The Pension Fund Regulatory and Development Authority (PFRDA) has announced a significant update for National Pension System (NPS) subscribers. Effective from July 1, contributions made to the NPS will be settled on the same day they are transacted.
Key Changes in Settlement Process
- New Settlement Timing: Contributions received by the trustee bank by 11 AM on any settlement day will now be invested on the same day. Subscribers will benefit from the same day’s Net Asset Value (NAV).
- Previous System: Until now, contributions were settled the next day (T+1), meaning the NAV benefit was only received on the following day.
- Morning Contributions: Contributions received by 9:30 AM were already being invested the same day. The new rule extends this benefit to contributions received by 11 AM.
Benefits to NPS Subscribers
- Timely Investments: Ensuring contributions are invested on the same day enhances the efficiency of the investment process and potentially increases returns for subscribers.
- NAV Advantage: Subscribers will benefit from the same day’s NAV, allowing for more accurate and timely reflection of their investments.
Implementation
- Effective Date: The new settlement process will begin on July 1.
- Operational Hours: Contributions received by the trustee bank from 9:30 AM to 11 AM will now be included in the same-day investment cycle.
This move by the PFRDA aims to streamline the investment process for NPS subscribers, offering quicker and more efficient management of their pension contributions.
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