National Pension System An Overview Confidential NSDL eGov

National Pension System An Overview Confidential. NSDL e-Gov Internal use only

About NSDL Ø Established in November 1996 as a depository ü Promoters - IDBI, Unit Trust of India (now SUUTI) and NSE Ø Developed state of the art national infrastructure Ø Transformed capital market operations in India Ø Engaged by Go. I for developing various e-Governance solutions Ø Developed and managing various turnaround Greenfield projects Confidential. NSDL e-Gov Internal use only

Governance Structure Ø PFRDA Bill passed in parliament in 2013 and Act was notified in February 2014 Ø Notified regulations for all stakeholders Ø NPS Trust has been formed to safeguard subscriber’s interest ü Stringent SLA with all stakeholders ü Online Grievance Management System linking all stakeholders Ø Appointment of Pension Advisory Council Confidential. NSDL e-Gov Internal use only 3

Statistics NPS Central Government State Government All Citizens of India Corporate Sector 16. 85 lakh 30. 05 lakh 2. 33 lakh 4. 87 lakh NPS Lite / APY 81. 16 lakh Total Contribution almost Rs. 99, 000 Cr Total Asset Under Management in excess of Rs. 1. 23. 000 Cr Confidential. NSDL e-Gov Internal use only 4

Features of NPS Ø Open for all Indian citizens between 18 – 60 years Ø Unique and Portable Permanent Retirement Account Number (PRAN) with complete online access Ø Tier I & Tier II Ø Nomination facility Switch of funds allowed from Tier II to Tier I (No Tax incidence) Ø Choice of PFM and Asset Allocation Ø Tax Benefit under 80 C, 80 CCD(2) as well as 80 CCD(1 B) Confidential. NSDL e-Gov Internal use only 5

Unique Tax Benefit Employer’s Contribution can be deducted as ‘Business Expense’ from their Profit & Loss Account Tax benefit to Subscriber Employer Contribution: Deduction upto 10% of salary (Basic + DA) from taxable income u/s 80 CCD(2). This is over and above the limits u/s 80 C. Employee Contribution: Deduction upto 10% of salary (basic+ DA) within overall ceiling Rs. 1. 50 Lakh u/s 80 C. Voluntary Contribution: Deduction upto Rs. 50, 000 u/s 80 CCD(1 B) from taxable income for additional contribution to NPS. Confidential. NSDL e-Gov Internal use only 6

Benefit of 80 CCD(1 B) & 80 CCD(2) Particulars Salary Rs. 12 Lakhs Without NPS Basic (50% of Gross) With NPS Salary Rs. 24 Lakhs Without NPS With NPS 6, 00, 000 12, 00, 000 - 60, 000 - 1, 20, 000 Other Taxable Allowances / Perks 6, 000 5, 40, 000 12, 000 10, 80, 000 Gross Total Income 12, 00, 000 24, 00, 000 1, 50, 000 -- Section 80 CCD(1 B) - 50, 000 -- Section 80 CCD(2) - 60, 000 - 1, 20, 000 Taxable Total Income 10, 50, 000 9, 40, 000 22, 50, 000 20, 80, 000 Tax on Total Income 1, 44, 200 1, 16, 390 5, 15, 000 4, 62, 470 NPS contribution Less: Deductions -- Section 80 C Tax Savings - 27, 810 This is saving for a single year Confidential. NSDL e-Gov Internal use only - 52, 530 7

Unique tax benefit for NPS Additional Tax benefit of Rs. 50, 000 u/s 80 CCD(1 B) Investment With NPS Tax Slab - Amount 50, 000 Without NPS 20% 30% 40, 000 35, 000 After 15 years of Investment Corpus at @ 8% 13. 6 lacs 10. 9 lacs 9. 5 lacs Corpus at @ 10% 15. 9 lacs 12. 7 lacs 11. 1 lacs Diff in Corpus - 25% 43% Confidential. NSDL e-Gov Internal use only 8

Returns Ø Retail Domestic Term Deposit rates* ü 1999 ü 2009 ü 2016 - 10. 50 % 8. 50 % 7. 00 % Ø Government Sector schemes have delivered annualised returns of 9. 63% to 10. 11% since April 2008 Ø For Non Government Sector (Annualised returns for 3 year) ü Scheme E – Tier I – 12. 63% to 13. 44% ü Scheme C – Tier I – 9. 78% to 10. 50% ü Scheme G – Tier I – 9. 03% to 9. 45% Available at NPS Trust Website http: //www. npstrust. org. in/index. php/navreturns/returns * For SBI in % p. a. (below Rs. 1 crore) for 10 years Confidential. NSDL e-Gov Internal use only 9

Exit Process Ø Upon attainment of the age of 60 years Ø At any time before attaining the age of 60 years (after 10 years) Deferred withdrawal up to the age of 70 years Deferred Annuity for 3 years Ø Death of the subscriber Contribution allowed beyond the age of 60 years Online withdrawal process for easy exit Confidential. NSDL e-Gov Internal use only 10

NPS v/s Superannuation Features NPS Superannuation Inflation adjusted return ü X Transparent / Low cost structure ü X Customised Portfolio (amount & asset class) ü X 24 X 7 access ü X Seamless portability ü X Periodic cash flow ü X Choice of Annuity ü X Confidential. NSDL e-Gov Internal use only 11

NPS v/s Superannuation Features NPS Superannuation 10% of Basic + DA (no monetary cap) Upto 1. 5 LPA Upto 60% Upto 33% Formation of Trust Not required Required Coordination with IT Commissioner Not Required Subscriber Servicing Point of Presence / CRA Employer Tax Benefit Lumsum withdrawal on Retirement Existing corpus under Superannuation can now be transferred to NPS without any Tax incidence Confidential. NSDL e-Gov Internal use only 12

Flexibility in Implementation Ø Can be implemented on a voluntary basis Ø Can be made mandatory for a section of employees based on ü Designation ü Date of joining Ø Contribution from either the employer or the employee or both Ø Scheme selection at Corporate / Employee level Confidential. NSDL e-Gov Internal use only 13

Ease of Implementation Ø Register though Point of Presence (Bank / Non-Bank) Ø Register / contribute online through e. NPS Ø Tag your PRAN to your employer once NPS is implemented in your organization Ø Switch your contribution in Superannuation to NPS Ø Stay informed through alerts and 24 X 7 online access PRAN generation PRAN Kit desptach Confidential. NSDL e-Gov Internal use only Contribution credit & Change of details Monthly e-Statement Quarterly Balance 14

Let’s keep in touch www. npscra. nsdl. co. in facebook. com/nps. NSDL Tel: 022 -40904242 Helpline-: 1800 222 080 Email: info. cra@nsdl. co. in Confidential. NSDL e-Gov Internal use only

PRAN Card View Confidential. NSDL e-Gov Internal use only

Two Tier Structure Tier II Pension Account Investment Account Mandatory Optional Multiple Tax Benefit Anytime withdrawal without exit load Employer contribution in Tier I is mandatory for opening Tier II Confidential. NSDL e-Gov Internal use only 17

PFMs under NPS Confidential. NSDL e-Gov Internal use only

Schemes / Investment Approach Subscriber decides allocation pattern amongst E, C and G Active Choice Asset Class Cap on Investment Equity (E) 50% Corporate Bonds (C) 100% Government Securities (G) 100% Funds managed on the pattern of a lifecycle fund Auto Choice Age (in Years) Asset Class E Asset Class C Asset Class G Upto 35 36 37 55 and Above 50% 48% 46% 10% 30% 29% 28% 10% 23% 26% 80% v Investment Option can be changed once in a financial year v No Tax incidence due to switch of funds Confidential. NSDL e-Gov Internal use only 19

Stakeholders in NPS Central Recordkeeping Agency Point of Presence Pension Fund Manager Subscribers Confidential. NSDL e-Gov Internal use only 20

Confidential. NSDL e-Gov Internal use only 21

Growth of subscriber in Govt sector Subscriber Count in Govt Sector 5 000 4 581 505 4 500 000 4 141 722 4 000 3 349 044 3 500 000 2 767 107 3 000 2 500 000 2 091 024 2 000 1 500 000 1 000 500 000 - FY 2011 -12 Confidential. NSDL e-Gov Internal use only FY 2012 -13 FY 2013 -14 FY 2014 -15 FY 2015 -16 22

Subscriber Charge Structure Intermediary Charge Head Initial Registration charges Any contribution POP CRA Charges (excluding Tax) Rs. 125 0. 25% of the amount, subject to minimum of Rs. 20/- Any other transaction not involving a contribution from subscriber Rs. 20 One time Account opening charge Rs. 50 Annual Maintenance Charge Transaction (contribution, change in scheme preference, switch and withdrawal) Confidential. NSDL e-Gov Internal use only Method of Recovery Rs. 190 Upfront collection Redemption of units on a quarterly basis Rs. 4 23

Effect of charges on corpus Ø Investing Rs. 25, 000 per annum for 25 years Ø Charges for Option A is 0. 25% and Option B is 2. 25% Ø Return on Investment (CAGR) for both the investment options is 10% Corpus under Option A will be 23. 6 Lacs Corpus under Option B will be 17. 6 Lacs Confidential. NSDL e-Gov Internal use only 24

Ease of Access to bi-lingual Interactive Voice Response (IVR) using TPIN View details / Change of contact details, scheme preference using I-PIN Instant reset of T-PIN & Online reset of I-PIN through OTP Online complaint resolution platform Easy access to information through dedicated website and Facebook Confidential. NSDL e-Gov Internal use only 25

Prerequisite for Implemetation Ø Shortlisting POP Ø Deciding on implementation parameter ü Voluntary / Mandatory ü Co-contribution ü Scheme preference Ø Internal Approval for selecting POP Ø Signing agreement with POP Ø Disseminating information to employees Confidential. NSDL e-Gov Internal use only 26

Interim Withdrawal Ø Withdrawal will be allowed subject to ü Subscriber should be in NPS for 10 years ü Amount should not exceed 25% of the contributions made by the subscriber ü Withdrawal can happen only against specified reasons Withdrawal option are limited to ensure sufficient terminal corpus Confidential. NSDL e-Gov Internal use only 27

Promoters & Shareholders Promoters Ø Industrial Development Bank of India Ø Unit Trust of India (now SUUTI) Ø National Stock Exchange Shareholders • • • State Bank of India Canara Bank Dena Bank Oriental Bank of Commerce Union Bank of India Confidential. NSDL e-Gov Internal use only • • • Citibank Deutsche Bank Standard Chartered Bank HSBC HDFC Bank Axis Bank

PFRDA Org Chart Confidential. NSDL e-Gov Internal use only

NPS Trustee 1. Shailesh V. Haribhakti - Chairman & Trustee o Fellow Chartered Accountant and the Chairman of BDO Consulting Pvt. Ltd. o Serves on the Board of over ten large Indian Companies and Chairs ten Audit Committee o Participated in the process of framing regulations and standards with forums like ASSOCHAM, CII and Indian Merchants’ Chamber o Member of Corporate Governance Committee of CII, member and past chairman, Corporate Governance Committee ASSOCHAM 2. Smt. Pallavi S. Shroff o Leads the competition law practice at Shardul Amarchand Mangaldas & Co 3. Sh Pramod Kumar Rastogi o Former member Telecom Disputes Settlement and Appellate in the rank of Secretary to Government of India. o Former Secretary Ministry of Steel, retired on 31. 10. 2009 o Principal Secretary (Finance), Government of Andhra Pradesh, Finance and Planning Department Confidential. NSDL e-Gov Internal use only

NPS Trustee 4. Sh. Ashvin Parekh o Associated with Ernst & Young as a Senior Expert – Advisor o Served Deloitte Touche Tohmatsu India Pvt. Ltd. as Executive Director o Held senior positions in Arthur Anderson, Price Waterhouse Coopers, KPMG India, KPMG UK, KPMG Dubai and Hindustan Lever Ltd. o In the last 5 years he has been on 9 committees set up by the Finance Minister / Ministry of Finance 5. Sh. N. D. Gupta o Has been involved in providing, auditing, taxation & financial consultancy services to some of the top institutions of India like RBI, SBI, NTPC, Local self-governments, Municipal bodies and is on the board of many public companies as Independent director. o served as the President of Institute of Chartered Accountants of India (ICAI) 6. Sh. Bijay Kumar o An IAS of ’ 86 batch, he is working as the Principal Secretary (Financial Reforms), Government of Maharashtra Confidential. NSDL e-Gov Internal use only

NPS Trustee 7. Sh. Alok Tandon o Joined Indian Administrative Service in 1986 and was allotted UP Cadre. He has held various positions in the Government of UP including Joint Secretary, Deptt. Of Heavy Industries and District Magistrate of 3 Districts – Maharganj, Allahabad and Varanasi o He is holding the post of Joint Secretary, Ministry of Finance, Government of India since October 2011 Confidential. NSDL e-Gov Internal use only