20. (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;
(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 marketbased
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 subsection
(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.