Dubai: Indian expatriates in the UAE can now expect financial security after retirement with the Government of India’s National Pension Scheme expanding its ambit to include overseas Indians as well.

Beginning November 2015, the Reserve Bank of India allowed all Non Resident Indians (NRIs) around the world, including those in the UAE, to subscribe to the existing National Pension Scheme (NPS) overseen by the Pension Fund Regulatory and Development Authority (PFRDA) in India. Speaking to Gulf News, T.P. Seetharam, Indian Ambassador to the UAE, confirmed this less publicised fact.

RBI worked out interest rates for participating banks only by January 12, 2016 and so expatriates can now register for the pension scheme.

Realising the tremendous potential of investment that NRIs could make, this scheme, which has been in prevalence in India since 2004, was finally extended to expatriate Indians.

According to the latest figures released by the Ministry of Overseas Indian Affairs, currently the 22 million Indians residing in 200 countries contribute $70.8 billion (Dh260.04 billion) by way of remittances. These remittances alone make up 4 per cent of India’s $2 trillion GDP.

Substantial contribution

The contribution of 2.6 million UAE NRIs is substantial. “The remittances of UAE NRIs is $15 billion annually and they account for nearly 50 per cent of the remittances from the Gulf region,” said Seetharam.

According to Aneesh Choudhury, manager of the Indian Workers Resource Centre (IWRC), many participating banks and institutions from India that have branches here are authorised to process the forms.

He told Gulf News: “People can approach the Bank of Baroda. Alankit Assignment Ltd, a company outsourced to manage the affairs of the IWRC, is also registering pensioners. Most major Indian Banks — Axis, ICICI, HDFC, PNB, Kotak, Federal Bank, Corporation Bank, State Bank of Travancore, to name a few, have their representative offices in UAE which would facilitate the process. Alankit Assignment Limited has registered significant numbers of Indians in NPS.”

Dinesh Kumar, the first secretary, community affairs at the Indian Embassy, Abu Dhabi, provided a detailed perspective on the scheme.

What is the pension scheme?

The NPS is an easily accessible, low-cost, tax-efficient, flexible and portable retirement savings account that has now been extended to all NRIs in the age group of 18-60. All you have to do is register in seven easy steps with the nearest Point of Presence Service Provider (POP-SP) who will make you go through routine verification and provide an individual with a Permanent Retirement Account (PRAN) number. In the UAE the expatriate can contact branches of Indian banks for registration. After that the individual needs to make a minimum investment of Rs6,000 (Dh342 approximately) in the NPS account through their NRO/NRO/ FCNR account.

How it works

The money will be invested in a diversified portfolio of equities, corporate bonds and government securities which an individual can select. He can choose the funds he wants to invest in based on the risk he wants to take.

If a person is unable to select this, by default he can choose the auto choice option in which case the fund managers will choose and invest for best returns.

The greater the value of the contributions made, the greater the investments achieved, the longer the term over which the fund accumulates and the lower the charges deducted, and the larger the eventual benefit of the accumulated pension wealth. An individual can exit the scheme upon completion of 60 years or extend it up to 70 years and have the amount divided into an annual annuity payment and a lump sum withdrawal with a choice of combinations. The Reserve Bank of India has no restrictions on hundred per cent repatriation of the accumulated savings.

To provide an illustration, if a person has invested just Rs1.2 million until the age of 60 and lives up to the age of 80.

According to Choudhury, the person can expect the following:

“At the prevalent rate under life cover in specific condition, if the person opted for Rs1.2 million to be paid back to the nominee after death, the monthly pension payment would be around Rs6,800 as long as he lives. “

Financial experts feel the NPS is an excellent opportunity for low-income expatriates to create a corpus retirement fund with interest ranging from 8-14 per cent on deposits that are expected to accrue to them.

For more details log on to www.pfrda.org.in website. For all basic information log on to https://npscra.nsdl.co.in/all-faq-subscriber.php,http://www.npstrust.org.in/. For online application for specific cases log on to: https://enps.nsdl.com/eNPS/LandingPage.html (For online application for specific cases) and for pension calculations log on to: http://www.npstrust.org.in/PENSIONCALC/Index.html

 

NPS Investment in seven easy steps for Indian expats in UAE

1. Download the NPS form from the PFRDA website

2. Fill the form and submit to the local POP SP bank

3. Banks do due diligence such as follow the Know Your Customer (KYC) verification and send individual’s registration to Central Registration Authority (CRA). Submit your first cheque here

4. The CRA does its checks and generates a PRAN Account No

5. The CRA will generate a digitised account and send you the PRAN number

6. The CRA will send an email and SMS to the registered NRI

7. All subsequent transactions can be made online