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Wednesday, May 22, 2013

What is PRAN number


Background on National Pension System (NPS)
We know that National Pension System (New Pension Scheme) has been made mandatory for Central Government employees who joined in their service on or after 1st January,2004. Such employees are enrolled automatically in New Pension Scheme. Such employees are not eligible for old pension and GPF system. 

More importantly, until now the pension schemes was available to Govt employees and employees of relatively bigger companies who have provident fund facility . Any other person had to go with private pension schemes provided by insurance companies . 

With NPS now its a common person gateway to Pension Schemes.


What is PRA
In this NPS system, a subscriber shall periodically contribute savings into his/ her Permanent Retirement Account (PRA) while he/ she is working through the designated Points of Presence (POPs) and shall use the accumulations at retirement to procure a pension for the rest of his/ her life.
The accumulated saved amount will be reflected in his/her Permanent Retirement Account while he/she is working and shall use the accumulations at retirement to procure a pension for the rest of his/her life. Subscribers in this system shall enjoy certain facilities and rights including portability across jobs and locations, choices of selection of Pension Funds and investment schemes, freedom to switch between service providers and nationwide access.

What is PRAN
However, a registration for Permanent Retirement Account Number (PRAN) is a must to avail benefits of NPS. The NPS is based on a unique individual Permanent Retirement Account Number (PRAN) created for individual subscribers. This PRAN registration is to be done with National Securities Depository Limited (NSDL) who are Central Record Keeping Agency (CRA) for NPS.
Central Record keeping Agency (CRA) is the core infrastructure for the National Pension System and is critical for its successful operationalization.

The subscribers will have complete control on how their contributions and savings in PRAN are managed.
Hence PRAN is like a unique Pan Card which will stay with you lifelong.

The PRAN card is a document with PRAN No, subscriber’s name, father’s name, photograph and signature/thumb impression. The Card is issued by Central Record keeping Agency i.e. NSDL (National Securities Depository Ltd). A subscriber can hold only one PRAN card. The PRAN card will be unique, permanent and portable. The subscriber will get the PRAN card within 20-30 days after the submission of documents. A subscriber cannot open two different accounts in similar name. In case of rejection of application, the amount is refundable.

Returns
Investors in the New Pension Scheme (NPS) should be a happy lot. In the past three years, fund managers of NPS have given more than double returns compared to the Sensex and some of them have given returns even exceeding that of PPF.

Taxation
Sadly , As per the current law , the amount received at the end from NPS would be taxable , PFRDA is trying hard with govt to exempt the tax . You will get the Section 80C benefits on the amount invested in NPS .

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Cheers

Manoj Arora
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