Wait becomes longer for opening NPS accounts online

With the SC not allowing the use of Aadhaar for the NPS, PFRDA has put on hold its plans of using Aadhaar-based e-KYC for opening accounts online

Subscribers looking to open an account online with the National Pension System (NPS) will have to wait longer to access this facility.

With the Supreme Court not allowing the voluntary use of Aadhaar for the NPS, the Pension Fund Regulatory and Development Authority (PFRDA) has put on hold its plans of using Aadhaar-based e-KYC (know your customer) for opening accounts online.

“The plan to move forward through an Aadhaar-based e-kyc will remain on hold,” said R.V. Verma, member, PFRDA.

In its interim order on 15 October, the Supreme Court only allowed the use of Aadhaar for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), the Pradhan Mantri Jan Dhan Yojana, pension by central and state governments, and the Employees’ Provident Fund Scheme, in addition to the public distribution system (PDS), cooking gas and kerosene. The court has set up a constitutional bench to hear various petitions challenging the use of Aadhaar in various social security schemes of the government.

Meanwhile, PFRDA is exploring alternate options to make this facility available to its customers. “We are looking at alternative measures to see how account opening can be facilitated online but haven’t arrived at a decision yet,” said Verma.

The Supreme Court order will delay PFRDA’s plan of allowing subscribers to open an account without needing to go to the various agencies designated as points of presence by the regulator. The plan was to allow subscribers to fill a form online while taking care of the KYC requirements through e-KYC. E-KYC service provided by the Unique Identification Authority of India is recognized as a valid document by the government for all financial services under the Prevention of Money-laundering Rules.

The regulator was looking to make it easier for subscribers to open NPS accounts by facilitating online account opening, as it expects more people to open accounts this fiscal to capitalize on the Union budget sop that allowed extra tax deduction for investments in NPS.

To encourage old age saving and pension, finance minister Arun Jaitley had proposed to provide a deduction of up to Rs.50,000 over and above the saving limit ofRs.1.5 lakh under section 80C, for contributions made to NPS.

Though NPS has more than 10 million subscribers with total assets under management of more than Rs.1.1 trillion, the majority of subscribers are central and state government employees for whom it is mandatory to invest in the scheme.