc.
- Details like department, ministry, office, basic salary, pay scale etc. to be provided.
- Details of the group.
What is group?
When it comes to government jobs (Central or State government jobs), the employees are put in groups like A, B, C and D. The groups are:
- Group A – Gazetted and Executive.
- Group B – Gazetted.
- Group B – Non-Gazetted.
- Group C.
- Group D.
You need to provide the appropriate group details in the form.
Shifting NPS to Citizen Sector or Unorganized Sector from Government Sector
The process will be simple and same as the process used for shifting within the government sector. Some additional information will be needed in this scenario. The image below gives the additional information that one has to provide while shifting NPS to Citizen or Unorganized sector. Details like PFM, investment options (auto or active) etc. need to be furnished. Check the image properly to know the information you need to furnish.
Shifting NPS from Government to Corporate Sector
This too is possible and can be accomplished using the same form – Form ISS-I. The form needs to be filled in properly and necessary documents are to be provided along with a photocopy of the PRAN Card. The form and the necessary documents need to be submitted to the target or new POP or POP-SP. Some additional information will be required as well. The subscriber MUST provide PFM and investment options details. Other necessary details will be PAN details, bank details as well as employment details. The image below shows the additional information which will be required for shifting NPS to Corporate Sector.
That’s pretty much all the information you will need to know about shifting NPS. In case we have missed any detail, let us know through the comments section. We will try to update the same soon.