Benefits of joining NPS for Corporates
Pension Fund Regulatory and Development Authority (PFRDA) has introduced a separate pension model for employers viz. corporate entities, central public sector enterprises, public sector undertakings etc. to adopt NPS as a retirement benefit scheme for its employees. This model is known as the NPS - Corporate Sector Model.
Employer
benefits:
·
Ease of Adoption -
NPS can be introduced by an employer / corporate (entity) for its employees (as
a retirement benefit scheme) within the purview of their employer-employee
relationship on a voluntary or a mandatory basis.
·
Cost-effective -
Employer extending NPS as a retirement benefit scheme to its employees need not
establish and maintain a Trust, manage the funds or undertake recordkeeping
activities.
·
Flexible – It is not
mandatory for the employer to contribute to employees’ NPS account.
Contributions to NPS depend on the employer’s policy on compensation and
retiral benefits extended to its employees. The NPS contribution can be either
(i) equal contributions by both employer and employee (say 10% each) or (ii)
unequal by employer and employee (say 10% by employee and 14% by employer) or
(iii) contribution by only employer or only employee.
·
Tax benefits -
Employer registered with NPS can claim tax benefits for the amount contributed
towards NPS on behalf of employees. The employer can claim up to 10 per cent of
the salary (basic and dearness allowance) contributed towards employees’ NPS
account as ‘Business Expense’ under Section 36(i)(iv)(a) of the Income Tax Act,
1961.
·
Additional avenue -
NPS can be offered as an additional avenue for retirement planning and can be
offered along with any other pension scheme(s) including statutory
pension/provident funds.
·
Portability -
Facility to transfer Approved Superannuation Fund to NPS has been enabled and
the transfer of corpus can be made in bulk as is where is basis or on an
individual case to case basis.
·
Choices - Employer
can exercise choice of Pension Fund and decide on the asset allocation on
behalf of its employees or can leave these options to the employees.
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