prpri PFRDA (National Pension System Trust) (Amendment) Regulations, 2021 PFRDA (National Pension System Trust) (Amendment) Regulations, 2021

PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY

NOTIFICATION

New Delhi, the 14th June, 2021

PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY (NATIONAL PENSION SYSTEM TRUST) (AMENDMENT) REGULATIONS, 2021

No. PFRDA/12/RGL/139/5.—In exercise of the powers conferred by sub-section (1) of Section 52 read with clause (v) and clause (w) of sub-section (2) of the Pension Fund Regulatory and Development Authority Act, 2013 (23 of 2013), the Pension Fund Regulatory and Development Authority hereby makes the following regulations to amend the Pension Fund Regulatory and Development Authority (National Pension System Trust) Regulations, 2015, namely: —

1. These regulations may be called the Pension Fund Regulatory and Development Authority (National Pension System Trust) (Amendment) Regulations, 2021.

2. These shall come into force on the date of their publication in the official gazette.

3. In the Pension Fund Regulatory and Development Authority (National Pension System Trust) Regulations, 2015: —

(I) Sub-regulation (1)(b) of regulation 2 shall be substituted as below –

“auditor” means a person who is qualified to audit the accounts of a company under section 224 of the Companies Act, 1956 (1 of 1956) or Section 139 of the Companies Act, 2013 (18 of 2013);

(II) Sub-regulation (1)(c) of regulation 2 shall be substituted as below –

“company” means a company formed and registered under the Companies Act, 1956 (1 of 1956) or the Companies Act, 2013 (18 of 2013);

(III) New sub-regulation (1)(i) shall be added under regulation 2 as below—

(i) “Assets of the National Pension System Trust” means the assets of the subscribers held in the name of the National Pension System Trust, the subscribers’ funds in the account of National Pension System Trust with Trustee Bank and such other assets both moveable and immovable as are recorded in the books of accounts of such Trust;

The assets shall comprise cash, securities and any other instruments as specified in the investment guidelines issued by the Authority and held in the name of the National Pension System Trust on behalf of the subscribers.

(IV) Regulation 3 shall be substituted as below—

Establishment of National Pension System Trust.- (1)There shall be established a trust to be known as the National Pension System Trust and the instrument of trust shall be in the form of a Trust Deed duly registered under the Registration Act, 1908 (16 of 1908), executed by the Authority in favour of the trustees named in such an instrument. The trust deed executed in favour of the trustees, including any amendments thereof made with the approval of the Authority, shall be deemed as the registration granted to the National Pension System Trust, as an intermediary, under the provisions of the Act and these regulations.

(V) Sub-regulation (2)(a) of regulation 4 shall be substituted as below—

the Board of Trustees’ responsibility with regard to maintenance of confidentiality of information in its possession;

(VI) Sub-regulation (2)(b) of regulation 4 shall be substituted as below—

the responsibilities of the Board of Trustees with regard to taking of action on reports submitted by the pension funds, trustee bank, custodians and in respect of central recordkeeping agencies, for activities pertaining to exits and withdrawals under national pension system in order to ensure compliance with the regulations applicable to them under the National Pension System;

(VII) Sub-regulation (2)(i) of regulation 4 shall be substituted as below—

the Board of Trustees to recommend to the Authority for taking suitable measures against pension funds, trustee bank, custodians and in respect of central recordkeeping agencies with respect to exits and withdrawals under national pension system for violation of the Act, rules and regulations, which comes to its notice;

(VIII) Sub-regulation (2)(j) of regulation 4 shall be substituted as below—

the National Pension System Trust shall be responsible for monitoring and evaluation of all operational and service level or investment management activities of pension funds, trustee bank, custodians and in respect of central recordkeeping agencies with respect to exits and withdrawals under national pension system, in accordance with the provisions of the Act or the regulations made or guidelines or circulars issued by the Authority;

(IX) Sub-regulation (2)(k) of regulation 4 shall be substituted as below—

the National Pension System Trust s h a l l be responsible for receiving, processing and settlement of claims made by the subscribers upon exit from National Pension System. The National Pension System Trust may delegate the activities of receiving, processing and settlement of such claims made by the subscribers upon exit from National Pension System to any other intermediary registered with the Authority, with the previous approval of the Authority;

(X) Sub-regulation (2)(l) of regulation 4 shall be deleted.

(XI) New sub-regulation (2)(t) of Regulation 4 shall be added as below—

(t) provision regarding collection of fee or charges from subscribers for any services rendered to subscriber, after approval of the Authority

(XII) New sub-regulation (2)(u) of Regulation 4 shall be added as below—

(u) provision regarding reimbursement of expenses incurred by the Trust out  of  the property of   the Trust for the execution of the trust, or the realization, preservation, or benefit of the trust property, or the protection or support of the subscribers, such that no surplus shall be created in the process of reimbursement.

(XIII) Sub-regulation (1) of regulation 5 shall be substituted as below—

The Authority shall appoint trustees to the Board of National Pension System Trust in accordance with these regulations. The Authority may issue guidelines on composition, selection and appointment such trustees from time to time in order to ensure that the composition of Board of Trustees adequately represents the interests of various sections of subscribers.

(XIV) Sub regulation (1) of Regulation 7 shall be substituted as below—

Every trustee shall be appointed by the Authority for a term of three years which may, if the Authority deems fit, be extended not more than two years:

Provided that no person shall hold the office as a Trustee after he attained age of seventy years. (XV) Sub regulation (1) of Regulation 9 shall be substituted as below—

The National Pension System Trust is established to hold the assets of subscribers for their benefit and for the said purposes, its activities shall include monitoring and evaluation of all operational and Service level or investment management activities pertaining to pension funds, trustee bank, custodians and in respect of central recordkeeping agencies, for activities pertaining to exits and withdrawals under the National Pension System and pension schemes regulated and/or administered by the Authority. Such monitoring and evaluation shall primarily be undertaken by the NPS Trust through the mechanism of receiving and analysing reports and such other information as may be furnished to it in relation to the functions of such intermediaries and based on market information and intelligence gathered by the National Pension System Trust. The Authority may by issuance of appropriate guidelines direct that the National Pension System Trust shall have such other powers and duties in relation to any other pension scheme, referred to in clause (b) of sub-section (1) of section 12 of the Act, as may, in the interest of subscribers, be deemed necessary.

(XVI) Sub regulation (xi) of Regulation 11 shall be substituted as below—

monitor and evaluate the operational and service level or investment management activities of pension funds, trustee bank, custodians, and central recordkeeping agencies for activities pertaining to exits and withdrawals, in order to safeguard the assets of subscribers and call for any information or reports from the intermediaries and provide the Authority with exception reports for the deviations observed along with their observations;

(XVII) Sub regulation (xii) of Regulation 11 shall be substituted as below—

Appoint a panel of auditors to undertake scheme audits of each pension fund. The Board of Trustees shall also obtain internal audit reports at regular intervals from the auditors appointed by the pension funds, trustee bank, custodians, and in respect of central recordkeeping agencies for activities pertaining to exits and withdrawals under National Pension System. The reports of the auditor appointed by the Board of Trustee and internal audit reports or compliance reports shall be considered at the meetings of the Board of Trustees for appropriate action;

(XVIII) Sub regulation (xiii) of Regulation 11 shall be substituted as below—

Obtain compliance certificates related to service level or investment management activities at regular intervals from the pension funds, trustee Bank, custodians, and central recordkeeping agencies for activities pertaining to exits and withdrawals in the formats and within the period or periods specified by the Authority and submit exception report to the Authority;

(XIX) Regulation (12) shall be substituted as below—

Obligations, duties, responsibilities and liabilities of Board of Trustees- The Board of Trustees shall be responsible for the monitoring and evaluation of the operational and service level or investment management activities of pension funds, trustee bank, custodians, and in respect of central recordkeeping agencies for activities pertaining to exits and withdrawals under National Pension System or any other pension scheme regulated under the Act, if it is so directed by the Authority. The scope of the National Pension System Trust role shall include activities relating to exit of the subscriber from the National Pension System, redressal of subscriber grievances in accordance with the Pension Fund Regulatory and Development Authority (Redressal of Subscriber Grievance) Regulations, 2015 and amendments thereto and other responsibilities, in particular, the following shall be obligations, duties, responsibilities and liabilities of the Board of Trustees, namely:—

(XX) Sub regulation (b) of Regulation 12 shall be substituted as below—

it shall be responsible for approving audited scheme financials, examination of internal audit reports, compliance reports and any other reports, as specified by the Authority, which are to be submitted by the pension funds, trustee bank, custodians, and central recordkeeping agencies for activities pertaining to exits and withdrawals to the National Pension System Trust. Such approved scheme reports and other reports shall be presented to the Authority with qualifications and recommendations, if any, made by it:

Provided that the recommendations shall not be binding on the Authority in any manner;

(XXI) Sub regulation (l) of Regulation 12 shall be substituted as below—

it  shall execute all operational agreements with pension funds, trustee bank, custodians, and central recordkeeping  agencies with respect to exits and withdrawals under the National Pension System;

(XXII). Sub regulation (m) of Regulation 12 shall be substituted as below—

it  shall  be its duty to take all care to   ensure   that   the   pension   funds   managed   in   accordance   with   the pension funds are managed in accordance with the provisions of the Act, Pension Fund Regulatory and Development Authority (Pension Fund) Regulations, 2015, Trust Deed and these regulations, or any guidelines, directions, circulars or notifications issued by the Authority;

(XXIII) Sub regulation (o) of Regulation 12 shall be substituted as below—

it shall communicate in writing to the pension funds, trustee bank, custodians, and central recordkeeping agencies for activities pertaining to exits and withdrawals, of the deficiencies and also keep checks on the rectification of such deficiencies;

(XXIV) Sub regulation (p) of Regulation 12 shall be substituted as below—

it shall ensure that the pension funds, trustee bank, custodians, and central recordkeeping agencies with regard to activities pertaining to exits and withdrawals are conducting their activities in accordance with the applicable regulations in force and any guidelines, notifications or circulars issued by the Authority and the operational and service level agreements or the Investment management agreement, as the case may be, executed between the National Pension System Trust and such intermediaries;

(XXV) Sub regulation (q) of Regulation 12 shall be substituted as below—

where it has reason to believe that the conduct of business of the pension funds, trustee bank, custodians, and in respect of central recordkeeping agencies for activities pertaining to exits and withdrawals is not in accordance with clause (p), it shall forthwith take such remedial steps as are necessary and shall immediately inform the Authority of the violation and the action taken thereafter;

(XXVI) Sub regulation (za) of Regulation 12 shall be substituted as below—

it shall ensure that pension funds and trustee bank maintain segregated bank account and other books of accounts, and custodians, and central recordkeeping agencies for activities with regard to exist and withdrawal maintain other books of accounts pertaining to activities under National Pension System;

(XXVII) Sub regulation (zc) of Regulation 12 shall be substituted as below—

it shall ensure that the central recordkeeping agencies exercise all due diligence and vigilance in carrying out its duties and in protecting the rights and interests of the subscribers related to exits and withdrawals function and comply with the terms and conditions of the agreement between National Pension System Trust and the central recordkeeping agencies;

(XXVIII) Sub regulation (zd) of Regulation 12 shall be deleted.

(XXIX) Sub regulation (2)(a) of Regulation 13 shall be substituted as below—

obtain internal audit reports at regular intervals from auditors appointed by appointed by the trustees and the pension funds, trustee bank, custodians, and central recordkeeping agencies for activities with regard to exist and withdrawals;

(XXX) Sub regulation (2)(b) of Regulation 13 shall be substituted as below—

obtain compliance certificates related to service level or investment management activities at regular intervals from the pension funds, trustee bank, custodians, and central recordkeeping agencies for activities with regard to exist and withdrawals;

(XXXI) Sub regulation (2)(d) of Regulation 13 shall be substituted as below—

Consider the reports of the auditor and compliance reports of the pension funds, trustee bank, custodians, and central recordkeeping agencies for activities with regard to exist and withdrawals, at the meetings of trustees for appropriate action;

(XXXII) Sub regulation (2)(e) of Regulation 13 shall be substituted as below—

maintain records of the decisions of the trustees at their meetings and of the minutes of the meetings and information on such approved decisions shall be shared with the Authority for its information. The Authority may direct the Board of Trustees to re-examine any particular decision of the Trust, if in the opinion of the Authority, the decision is not in the interest of the subscribers;

(XXXIII) Sub regulation (2) of Regulation 14 shall be substituted as below—

The Board of Trustees shall give true and accurate accounts of all assets and properties and money received and spent and all matters in respect thereof in the course of management of the National Pension System Trust’s properties or in relation with carrying out the objective and purpose of the National Pension System Trust as well as all the assets and liabilities related to the National Pension System Trust’s properties.

(XXXIV) Sub regulation (3) of Regulation 14 shall be substituted as below—

The Board of Trustees shall, prepare once every year, an annual report of the activities of the National Pension System Trust. A copy of the same along with the copy of the audited accounts at the end of the financial year shall be furnished to the Authority, not later than July, 31st of the said calendar year which can be extended by the Authority based on the examination of the request made by the National Pension System Trust.

(XXXV) Regulation 36 shall be substituted as below—

Monitoring, review and evaluating systems and controls.-The National Pension System Trust,—

(XXXVI) Sub regulation (a) of Regulation 36 shall be substituted as below—

shall have adequate processes for reviewing, monitoring and evaluating its controls, systems, procedures and safeguards and that of the intermediaries it is dealing with;

SUPRATIM BANDYOPADHYAY, Chairperson

[ADVT.-III/4/Exty./101/2021-22]

Footnote:

1. The principal regulations, Pension Fund Regulatory and Development Authority (National Pension System Trust) Regulations, 2015 was published in the Gazette of India, Part III Section 4 on March 12, 2015 vide notification No. PFRDA/12/RGL/139/5.

2. The Pension Fund Regulatory and Development Authority (National Pension System Trust) (First Amendment) Regulations, 2019 was published in the Gazette of India, Part III Section 4 on July 29, 2019 vide notification No. PFRDA/12/RGL/139/5.

3. The Pension Fund Regulatory and Development Authority (National Pension System Trust) (Second Amendment) Regulations, 2020 was published in the Gazette of India, Part III Section 4 on July 29, 2020 vide notification No. PFRDA/12/RGL/139/5.

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