Professional Documents
Culture Documents
PG20095052
ACKNOWLEDGEMENT
The Marvelous richness of human experience would lose some thing of rewarding joy if
there were no limitations to overcome. The hilltop hour would not be half so wonderful if
there were no dark valleys to traverse
This project is a product of the invaluable insights, facts and experience I had with
various people. The experience was more than what was visualized as.
A special note of gratitude goes to Mr. P.K. Dhirsamanta (Dy. Manager, NEPFT,
NALCO) and Mr. A.K. Rout (Senior Manager), NEPFT NALCO for his advice and
encouragement
that
helped
me
makes
this
project
a
reality.
I am deeply indebted to Ms. Kakoli Sen (Faculty), for her constant source of inspiration
and guidance throughout this project.
PG20095052
EXECUTIVE SUMMARY
During these six weeks of internship at Nalco, I came across various practical skills
which are very much different from that knowledge that are imparted to us in the
classroom teaching. I am very much obliged to my project mentor in the organization
who not only gave me the idea about how to design and equip a good project but also
passed on the information beyond the bound of the curricula of our project.
Here the project revolves around a vital element of society Social Security which is
most important duty on the part of government to provide it to its citizen. Social Security
caters to the universal human need for reassurance and support in times of
unemployment, illness, disability, death and old age. The State bears the primary
responsibility for developing appropriate systems for providing protection and assistance
to its workforce and their families. Public support systems for social security in India
have gained prominence over traditional family support in tune with the trends of
urbanization and work place migrations. The dependence on social security varies as per
the need and income status.
In India, both Social Insurance and the Social assistance programs provide for Social
Security needs of workers in the contingencies of sickness, maternity, employment,
injury occupational disease, old age and death. So far as Social Insurance programs are
concerned the following schemes are in existence.
In this project, I have tried to bring out the pros and cons of the EPS 95 and NPS
2009. For this project, what will be a better place to pursue this project other than
NALCO, a Navaratna PSU which created a bench-mark within the PSU by adopting NPS
2009? Now PFRDA has advised other PSU to follow the footprint of NALCO and
adopt NPS 2009. Even other PSU have approach NALCO for the know-how from
NALCO regarding NPS 2009. Recently a conference was conducted at Delhi regarding
the social security and NPS 2009 where it was been decided that Nalco will guide other
PSU in regards to the NPS 2009.
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Table of Content
Sl. No
Title
Pg No
1.
ALUMINUM SECTOR
69
2.
NALCO
10 -19
3.
20-23
4.
24-25
5.
EXPANSION PROGRAMMES
25
6.
26
7.
8.
NALCO CSR
9.
SOCIAL SECURITY
32-39
10.
40- 46
11.
47-67
12.
STATEMENT OF PROBLEM
13.
OBJECTIVE OF STUDY
68 69
14.
METHODOLOGY
69 70
15.
70
16.
RESULTS/FINDINGS
70
17.
71
18.
ANNEXURE I AND II
19.
27-30
331
68
72 75
REFERENCES
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Hindalco: Hindalco, an Aditya Birla Group flagship company is the biggest player in the
aluminum industry in India with around 39% of market share.. Hindalco has its
aluminum plant at Renukoot in Uttar Pradesh. It has various aluminum products with a
market share of 42% in primary aluminum, 20% in extrusions, 63% in rolled products,
31% in wheel and 44% in foil.
Sterlite Industries: The aluminum business of Sterlite Industries Limited comprises of
two aluminum giants MALCO and BALCO. While BALCO is a partially integrated
producer of aluminum, Malco is a fully integrated producer of aluminum. Sterlite has got
a market share of around 32%.
NALCO: It is one of the leading aluminum producers in India. Government of India has
stake of 81.15% in this company. Its aluminum refinery is located at Damanjodi. It also
has a smelter located at Angul, Odisha. Currently, NALCO is concentrating on a capex
program to increase its production from 345,000 tonnes to 460,000 tonnes.
SOME OTHER COMPANIES IN THIS SECTOR
Hindustan Zinc
Jindal Stainless
Kennametal India
INDAL
Sujana Metal Products
Ratnamani Metals
ALUMINUM-STRUCTURE
The Aluminum industry in India can be classified as:
(a) The primary producers who produce ingots and billets (primary form of
Aluminum) using bauxite.
(b) The secondary producers who add value to the ingots and billets to produce
semi-fabricated products..
All the primary producers have integrated forward into the manufacture of high
value semi-fabricated products like rods, rolled products, extrusions and foils.
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Aluminum Inputs
The aluminum industry in India can be classified as: Captive power, ample bauxite
reserves, coupled with cheap labour costs make Indian companies amongst the
most competitive Aluminum producers globally.
The main raw material for the manufacture of Aluminum includes bauxite, caustic
soda, calcined petroleum coke, coal tar pitch, and LS/FS furnace oil. The
production process for manufacture of Aluminum is briefly outlined below.
The mined bauxite ore is mixed with caustic liquor and is refined to produce
alumina. This is then smelted (through electrolysis in a smelter) to obtain
Aluminum. Depending on the quality of bauxite, 2.5 3 tonnes are required for
manufacture of 1 tonne of alumina. In turn, 2 tonnes of alumina are required for
manufacture of 1 tonne of Aluminum.
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Highly concentrated industry with only five primary plants in the country
Controlled by two private groups and one public sector unit
Bayer-Hall-Heroult technology used by all producers
Electricity, coal and furnace oil are primary energy inputs
All plants have their own captive power units for cheaper and un-interrupted
power Supply
Energy cost is 40% of manufacturing cost for metal and 30% for rolled products
Plants have set internal target of 1 2% reduction in specific energy consumption
in the next 5 8 years
Energy management is a critical focus in all the plants
Two plants have declared formal energy policy
Each plant has an Energy Management Cell
Achievements in energy conservation are highlighted in the Annual Report of the
Company.
Energy targets are based on best energy figures achieved in their sector / region
and by the plant itself in the past
Generally, government policies were rated as conducive to energy management
Task Force formed by BEE in this sector to work as catalyst in promoting energy
efficiency
High cost of technology is the main barrier in achieving high energy efficiency
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The main units of NALCO are at Damanjodi (Mines and refinery complex) and NALCO
nagar, Angul (Smelter and Captive Power Plant Complex). The Bauxite mines are
situated atop a set of five mountains called Panchpatmalli. These mines are open cast
mines. The refinery complex for producing bauxite is located in Damanjodi. The
companys headquarter are located in Bhubaneswar, which is the capital of Odisha.
NALCO is considered to be the one of the best profit making PSU n India and reaps
impressively huge benefits every year. It is expanding by currently employing new
projects. The ongoing second phase of expansion is set to make it the sixth largest
producer of the metal in the world.
The company has numerous awards to its credit, some of them being prestigious awards
and recognitions. The company received Indira Priyadarshini Vrikshamitran Award from
Government of India for its contribution in the field of afforestation and wasteland
development. The 960 MW Captive Power Plant of the Company also received the
prestigious Indira Gandhi Paryavaran Puraskar for the year for the year 2000 from
Government of India for its outstanding contributions in the field of environment
management. Besides these, the Company and its Units have received various National,
State and Institutional awards for excellence in Safety and Environment Management.
NALCO received ISO 9001:2000 awards and OHSAS 140001 for its excellence in
production technology and occupational health and safety systems respectively.
Percentage of Holding
Promoter
5%
FII
DII
Other
5% 3%
87%
The huge chunk of the share is held by Government while the rest is distributed among
the FIIs, DIIs and other investors. Before the recent divestment, the scenario was slightly
11
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different. The Government holding was 87.11%, FII was 5%, DII was4.5% and the rest
of 2.39%. But the recent divestment has been done to meet the future expansion policy.
Vision of NALCO:
To be a company of global repute in Metals and Energy Sectors.
Mission of NALCO:
HR Vision of NALCO:
To attain organizational excellence through trust, openness, commitment, creativity,
innovation and providing opportunities for growth, well being and professional
enrichment.
HR Mission of NALCO:
To create a learning and knowledge based organizational through continuous innovation,
evaluation and realignment HR practices with the business strategies and to attract,
nurture and retain talent. To inculcate a spirit of creativity, quest for learning, to create a
responsive and competent work force and inspiring and motivational organizational
climate.
HR Philosophy of NALCO:
The philosophy of NALCO in the field of human resources and management has been:
To attract competent personnel with growth potential and develop their skill and
capability in a congenial work and social environment through opportunities for
training, recognition, career advancement and other incentives.
To develop and nurture favorable attitude among employees and to obtain their
best contribution to the organization by providing stable employment, safe
working conditions, job satisfaction, quick redress of grievances and through good
pay and welfare amenities, commensurate with the companys capacity to spend
and the government guideli9nes.
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Mines
Alumina
Smelter
Port (Vizag)
Corporate
Delhi
Kolkata
Chennai
Mumbai
Non-Permanent
Worker
Units
Mines
493
Alumina
1806
Smelter
3160
1456
Port (Visakhapatnam)
60
Corporate
4000 Contract
Workers
and
12,000 Casual
Workers to whom
Payment were made
on daily basis.
383
Delhi
44
Kolkata
26
Chennai
17
Mumbai
Total
14
7459
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Environment Policy
In recognition of the interests of the society in securing sustainable industrial growth,
compatible with wholesome environment, National Aluminum Company Limited
(NALCO) affirms that it assigns high importance to promotion and maintenance of a
pollution-free environment in all its activities.
To use non-polluting and environment-friendly technology.
To monitor regularly air, water, land, noise and other environmental parameters.
To constantly improve upon the standards of pollution control and provide a
leadership in the environment management.
To develop employees awareness on environmental responsibilities and
encourage adherence to sound environmental practices.
To work closely with Government and local authorities to prevent or minimize
adverse consequences of the industrial activities on the environmental practices.
To comply with all applicable laws governing environment protection through
appropriate mechanisms.
To actively participate in social welfare and environmental development activities
of the locality around its Units.
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BAUXITE MINE
A fully mechanized open-cast mine of 48, 00,000 tonne per annum, on Panchpatmali hills
of Koraput district in Odisha, serves feed-stock to the Alumina Refinery at Damanjodi,
located 16 km downhill. The transportation is done through a 14.6 km long single flight ,
multi-curve, cable belt conveyor of 1800 TPH(Tonne per Hour) capacity. The mining
capacity has been expanded to 63,00,000 TPA.
Area of Deposit
: 16 Sq. Km
Resource
Mineralogy
: Over 90 % gibbsitic
Ore Quality
Ore Thickness
: 14 mtr (avg.)
Alumina Refinery
The 15,75,000 TPA energy efficient Alumina Refinery, having three parallel stream of
equal capacity, located in the picturesque valley of Damanjodi. The Refinery provides
alumina to the Companys Smelter at Anugul and exports the balance alumina to
overseas markets through Visakhapatnam Port. Presently, it is being expanded to
21,00,000 TPA capacity.
Smelter Plant
The 3,45,000 TPA capacity and Alumina Smelter, located at Anugul in Orissa, is based
on advanced technology of smelting and pollution control. Its capacity is being further
expanded
to
4,60,000
TPA.
Some of the key features of the Plant include:
180 KA cell technology
Manufacturing of carbon anodes, bus bars, anode stems etc
Integrated facilities for manufacturing Ingots, Sows, Billets, Wire Rods, Strips and
Rolled Products. Advanced 180 KA cell technology
Micro-processor based pot regulation system
Fume treatment plant with dry-scrubbing system for pollution control
and fluoride salt recovery
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The water for the Plant is drawn from River Brahmani through a 7 km long double
circuit pipeline. The coal demand is met from a mine of 3.5 million tpa capacity
opened up for Nalco at Bharatpur in Talcher by Mahanadi Coalfields Limited. The
Power Plant is inter-connected with the State Grid.
Port Facilities
On the inner harbor of Visakhapatnam Port on the Bay of Bengal, NALCO has
established mechanized storage and ship handling facilities for exporting alumina in bulk
and importing caustic soda. This facility can handle ships up to 35,000 DWT.
Ship Loading Rate : 2200 TPH
Alumina Storage
: 3 x 25,000 tonnes
Besides, Nalco exports from the port of Paradeep and Kolkata.
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Aluminum Metal:
Standard Ingots (each approx. 20/22.5 kgs)
Sows Ingots (each max 750 kgs)
Billet (in four sizes: 127+/- 1.5mm, 152+/- 1.5mm,178+/- 1.5mm,
203+/- 1.5mm)
Wire Rods (in coil form : 9.5/11.95 mm dia, weight approx. 2 MT)
Alloy wire rods ( Max. width 1600 mm, gauge 6 10 mm)
Cast Strips
Alumina Hydrate:
Calcined Alumina
Alumina Hydrate
Zeolite-A
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Chart Title
1600
1400
Axis Title
1200
1000
800
600
400
200
0
Production
Export
2005-06
1590
2006-07
1475
2007-08
1576
2008-09
1577
863
774
860
852
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ALUMINUM
(in 000 MTs)
Chart Title
400
350
Axis Title
300
250
200
150
100
50
0
Production
2005-06
359
2006-07
359
2007-08
360
2008-09
361
Export Sales
96
93
101
82
Domestic Sales
258
263
252
271
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POWER
(in 000 MTs)
Chart Title
Axis Title
7000
6000
5000
4000
3000
2000
1000
0
2005-06
2006-07
2007-08
2008-09
Generation
5679
5968
5609
5541
Sales
322
421
129
81
Consumption
5357
5547
5480
5460
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FINANCIAL PERFORMANCE
Turnover and Net Profit
(Rs. in Crore)
Chart Title
7000
6000
Axis Title
5000
4000
3000
2000
1000
0
Sales Turnover
Net Profit
2005-06
5324
2006-07
6515
2007-08
5474
2008-09
5531
1562
2381
1632
1272
Sales Turnover
(Rs. in Crore)
Axis Title
Chart Title
4500
4000
3500
3000
2500
2000
1500
1000
500
0
2005-06
2006-07
2007-08
2008-09
Export
2306
2586
2134
2085
Domestic
3018
3929
3340
3446
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Dividend Payment
(Rs. in Crore)
% of Dividend
80
70
60
50
40
% of Dividend
30
20
10
0
322.00
483.00
387.00
322.00
2005-06
2006-07
2007-08
2008-09
Expenditure Breakdown
(Rs. in crore)
Rs. in Crore
Raw Material
Staff Cost
Depreciation
Others
7%
13%
18%
20%
35%
7%
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CURRENT
MARKET
PRICE
367.00
138.45
MARKET
CAPITALIZATION(Rs.
in million)
EPS(Rs.) P/E
236461.77
8.13
45.18
265297.50
7.16
19.34
P/B.V.
2.42
1.12
DIVIDEND
60
135
5.85
63.05
468.00
517.10
1.72
3.92
10.00
0.00
0.54
3.51
10.83
17.96
Weakness:
1. High transportation cost from the refinery to the smelter.
2. Prices of Aluminum depend upon London Metal Exchange quotes.
3. The cash reserves are increasing each year without any further utilization or
investment.
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Opportunity:
1. Growth of the potential domestic market
2. Widespread uses of Alumina for various purposes
3. Utilization of the idle cash reserves in other booming sector like Nuclear Power or
in further expansions.
4. Identifying the prospect of setting up manufacturing units in foreign countries as
well as looking for new source of raw material in foreign countries.
Threat:
1.
2.
3.
4.
5.
Expansion Programme
In order to strengthen its business and increase market share, the company has been
pursuing expansion programs on a sustained basis. Soon after the completion of first
expansion, the Company launched its 2nd phase expansion commenced on October 2004,
which involved fresh investment of more than Rs. 4402 Crore. The ongoing expansion
will raise the capacities of its various segments:
Unit
Bauxite Mines
Alumina Refinery
Aluminum Smelter
Power Plant
Original Capacities
24,00,000 MT
8,00,000 MT
2,30,000 MT
600 MW
The Company is now planning for 3rd phase expansion at an investment of Rs.6000
Crore, which will further increase Aluminum Smelter capacity to 5.80 Lakh tonnes and
power generation to 1400 MW per annum.
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NALCO
NALCO
POWER
NALCO
METALS
NALCO
INTERNATIONAL
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THRUST AREAS
Areas related to the business of the PSE as a natural corollary to the business;
Assistance to be mostly project based rather than donation, so as to generate
community goodwill, create social impact and visibility;
Finalizing of time-frames and various milestones before commencement of a
project;
Involving of suppliers in order to ensure that the supply-chain also follows the
CSR principles;
Emphasis on principles of Sustainable Development, based on the immediate and
long-term social and environmental consequences of the activities undertaken;
Improvement of the existing ecological conditions;
Ensuring skill enhancement and employment generation by co-creating value with
local institutions and people.
ACTIVITIES THAT WILL NOT COUNT AS CSR
Benefits to staff
Grants to organization/institutions
IMPLEMENTATION MODALITIES
CSR Activities to be carried out by Specialist Agencies;
Such activities generally not to be conducted by CPSE employees / staff;
Specialist Agencies to include NGOs, Institutes, Academic Organizations, Civil
Society / Community-based Organizations, Trusts, Missions etc., who have
requisite expertise;
Utmost efforts to be made to find out the reliability, and track record of the NGOs
/ Organizations entrusted with CSR activities;
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(% of profit)
MONITORING
Monitoring of the CSR projects is very crucial and needs to be a periodic activity
of the Enterprise;
The Board of CPSEs should discuss the implementation of CSR activities in their
Board meetings;
The CPSE should bring a separate paragraph / chapter in the Annual Report on the
implementation of CSR activities / projects including the facts relating to physical
and financial progress
The implementation of CSR guidelines to form a part of the Memorandum of
Understanding to be signed between CPSE and the Government;
The performance of CSR should be monitored by the Ministry / Department on
regular basis;
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In MoU Guidelines from 2010-11 onwards, 20% has been earmarked out of the
non-financial parameters for performance under CSR.
For proper monitoring of CSR activities, companies may appoint a CSR
committee or a Social Audit Committee or a suitable, credible agency to critically
assess fulfillment of social obligations.
CSR projects should also be evaluated by an independent external agency. This
evaluation should be both concurrent and final.
MONITORING & EVALUATION BASELINE SURVEYS AND
DOCUMENTATION
Impacts made may be quantified to the best possible extent with reference to base
line data, which need to be created by the CPSEs before the start of any project.
Hence, Base-line Surveys mandatory.
The documentation relating to CSR approaches, policies, programs, expenditures,
procurement, etc. to be put in the public domain, particularly through the internet.
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As a policy NALCO allocates 1% of its net profit per year for the periphery development
activities of the succeeding year. Out of this allocable fund, 40% is allocated for the
Damanjodi, 40% towards Angul and the rest 20% is for other areas. Around Rs.136.87
Crore has been allocated towards the periphery development including the special
projects. Nalco has created a trust within the local people towards the company. It will
foster the relation between the company and the people of the local area. Nalco has set up
a Corporate Social Responsibility Foundation and has doubled the allocated money from
1% of its net profit to 2%
.
Nalco is now playing a vital role in the economic development of the area where it
operates. Rehabilitation of displaced families, employment and income generation for
local people, development of infrastructure, environment care and humanitarian goodwill
missions have earned Nalco a special place in the hearts of the local people of the area
where Nalco operates.
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PROJECT
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INTRODUCTION
Social Security protects not just the subscriber but also his/her entire family by giving
benefit packages in financial security and health care. Social Security schemes are
designed to guarantee at least long term sustenance to families when the earning member
retires, dies or suffers a disability. Thus the main strength of the Social Security system is
that it acts as a facilitator it helps people to plan their own future through insurance and
assistance. The success of Social Security schemes however requires the active support
and involvement of employees and employers.
The term Social Security is of almost indefinite connotation as it covers several
measures of protection against various contingencies from Womb to Tomb or from
the Cradle to the Grave. It is a scheme of social insurance against interruption and
destruction of earning power and for special expenditure arising at birth, marriage or
death. It is an attack on five giants namely, Want, Disease, Ignorance, Squalor and
Idleness The concept of Social Security is as old as civilization itself. The concept of old
age, disability and survivors protection, as an essential ingredient of Social Security, was
included in the objectives of International Labor Organization, set up after the First
World War in 1919. The oldest institution of social security in the history of mankind is
family. Closely connected by flesh and blood, inspired by the tales of filial devotion,
fraternal affection and parental sacrifice and encouraged by various religions, every
member of the family consider it as a part of his duty to share his weal and woe with
other members. Income from family property and family labor was pooled together and
was used for the maintenance of all members, whether protective or non-protective. The
family is supposed to look after physical needs of its member including food, shelter,
clothing as well as providing comfort and love acceptance and approval. The break-up of
the joint family system following emergence of the urbanization and industrialization has
resulted in the need for social security through the society.
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In addition, a number of social assistance scheme both central and state Government
schemes provide social assistance benefits for the welfare of specific categories of
workers. Most of these schemes cater to the 90% of the work force which is in the
unorganized sector, for whom the benefits of a Contributory Social Insurance Scheme is
yet to be extended, as is provided to worker in the unorganized sector. Today Social
Security exists for employees in Organized Sector whereas it is absent in the unorganized
sector. In the employee category, the complete responsibility of social security is given to
the Employer and States assistance is negligible. Out of 400 million workforces in India,
about 8% of them are brought under the PF/Pension legislation. The Government of India
is very keen to extend this benefit to the unorganized sector.
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In 1965, the Gratuity Scheme was introduced for the Government employees. In
respect of Central Government employees who join the service on or after
1.10.2001, the Government is considering framing of a separate pension scheme
on recommendations of Pension Regulatory Authority set up by the Government
of India.
Industrial Employees
The Employees Provident Funds Scheme was framed under the EPF Act, 1952.
With a view to protect the family of the PF members, who die while in service, a
Scheme name Employees Family Pension Scheme was framed under the EPS and
Family Pension Fund Act, 1952 in the year, in the year 1971, as a Social Insurance
Scheme. In the year 1976, the Employees Deposit Linked Insurance Scheme was
framed under the EPF and MP Act, 1952, providing lump sum benefit, which was
linked to the PF deposits of the subscribers who dies while in service. On behalf of
the employees, the employer is required to pay the contributions towards the EDLI
scheme, 1976. In the year 1995, the Employees Provident Pension Scheme, 1971
was replaced by Employees Pension Scheme, 1995 which provides pension on
Superannuation, Family Pension to the family of the member who die while in
service or away from service or while drawing pension. In addition, Disablement
Pension, Children Pension, Orphan Pension, Disabled Children Pension and
pension for nominee and dependent parents and other benefits viz. Return of
Capital and communication are also being provided. The working class in India
was demanding one more retrial benefit and accordingly the Government of India
introduced the payment of Gratuity Act in the year 1972.
Other Schemes in general
The Public Provident Fund Scheme, 1967 is a statutory Scheme of the Central
Government framed under the provisions of the PPF Act, 1968. The scheme came
into force w.e.f 1.07.1968 the PPF scheme can be availed by any individual in his
or spouse name and this is a boon to the self employed and entitled for income tax
benefits.
The Government of India included the National Social Assistance Programmes
(NSAP) in the Central Budget for the year, 1995-96 and it came into effect from
15th August, 1995. The NSAP for the time being included:
1. National Old Age Pension Scheme
2. National Family Benefit Scheme (Survivor Benefit Scheme)
3. National Maternity Benefit Scheme
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Employers Representative
Shri S.C. Das, Executive Director (Finance), Corporate Office
Shri S.K. Das, Dy. General Manager (Finance), Smelter & Plant Complex
Shri K Ravindranath, Dy. General Manager (Electrical), Mines & Refinery
Complex
Shri S.K. Mishra, Dy. General Manager (HRD), Corporate Office
Shri A.K. Rout, Sr. Manager (Finance),NEPFT, Corporate Office
Shri P.K. Dhirsamant, Dy. Manager (Finance), NEPFT, Corporate Office
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Employees Pension
Scheme 1995
(w.e.f. 16th November 1995)
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INTRODUCTION
The Employees Pension Scheme (EPS), 1995 is one of the three subordinate legislations
coming under the Employees Provident Fund Act, 1952 and is the latest among the
three, coming into effect from 16th November, 1996. On introduction of the Employees
Pension Scheme, 1995, the erstwhile Employees Family Pension Scheme, 1971 ceased
to operate and all assets and liabilities of the old scheme were transferred and merged
with the Employees Pension Fund. The Employees Pension Scheme 1995 has been
designed as a Benefit defined Social Insurance Scheme formulated following
actuaries principles for ensuring long term financial viability. The Scheme is a
defined contribution as well as defined benefit scheme and aims at providing for
economic sustenance during old age and survivorship coverage to the member and his
family. The Employees Pension Scheme, 1995 derives its financial resource by partial
diversion of 8.33% from the employers share of Provident Fund contribution. The
Central Government contributes at the rates of 1.16% as done in old scheme. The benefits
and entitlements to the members under the old scheme are protected and continue under
the new Pension Scheme, 1995.
The Scheme on its application applies to all existing members of the Provident Fund who
were contributing to the Employees Family Pension Scheme, 1971. The new entrants to
the membership of Provident Fund from 16.11.1995 onwards shall also acquire
membership of the scheme on compulsory basis. The existing members of the Provident
Fund who did not opt for joining the erstwhile Employees Family Pension Scheme, 1971
shall have a option to join the new Pension Scheme. The Employees Pension Scheme
though effective from 16.11.1995 has a provision for retrospective application from
1.04.1993 in selective cases for outgoing members of the ceased Employees Family
Pension Scheme, 1971 during the period between 1.04.93 to 15.11.95. Members of the
old scheme who died between 1.04.1993 and 16.11.1995 are deemed to join the new
scheme and their beneficiaries are entitled for the pensionary benefits under EPS-1995.
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Early Pension:
With a minimum service of 10 years and any time before attaining the age
of superannuation but after 50 years of age provided the member retires or
otherwise ceases to be in employment.
II.
Disablement Pension
Paid to the member on permanent and total disablement during the service if at
least one months contribution has been paid.
III.
Widow/Widower
The widow or widower pension shall be payable to the spouse of the member
when member dies
While in service
Away from Service
As a pensioner
This pension is payable upto the death of the spouse or upto date of remarriage
whichever is earlier.
IV.
Children Pension
The children pension to each child shall be 25% of the widow/widower pension
and is payable to two children at a time upto their age of 25 years and will run
from the oldest to the younger in that order. The pension shall be paid
concurrently along with the widow/widower pension. The legally adopted children
of the member are also eligible for children pension
V.
Orphan Pension
The orphan pension to each child shall be 75% of the widow/widower pension and
is payable to two children at a time up to their age of 25 years and will run from
the oldest to the younger in that order, on the death or remarriage of the spouse of
the member.
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VI.
VII.
Nominee Pension
If there is no spouse or an eligible child for the member on his death, then the
nominee executed through the Nomination proforma in Form 2 for the EPS-95
would be eligible to get a nominee pension up to his/her life time with quantum of
pension same as the widow pension.
VIII.
Previously under the old Employees Family Pension Scheme, 1971, only
widow/widower pension was payable, in case of only death while in reckonable service
and prior to completion of 60 years of age. In absence of widow or on cessation of
Widow Pension, pension was payable to the eldest child up to the age of 25 years and
then it was to pass on to the younger children, one at a time, subject to the age limit of of
25 years. There was no provision for pension to member and capital return or
commutation or disablement pension. At the time of leaving the service, the employee
was entitled to withdrawal benefit only.
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Salary
x
70
Pensionable
Service)
Those retiring after 16-11-1995, shall have also the benefit of past service pension for the
period of membership under the erstwhile Employees Family Pension Scheme, 1971 on
factor formula basis provided in Paragraph 12(3) in the EPS-1995 as below:
Years of Past Service
Salary up to
Rs.2500/- per
month
Up to 11 years
80
85
95
105
120
135
Beyond 20 years
150
170
However, the amount shall be multiplied by the corresponding Table B factor for the
period that had elapsed between 16-11-1995 and the date of exit is date of attaining 58
years for superannuation/early pension, date of death for widow/widower pension and
date of disablement for disablement pension.
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Both the amounts would be aggregated to calculate the total monthly member pension
subject to the minimums prescribed as below:
Date of
Commencement of
Pension
Minimum formula
Pension For Pension
For Pensionable
Service
Minimum
Aggregate
Pension
Minimum after
proportionate
reduction for
eligible service
less than 24 years
From 16.11.1995 to
15.11.2000
335
500
265
From 16.11.2000 to
15.11.2005
438
600
325
From 16.11.2005
635
800
450
However these minimums are prescribed only to the existing members. For new
entrants the pension would be as per the formula.
Widow/Widower Pension:
If Member dies in service then
Widow Pension = Member Pension treating the date of death of retirement (or) Table C
factor (or) Rs.450/- whichever is higher
If the members dies away from service before 58 with service of more than 10 years
then
Widow Pension = Member Pension treating the date of exit from employment as date of
retirement (or) Table C factor (or) Rs 450/- whichever is higher
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If the members dies away from service before 58 with service of less than 10 years
then
Widow Pension = Table C factor, if the member is a bachelor otherwise a lump-sum
amount equal to 100 times of pension payable to the nominee or patent
If the member dies as a pensioner then
Widow Pension = 50% of the Member Pension (or) Rs.450/-, whichever is higher
Children Pension
25% of the widow pension calculated as above or Rs.150/-whichever is higher
Orphan Pension
75% of the widow pension calculated as above or Rs.250/- whichever is higher
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GLOSSARY
PFRDA
NPS
GOI
CRA
CRA-FC
KYC
NSDL
T+1
NPIN
T-PIN
PRA
PRAN
PF/PFM
RFP
ASP
TB
PoP
PoP-SP
UAT
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1.
The Central Government has introduced the New Pension System (NPS) with effect
from 01 January 2004. The new pension system covers, at present, new entrants to
Central Government services (excluding Armed Forces) some State Government
services and autonomous bodies at their discretion and all citizens of India on a
voluntary basis with effect from 1st May 2009.
2.
3.
PFRDA has already put in place the institutional framework and infrastructure
required for administering the 'New Pension System' (NPS) for government
employees. Various institutional entities such as Central Record Keeping Agency
(CRA), Pension Fund Managers (PFM), Trustee Bank (TB), Custodian and NPS
Trust have been appointed and are now functional.
4.
The recordkeeping and administration functions for all subscribers of the New
Pension System will be centralized and performed by a Central Recordkeeping
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PG20095052
Agency (CRA). The CRA will issue the unique PRAN to each subscriber, maintain
a master database of all pension accounts and record the transactions related to each
subscriber's PRAN.
5.
6.
PFRDA has already appointed 21 Points of Presence (PoP) and is now undertaking
the task of expanding the Pop network for all citizens of India. For this purpose,
PFRDA proposes to select and authorize entities as Points of Presence (POPs) to
extend customer interface for non-government subscribers/individual citizens.
PFRDA has undertaken the process of registration of PoP(s) in phases. This is the
second phase of registration in which interested entities fulfilling the eligibility
criteria as laid down in this document will be registered as PoP(s).
7.
8.
The POPs and associated POP-SPs shall also abide by such regulations, directions
and guidelines that PFRDA may issue from time to time.
9.
All the eligible bidders are requested to note that the current selection of PoP(s) is
for expanding the existing network of PoPs for all citizens of India.
10. The proposed appointment of PoP(s) will be valid for 5 years subject, however, to
review on the passage of the PFRDA Bill. The PoP(s) are expected to commence
their operations immediately after entering into agreement with PFRDA.
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Funds Flow
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PFRDA is the regulator for the NPS. PFRDA is responsible for appointment of various
intermediaries in the system such as Central Record Keeping Agency (CRA), Pension
Funds, Custodians, NPS Trustee Bank, etc. PFRDA shall also monitor the performance of
the various intermediaries. PFRDA has a significant role to play in safeguarding the
interest of subscribers. It will regulate the manner in which subscriber contributions are
invested by PF(s) and will make all efforts to ensure fair play for subscribers. It shall also
ensure that all stakeholders comply with the guidelines/regulations issued by PFRDA
from time to time.
Central Recordkeeping Agency (CRA)
The recordkeeping, administration and customer service functions for all subscribers of
the New Pension System will be centralized and performed by the CRA. The CRA shall,
on the basis of instructions received from subscribers, transmit such instructions to the
appointed Pension Funds on a regular basis. The CRA will also provide periodic,
consolidated PRAN statements to each subscriber.
Pension Funds (PFs)/Pension Fund Managers
Appointed PFs would manage the retirement savings of subscribers under the NPS. PFs
would use their secure access codes to confirm receipt of netted assets and instructions
regarding fund allocation, confirm allocation of funds and communicate the NAV of each
scheme to CRA on a regular basis. The PFs will be required to invest strictly in
accordance with guidelines issued by the PFRDA.
Annuity Service Provider (ASP)
ASPs would be responsible for delivering a regular monthly pension to the subscriber for
the rest of his/her life. On receipt of personal and banking information details of
subscriber from CRA and of specified sum from the trustee bank the ASP would use its
access codes to confirm receipt. ASP would then begin payments of annuities to the
subscriber.
Trust & Trustee Bank (TB)
A Trust would be responsible for taking care of the funds under the NPS. The Trust
would hold an account with a bank and this bank would be designated as NPS Trustee
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Bank. NPS Trustee Bank will facilitate fund transfers across various entities of NPS
system viz. PFM, Annuity Service Providers, subscriber, etc. PFRDA has already
established NPS Trust under the provisions of the Indian Trusts Act w.e.f. 27th February
2008 and Bank of India is functioning as NPS Trustee Bank. The NPS Trust is being
administered by the Board of Trustees, as constituted by the PFRDA.
Point of Presence (POP)
POP shall be the first point of interaction between the voluntary subscriber and the NPS
architecture. PoP shall perform the functions relating to registration of subscribers,
undertaking Know Your Customer (KYC) verification, receiving contributions and
instructions from subscribers and transmission of the same to designated NPS
intermediaries. Detailed functions to be performed by the PoP(s) are listed out in section
2 of this RFP., PoP(s) and their authorized branches (PoP-SPs) shall also be required to
comply with the provisions of the Prevention of Money Laundering (PML) Act , 2002
and the rules framed thereunder, as may be applicable, from time to time.
Voluntary Subscribers
Subscribers will have complete control on how their contributions and savings in PRAN
are managed. They will be able to select a professional Pension Fund ( PF) from a pool of
competing Pension Funds. Each PF in this system will offer a limited number of simple,
standard investment schemes with different risk and return profiles. They will also be
able to seamlessly switch savings between investment schemes subject to such conditions
as prescribed by PFRDA from time to time.
FUNCTION OF POPs
The following sets of functions are primarily expected from PoP/PoP-SP. However, these
are not exhaustive.
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The application and other request forms as prescribed by PFRDA for various services
under NPS would be required to be printed, stored and made available to NPS subscribers
by the PoP. In addition, these forms shall also be made available in downloadable format
on the PFRDA, PoP and CRA websites.
SUBSCRIBER REGISTRATION
a) Receive the duly filled application form along with the KYC documentation as
may be applicable from time to time.
b) Verification of KYC documents as may be required from time to time.
c) At the time of registration, PoP-SP shall collect and verify contributions that may
be received through cash/cheque/Demand Draft.
d) Collection/deduction of NPS application processing fees and issue of receipt to the
subscriber against the same.
e) Duly accepted application form shall be submitted on a daily basis, to CRA/CRAFacilitation Centre (FC) for digitization by hand where the PoP-SP and the CRAFC are co-located. Where the PoP-SP and CRA-FC are not co-located, the former
shall have the option to transmit the documents (original application form along
with documents) to the nearest CRA-FC either by hand or through post. For the
purpose, PFRDA/CRA may map PoP-SP(s) to nearest CRA-FC location.
f) Currently CRA-FC(s) are existing in approx 50 cities.
g) CRA would, on successful digitization, dispatch the PRAN kit directly to the
subscriber. The CRA shall also inform the PoP-SP of the PRAN numbers allotted
to its subscribers.
h) On receipt of PRAN numbers, PoP-SP shall upload the subscriber contribution
files into
CRA system and simultaneously arrange to transfer the funds into the account of
the NPS trust maintained with the Trustee Bank. For this purpose, the PoP/PoP-SP
is expected to maintain a separate, earmarked account for the NPS contributions
received.
i) The initial contribution of subscriber shall be remitted to the trustee bank on the
day it receives information from CRA about the PRAN number allotment to the
subscriber
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PG20095052
j) On successful digitization, the CRA shall retain the original NPS application form
and the
KYC documents for storage.
MAINTENANCE OF HARD COPIES AND RECORD OF TRANSACTIONS
(i)
(ii)
PoPs and PoP-SPs shall ensure maintenance, reporting and retention of records
of
all
transactions in accordance with the provisions of PML Act, 2002 and Rules
framed
thereunder, as may be applicable, from time to time.
CRA shall store hardcopy of the NPS application form and other supporting
documents
submitted by the subscriber at the time of registration towards fulfilling the
KYC norms. In addition, CRA shall also maintain documents submitted by the
subscribers for effecting any changes in demographic details.
Note: NSDL/CRA has agreed to store the hard copy documents on behalf of PoP/PoPSP. This arrangement would, accordingly, need to be formalised in writing between
the PoP/PoP-SP and NSDL. NSDL shall however not be charging PoP/PoP-SP for
storage of such KYC documentation. The responsibility for KYC verification shall,
however, be that of PoP/PoP-SP.
REGULAR SUBSCRIBER CONTRIBUTION UPLOAD
a) Verify PRAN card details on the deposit slip, the format for which shall be
prescribed by PFRDA.
b) Collection and verification of contributions that may be received
through cash/cheque/Demand Draft/ Electronic Clearing System (ECS).
c) Collection/deduction of contribution processing fee and issue of receipt to the
subscriber against the same.
d) Uploading subscriber contribution details online into the CRA system, in respect
of subscribers for whom clear funds are available, on a daily basis.
e) Remit clear funds into the account of the NPS trust maintained with the Trustee
Bank on a T+1 basis.
f) Maintain hard copies of deposit slips
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SUBSCRIBER SERVICING
On a regular basis, PoP/PoP- SP is expected to provide following range of services to the
NPS subscribers:
a) Carry out changes in subscriber details on request by subscriber subject to the
conditions stipulated by PFRDA.
b) Receiving switch request for change in PFM and/or investment option from
subscriber and transmitting the same to CRA.
c) Receiving withdrawal requests from subscriber and transmitting the same to CRA.
For this purpose, subscriber would put in a withdrawal request to PoP-SP. The
subscriber's corpus would be credited directly to his bank account by trustee bank,
on receiving instructions from CRA, through RTGS/NEFT or by way of a pay
order where his/her personal bank details are not available.
d) Attending to subscriber's request for shift to another PoP-SP.
- Recording the request
- Updating records in CRA system.
e) Any other NPS account related service as may be prescribed by PFRDA from time to
time
In order to execute above instructions/requests PoP/PoP-SP shall follow maker - checker
principle.
GRIEVANCE HANDLING
PoP/PoP-SP shall be expected to carry out the following in respect of receiving,
transmitting, verification and redressal of grievances from the subscribers and other NPS
Intermediaries:
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C
D
Inter/Intra-operability considerations
in service delivery to NPS subscriber
Registration of Subscriber
Subscriber has the right to choose any
PoP/PoP-SP
for
registering
himself/herself as NPS subscriber. The
PoP-SP through which he/she has been
registered would be termed as 'Parent
PoP-SP'.
Acceptance of subscriber contribution
Shall be accepted at any authorized
branch (PoP-SP) of any PoP. There will
be complete inter-PoP operability in this
regard.
Acceptance and upload of switch/scheme Initially, only at the parent PoP-SP
preference change request1
Changes in subscriber's details.
Initially, only at the parent PoP-SP
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PG20095052
E
F
G
C
D
E
Grievances
Subscriber shifting
Service level/Standards
Submission of application forms to CRA-FC by
end of the day (EoD)
As per the provisions of the PML Act, 2002 and
the rules framed thereunder, as may be
applicable, from time to time.
Clear funds have to be transferred to the
Trustee Bank on a T+1 basis.
Request to be uploaded into the CRA system as
and when received from subscriber by PoPSP/PoP.
Grievances against the PoP-SP to be normally
resolved within 7 days from the date of receipt
of grievance.
Request to be uploaded into the CRA system as
and when received from subscriber by
PoP/PoP-SP.
In due course of time (as stipulated by PFRDA)
the subscriber will have the option to shift from
one PoP to any other PoP registered with
PFRDA. Operational details to be prescribed by
PFRDA in due course.
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REGISTRATION OF CONTRACT
REGISTRATION CRITERIA
Any bidder who satisfies all the technical eligibility conditions laid out in this RFP and
submits the requisite commercial undertaking as specified in Annexure V will qualify for
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registration as PoP under NPS. The bidder has to provide sufficient evidence of being a
responsible and responsive bidder whose proposal conforms to the RFP.
NOTIFICATION OF AWARD
Prior to expiry of the validity period, PFRDA will notify the successful bidder in writing
that its proposal has been accepted..Immediately on receipt of acceptance letter from
PFRDA, the successful bidder should initiate the process of registration of its branches as
PoP-SP. The successful bidder should log on to the NPS architecture and establish
necessary connectivity with CRA and Trustee Bank so as to be ready for participating in
Orientation programme. The authorised and registered branches (PoP-SP) of the PoP
should become fully operational and registration of minimum 25 branches completed
within time frame prescribed by PFRDA in the contract.
SIGNING OF CONTRACT
Once the PFRDA notifies the successful bidders that their proposal has been accepted,
PFRDA shall enter into a separate contract, incorporating service level agreements (will
be provided in detail to successful bidders separately) between PFRDA and the
successful bidders.
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The successful bidder shall at its own expense deposit with PFRDA, within fifteen (15)
working days of the date of announcement of eligibility or prior to signing of the contract
whichever is earlier, an unconditional and irrevocable Performance Bank Guarantee
(PBG) from a scheduled bank acceptable to the PFRDA, payable on demand, for the due
performance and fulfilment of the contract by the bidder. The Performance Bank
Guarantee will be of Rs. 500,000 (Rupees Five Lakh only). All incidental charges
whatsoever such as premium, commission etc. with respect to the Performance Bank
Guarantee shall be borne by the bidder. The PBG shall be valid till 120 days after the
completion of the registration period/termination of the registration.
In the event of the bidder being unable to service the contract for whatever reason, the
PFRDA would invoke the PBG. Notwithstanding and without prejudice to any rights
whatsoever of the PFRDA under the contract in the matter, the proceeds of the PBG shall
be payable to the PFRDA as compensation for the bidder's failure to perform/comply
with its obligations under the contract. The PFRDA shall notify the bidder in writing of
the exercise of its right to receive such compensation within 14 days, indicating the
contractual obligation(s) for which the bidder is in default.
Before invoking the PBG, the vendor will be given an opportunity to represent before the
PFRDA. The decision of the PFRDA on the representation given by the vendor shall be
final and binding. If circumstances so warrant, the matter may be referred to an arbitrator
to be appointed by the PFRDA in consultation with registered PoP. .
REGISTRATION FEES
Due to the fact that NPS is at its development stage no registration fee has been
prescribed for PoP at present. PFRDA, however, reserves the right to impose registration
fees for PoP in due course.
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Any matter relating to the appointment of PoP shall be governed by the Laws of Union of
India. Only Courts at New Delhi (with exclusion of all other Courts) shall have the
jurisdiction to decide or adjudicate on any matter or dispute which may arise.
The initial registration of PoP(s) will be for a period of 5 (five) years. The tenure of
registration of the PoP will end if:
1) PoP contravenes the conditions/clauses as specified in the contract with PFRDA;
or
2) At the end of the tenure as specified in the letter of registration.
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PoP once registered will have to ensure that the eligibility conditions laid out in this RFP
are strictly adhered to during the entire currency of the registration period and any
extension thereto. A certificate evidencing compliance with the eligibility conditions
shall have to be furnished by the registered PoP to PFRDA on annual basis within 15
days of completion of each financial year.
On attaining normal retirement age (60 years), there should be compulsorily annuitize
of 40% of the total fund and the rest 60% can be withdrawn in a lump sum or in a phased
manner. In case if the subscriber opt for phrasal withdrawal,
Minimum 10% of the pension wealth should be withdrawn every year.
Any amount lying to the credit at the age of 70 years should be compulsorily
withdrawn
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INVESTMENT CHOICE
The NPS would have two choices in front of the subscriber.
Active Choice Individual Funds (Asset Class E, Asset Class C and Asset Class
G)
Auto Choice Lifecycle Fund
It is at the will of the subscriber to decide the investment option of the NPS Pension
Wealth.
Asset Class E investment in predominantly in equity market instrument
Asset Class C investment in fixed income instruments other than Government
Securities
Asset Class G investments in Government Securities
If the subscriber opts for Asset Class E then 50% of the fund would be invested in Equity,
30% in Government Securities and the rest 20% in corporate bonds and other income
instrument other than Government Securities. If the subscriber opts for Asset Class C,
then 100% of the fund would be invested in Corporate Bonds and other fixed income
instruments other than the government securities. The option of Asset Class G would give
the subscriber a choice to invest 100% in Government Securities.
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The amount of risk the subscriber can sustain depends upon the investment time
horizon. The more the time the subscribers have before investment, the more risk
the subscriber can take. (This is because early losses can be later offset by later
gain.
Periodically the subscriber should review the investment choices and check the
distribution of his/her account balance among the funds to make sure that the mix
they choose is still appropriate for his/her situation. If not, rebalance the account to
get the allocation they want.
Auto Choice:
NPS offers an easy option for those subscribers who do not have the required knowledge
their NPS investments. In case the subscriber is unable/unwilling to exercise any choice
as regards to asset allocation, their fund would be investment in accordance with the Auto
Choice option.
AGE
Upto 35 years
36 years
37 years
38 years
39 years
40 years
ASSET
CLASS E
ASSET
CLASS C
50%
48%
46%
44%
42%
40%
ASSET
CLASS G
30%
29%
28%
27%
26%
25%
20%
23%
26%
29%
32%
35%
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41 years
42 years
43 years
44 years
45 years
46 years
47 years
48 years
49 years
50 years
51 years
52 years
53 years
54 years
55 years
38%
36%
34%
32%
30%
28%
26%
24%
22%
20%
18%
16%
14%
12%
10%
24%
23%
22%
21%
20%
19%
18%
17%
16%
15%
14%
13%
12%
11%
10%
38%
41%
44%
47%
50%
53%
56%
59%
62%
65%
68%
71%
74%
77%
80%
CHARGES
NPS offers Indian citizen a low cost option for planning their retirement. A 0.0009% fee
(based on Asset under Management) is charged for managing the wealth, makes the
pension funds under NPS perhaps the worlds lowest cost money manager. Following are
the charges under NPS:
Service Charge
Charge Head
Method Of Deduction
Intermediaries
Rs.50
CRA
Through Cancellation
of unit
Rs.350
Annual PRA
maintenance
Charge per account
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Trustee Bank
Rs.10
Rs.40
Rs.20
Through NAV
deduction
Zero
Rs.15
0.0075%p.a. for
electronic segment
&0.05%p.a for physical
segment
0.0009% p.a.
Investment Management
PFM charges
To be collected upfront
Through NAV
deduction
Through NAV
deduction
Fee
STATEMENT OF PROBLEM
It was hard on our part to define a problem because both of EPS-1995 and NPS-2009
have their own pros and cons. But still we have to find out from both of this Pension
Scheme that which one is better for the Pensioner. Because both of this Scheme are the
part of Social Security. And Social Security is about securing the income of citizen of a
country whether it may be at the time of old age, sickness or death of earning member. So
it is for the well being of citizen of a country. And Government of India, in order to
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PG20095052
lessen the burden of expenditure along with maximum benefit to the pensioner, replaced
the EPS 95 by NPS 2009. In EPS, the contribution was made by employers and the
employees and the accumulated fund will also bear the contribution from the Government
of India. Government contributed to this fund Rs.2500 Crore (fig. as in2006) annually.
And on the NPS part, Government will have no contribution to the Pension Fund.
Government is in full support of this scheme. But the biggest drawback in this scheme is
when the pensioner while withdrawing 60% of the fund at time of retirement would have
to pay the tax on it. Even the PFRDA got only Rs. 8 Crore for the advertisement
campaign to create the awareness of NPS - 2009 which is very less. The six fund
manager will get only 0.0009% fee on the total fund held by them. So it is not luring for
the fund managers. Because in comparison to the other funds, this funds carries a very
low rate. And this may affect the interest of the fund managers to promote the pension
fund among other financial products.
OBJECTIVE
To find out the better scheme for the pensioner of PSU
To analyze the pros and cons of both of the scheme.
Elaboration of the objective
The Government of India has designed these pension schemes namely Employees
Family Pension Scheme 1971, Employees Pension Scheme 1995, New Pension
Scheme 2009 to secure the income of the working mass of India at the time of old age,
death or inability to work. Through the aspect study of EPS 1995 and NPS 2009 we
can find out the pros and cons of both of the schemes.
METHODOLOGY
a) Type of Study:
The study is based on the analysis of the data provided by the NALCO
Employees Provident Fund Trust (NEPFT). The data provided by the NEPFT was
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PG20095052
based on the Phase-I conversion of EPS account to NPS account which included
the conversion of 1247 out of 7459 EPS accounts
b) Type of Data:
The data can be divided into two categories namely primary data and secondary
data.
Primary Data:
The primary data was collected from the NEPFT and the data provided by
them. The PRAN entry also helped me a lot to analyze the data and to find
out the number of accounts in NPS-2009.
Secondary Data:
This type of data was collected from various websites and journal to find
out various circulars and notification issued by the Government of India
and PFRDA regarding the New Pension Scheme as well as the Social
Security. The secondary data was also helpful in providing data regarding
the Employees Pension Scheme 1995.
c) Sources of Data:
The sources of the data were the data provided by the NEPFT and Financial
Report and other financial statement was provided by the financial department of
NALCO. And for the part of the secondary data source, the circulars and
notification of PFRDA and the Government of India, internet was used.
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Final Receipt from NPS 2009 is taxed, unless it is being invested in the annuity
in the same financial year.
Other Peer products like Provident Fund and Public Provident Fund is not being
taxed at any stage and is under Triple Exempt Regime.
RESULTS/FINDING
The Pensioner, in NPS 2009, is given option to decide where the money in the fund
would be invested. There would three options in front of the Pensioner to decide their
investment channel. The three options would be G, C and E. The return from the NPS
would be better than the Provident fund and EPS 1995 but it is not exempted from tax
as the peer products are. Even another drawback in the NPS is that it is a financial
market product and its benefit and schemes are need to be well-communicated and
advertised. But unfortunately the record keeper or the fund managers get very low
incentives and they cannot spare a part of it for promotions. The positive side for the NPS
is that there are 40 Crore of working population in India but only 12-13% are enrolled
under the EPS -1995 so there is still a scope to bring the rest of the working population to
take into its grip. Where as in EPS 1995, the employee do not get any option to decide
their investment patterns. Moreover in EPS 1995, the return is lower than the NPS
2009. The positive side of EPS 1995 would be that it is not taxable at any point of time
as it is in NPS 2009.
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investment strategy of their pension fund. The return on the pension fund is better than
EPS 1995. In NALCO only 1247 employees out of 7459 are enrolled under NPS
2009. Most of them were from Corporate of NALCO. This proves that the employees in
the middle level and top level management are more enrolled in the NPS 2009.
Recommendation:
The Government needs to think over the recommendation given by the PFRDA to
make the amount at the maturity of Pension Fund tax-free.
The Government needs to think over the increase in the money allocated for the
promotion of NPS.
The PFRDA as well as the Government should try to increase the fund manager
fee so as to encourage them to promote NPS over and along other Pension Scheme
and other retirement investment plan.
The lack of knowledge and promotion is one of the major lacunae which the
Government should think upon.
On the part of NALCO, the NEPFT should carry out extensive promotional
activity like seminars among the labors and labor union.
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ANNEXURE - II
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REFERENCE
Annual Report 2007-08, 2008-09 of NALCO
Circulars of PFRDA to NEPFT
CSR report of NALCO
Article of Association of NALCO
http://www.nalcoindia.com/newsdefault.htm
http://www.nalcoindia.com/productsmain.asp
http://www.nalcoindia.com/productsmain.asp
http://pblabour.gov.in/pdf/acts_rules/maternity_benefit_act_1961.pdf
http://pfrda.org.in/
http://www.dnaindia.com/money/report_a-layman-s-guide-to-the-new-pensionscheme_1253551
http://epfindia.nic.in/pension.htm
http://www.youtube.com/watch?v=krmKmpJoDwg
http://www.youtube.com/watch?v=8fuh_gkX9Hk
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