20. National Pension System.—(1) The contributory pension system notified by the Government of
India in the Ministry of Finance vide notification number F. No. 5/7/2003-ECB & PR, dated the 22nd
December, 2003, shall be deemed to be the National Pension System with effect from the 1st day of
January, 2004, and such National Pension System may be amended from time to time by regulations.
(2) Notwithstanding anything contained in the said notification, the National Pension System shall, on
the commencement of this Act, have the following basic features, namely:–
(a) every subscriber shall have an individual pension account under the National Pension System;
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(b) withdrawals, not exceeding twenty-five per cent. of the contribution made by the subscriber,
may be permitted from the individual pension account subject to the conditions, such as purpose,
frequency and limits, as may be specified by the regulations;
(c) the functions of recordkeeping, accounting and switching of options by the subscriber shall be
effected by the central recordkeeping agency;
(d) there shall be a choice of multiple pension funds and multiple schemes:
Provided that—
(a) the subscriber shall have an option of investing up to hundred per cent. of his funds in
Government Securities; and
(b) the subscriber, seeking minimum assured returns, shall have an option to invest his funds
in such schemes providing minimum assured returns as may be notified by the Authority;
(e) there shall be portability of individual pension accounts in case of change of employment;
(f) collection and transmission of contributions and instructions shall be through points of
presence to the central recordkeeping agency;
(g) there shall not be any implicit or explicit assurance of benefits except market based guarantee
mechanism to be purchased by the subscriber;
(h) a subscriber shall not exit from the National Pension System except as may be specified by
the regulations; and
(i) at exit, the subscriber shall purchase an annuity from a life insurance company in accordance
with the regulations.
(3) In addition to the individual pension account mentioned in clause (a) of sub-section (2), a
subscriber may also, at his option, have an additional account under the National Pension System having
the features mentioned in clauses (c) to (g) of sub-section (2) and also having the additional feature that
the subscriber shall be free to withdraw part or all of his money at any time from the additional account.
21. Central Recordkeeping Agency.—(1) The Authority shall, by granting a certificate of
registration under sub-section (3) of section 27, appoint a central recordkeeping agency:
Provided that the Authority may, in public interest, appoint more than one central recordkeeping
agency.
(2) The central recordkeeping agency shall be responsible for receiving instructions from subscribers
through the points of presence, transmitting such instructions to pension funds, effecting switching
instructions received from subscribers and discharging such other duties and functions, as may be
assigned to it under the certificate of registration or as may be determined by regulations.
(3) All the assets and properties owned, leased or developed by the central recordkeeping agency,
shall constitute regulated assets and upon expiry of certificate of registration or earlier revocation thereof,
the Authority shall be entitled to appropriate and take over the regulated assets, either by itself or through
an administrator or a person nominated by it in this behalf:
Provided that the central recordkeeping agency shall be entitled to be compensated the fair value, to
be ascertained by the Authority, of such regulated assets as may be determined by regulations:
Provided further that where the earlier revocation of the certificate of registration is based on
violation of the conditions in the certificate of registration or the provisions of this Act or regulations,
unless otherwise determined by the Authority, the central recordkeeping agency shall not be entitled to
claim any compensation in respect of such regulated assets.
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22. Point of presence.—(1) The Authority may, by granting a certificate of registration under subsection (3) of section 27, permit one or more persons to act as a point of presence for the purpose of
receiving contributions and instructions, transmitting them to the Trustee Bank or the central
recordkeeping agency, as the case may be, and paying out benefits to subscribers in accordance with the
regulations made by the Authority from time to time in this regard.
(2) A point of presence shall functions in accordance with the terms of its certificate of registration
and the regulations made under this Act.
23.Pension funds.—(1) The Authority may, by granting a certificate of registration under sub-section
(3) of section 27, permit one or more persons to act as a pension fund for the purpose of receiving
contributions, accumulating them and making payments to the subscriber in such manner as may be
specified by regulations.
(2) The number of pension funds shall be determined by regulations and the Authority may, in public
interest, vary the number of pension funds:
Provided that at least one of the pension funds shall be a Government company.
Explanation.—For the purposes of this sub-section, the expression “Government company” shall
have the meaning assigned to it in section 617 of the Companies Act, 1956 (1 of 1956).
(3) The pension fund shall function in accordance with the terms of its certificate of registration and
the regulations made under this Act.
(4) The pension fund shall manage the schemes in accordance with the regulations.
24. Certain restrictions on foreign companies or individual or association of persons.—The
aggregate holding of equity shares by a foreign company either by itself or through its subsidiary
companies or its nominees or by an individual or by an association of persons whether registered or not
under any law of a country outside India taken in aggregate in the pension fund shall not exceed twentysix per cent. of the paid-up capital of such fund or such percentage as may be approved for an Indian
insurance company under the provisions the Insurance Act, 1938 (4 of 1938) whichever is higher.
Explanation.—For the purposes of this section, the expression “foreign company” shall have the
meaning assigned to it in clause (23A) of section 2 of the Income-tax Act, 1961 (43 of 1961).
25. Prohibition of investment of funds of subscribers outside India.—No pension fund shall,
directly or indirectly invest outside India, the funds of subscribers.
26. Eligibility norms of the central recordkeeping agency, etc.—The central recordkeeping
agency, points of presence and pension funds, shall satisfy the eligibility norms as may be specified by
the regulations, including minimum capital requirement, past track-record including the ability to provide
guaranteed returns, costs and fees, geographical reach, customer base, information technology capability,
human resources and such other matters.