Novartis India

National Pension System (NPS)

Awareness Session
March 2020
Q&A

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Agenda for today

Section 1 | Introduction to NPS

Section 2 | Few key considerations

Section 3 | NPS enrollment process

Section 4 | What’s next

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Agenda for today

Section 1 | Introduction to NPS

Section 2 | Few key considerations

Section 3 | NPS enrollment process

Section 4 | What’s next

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Introduction to NPS

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Intermediaries
Pension Fund Regulatory and Development Authority (PFRDA) is responsible for regulating NPS, which is
PFRDA subscribed by employees of the Government of India, state governments and by employees of private
institutions/organizations and unorganized sectors.

All record-keeping, administration and customer service functions for NPS subscribers are centralized and
CRA performed by a Central Recordkeeping Agency (CRA). Currently, National Securities Depository Ltd (NSDL) and
Karvy Fintech Private Limited (KFPL) are the CRAs for NPS. Novartis has chosen KFPL as the CRA.

The Point of Presence (POP) is an interface between subscribers and NPS architecture. POPs perform functions
such as registration of subscribers, KYC verification, receiving contributions and instructions from subscribers,
POP
and uploading them to designated NPS intermediaries. Novartis has appointed HDFC Pension management
company limited as POP.

The PFRDA has appointed seven professional firms as Pension Fund Managers (PFMs). Subscribers’
PFM contribution is given to these PFMs for further investment. The investment choices are prescribed by the
regulator. Employees shall choose their own PFMs and Novartis will not make this choice for them.

The ASP (Annuity Service Provider) provides annuity payments to the subscribers at the time of exit from NPS.
ASP
Currently, there are 10 ASPs that offer a wide range of annuity products.

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What is National Pension System?
What is in it for you - a pension plan to help you save for your retirement
Systematic contribution plan
Tax-efficient

Contribution made on a regular basis

Attractive tax benefits on contributions
Government- regulated
Ease of access
Regulated by the Pension Fund Regulatory and
Individuals can access their account Development Authority (PFRDA)
online and make changes directly

Portable unique PRAN

Plug-and-Play model

1 Permanent Retirement Account Number (PRAN)

number for lifetime, irrespective of the organisation
Flexible choices Well-defined architecture;
just enroll and start contributing
Flexibility to choose investment profile, pension fund
manager (PFM), etc.
Can also use a Tier 2* account for investment purposes
7 Business Use Only * There are no tax benefits or withdrawal restrictions with these accounts
Taxation under NPS
Revised Limits after
Section Description – For Employees
Budget 2015
Employee contribution of 10% of basic salary within the overall 10% of Basic Salary
80 CCD (1) within the
A overall 80 CCE
cap of Rs. 150,000 (only applicable if the limit is not within the overall
exhausted) INR 150,000/-

In addition to above A new section which gives benefits only for

B under 80 CCD 1 (B) NPS contributions
INR 50,000

Contributions made by employer of upto 10% of the (Basic

C 80 CCD (2) 10% of Basic Salary
Salary) in addition to the benefits under 80 CCE
Tax benefits under 80 CCD (1), 80 CCD 1 (B) and 80 CCD (2) are mutually exclusive and can be availed at the same time.

2020 budget proposal is likely to have the following impact on NPS contributions:

Employee contributions under 80CCD(1) and 80CCD(1B) respectively, will only be available for employees who opt to remain under the
old income tax regime with effect from 1 April 2020.

Employer contributions under 80CCD(2), can be availed under either of the income tax regimes, though it should be noted that from
April 1, 2021, the government has proposed an overall annual ceiling of INR 750,000 for tax purposes in respect of all employer
contributions to an employee’s retiral arrangements. These would include EPF, NPS and any superannuation funds.

Find additional information on this here.

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Agenda for today

Section 1 | Introduction to NPS

Section 2 | Few key considerations

Section 3 | NPS enrollment process

Section 4 | What’s next

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NPS process demystified

Enroll and Corpus Benefits at

Contribute Accumulated Retirement

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Employee enrollment in NPS
▪ Submit your enrollment / migration form(s) and KYC documents (see detailed
process).
▪ Choose an empaneled pension fund manager (PFM) and an asset allocation strategy.
– Seven PFMs empaneled by the Pension Fund Regulatory and Development
Authority (PFRDA) (see Fund Performance)
– Two asset allocation choices (and four asset classes)
▪ Generate / migrate your PRAN.
▪ Continue to contribute to your account even if you switch your job or location.

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Declaring a level of contribution

Which element of my
What are my How do I declare
Who is eligible? compensation will be
contribution contributions? impacted if I join
options?
NPS?
ADP portal
You can contribute https://www.ess.adp.in NPS contributions
All Novartis full-time
between 1% and 10% will come out of your
employees /ESS4/ – Process
of your Basic Salary ‘Supplementary
similar to choosing
chosen as an integer Allowance’, subject to
your flexi benefits;
Voluntary benefit percentage (e.g., 1%, a
2%, 10%). maximum of
Option to change
contribution level/opt 10% of Basic Salary.
out – twice a year
You can email your NPS queries to kirtishankarp@hdfclife.in or call on +91 90048 16765
For payroll-related queries, write to hroperations.india@novartis.com.

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Changes to your salary structure -
sample
Salary Breakdown Annual Income • If you do not opt for NPS, there
will be no change to your salary
Before NPS After NPS structure.
Pay Element
Pay Element Description Contribution Contribution
Type (INR) (INR) • This illustration explains the
impact on the split of your Total
Payroll Basic Salary 600,000 600,000 Annual Base Salary, assuming
you opt into NPS at a rate of 10%
Flexi Payroll House Rent Allowance 240,000 240,000 of Basic Salary. The components
are for illustration purposes only.
Flexi Payroll Leave Travel Allowance 20,000 20,000
Supplementary • In this example, Novartis will
Allowance contribute only the amount
Flexi Payroll 640,000 580,000 declared by you under 80CCD(2).
Flexi Payroll Contribution Toward 0 60,000 If you wish to contribute in
Corporate NPS addition to this amount, you may
[80CCD(2)]
do so as voluntary contributions.
Total Annual Base Salary 1,500,000 1,500,000

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Corpus accumulated
▪ The corpus value is market-related.
The total value of the corpus at any time is related to the market and depends on your
investment profile.
▪ You can change your PFM once a year and asset allocation twice a year.
▪ Admin charges are levied and borne directly by the subscriber.
▪ Partial withdrawal of personal contributions is allowed under special
circumstances.
• 3 times during the lifetime after 3 years of membership
• Up to 25% of your personal contributions (i.e., contributions over and above recurring
monthly payroll deductions by Novartis) in certain situations (detailed in the FAQs)

▪ The full corpus will be paid to your nominee/s on death.

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Benefits at retirement

▪ Use a fixed portion of your corpus to buy a pension.

Withdraw the remaining amount as a lump sum (see here).

▪ Optional deferment of proceeds at retirement till age 70

After reaching age 60, you can defer the annuity purchase for a maximum
of 3 years and phased lump sum withdrawal until age 70.

▪ Format of pension choice available

There are a variety of annuity options available to suit your needs

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Agenda for today

Section 1 | Introduction to NPS

Section 2 | Few key considerations

Section 3 | NPS enrollment process

Section 4 | What’s next

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 More about HDFC Pension
▪ HDFC Pension Management Company Ltd is a POP and a PFM (pension fund manager) that manages the funds
collected under NPS for Indian citizens.

▪ A wholly owned subsidiary of HDFC Life, the company began its operations in August 2013 after it was appointed by
the Pension Fund Regulatory and Development Authority (PFRDA) as a PFM.

One-stop shop for NPS

NPS capabilities
enrollment at Novartis

• One of the oldest players in the NPS • Onboard: onboards subscribers as

space a POP
• More than 3,000 Companies enrolled • Service: The group also PFM and
for C-NPS manages customers’ NPS funds and
• More than 1,50,000 subscribers under services customer requests
C-NPS • Annuitize: Customer exits NPS and
buys annuity HDFC Life for a life-
long income

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Enrollment process – New to NPS
How to open your online NPS account under Corporate Model

1. Click on your respective Novartis entity link and register on Life99 by HDFC Pension. Post Login, know more about NPS and subsequently
click on “Buy NPS” (a step by step guide is available to assist you)

2. Novartis India Limited: https://life99.in/register/c3f1a8e5ab88cebc43dc57f71933e3208fd6a312

3. Novartis Healthcare Private Limited: https://life99.in/register/43dafee51f56943c85adf29ec4d15a729d8f8a8b

4. Sandoz Private Limited: https://life99.in/register/98fee61febe9fda838b472b92602d3d557c6296a

5. Keep the following documents ready in order to complete your online NPS registration:
▪ Self-attested copy of PAN card
▪ Self-attested copy of address proof (if the correspondence address is not the same as permanent address, submit documents for both)
▪ Cancelled cheque
▪ Passport size colour photo
▪ Scanned copy of your signature specimen

6. Submit your PRAN generation request latest by April 7, 2020.

7. For any assistance during online registration, contact HDFC help desk SPOC Ms. Kirti Patil on + 91 9004 816 765 or write to
kirtishankarp@hdfclife.in.

8. Declare your contribution on ADP portal (https://www.ess.adp.in/ESS4/)between April 10 and April 17, 2020.
Exit from Novartis: You can get your account mapped to your new employer if your new employer is registered with NPS. You can also choose to
unsubscribe from the Corporate Model, in which case your account will remain active under the All-Citizen Model. However, you will not be able to
withdraw the contributions routed through Novartis.
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Enrollment process – Existing NPS subscribers
If you have an existing NPS account / PRAN under the retail category or if your account is mapped to the previous employer, get your PRAN
mapped to the Novartis corporate code.

1. Ensure that the PRAN is in an active state before submitting your request to kirtishankarp@hdfclife.in or
hroperations.india@novartis.com for mapping it to Novartis. You can check the status of your PRAN by logging into your online account.

2. If your PRAN is currently “frozen/inactive”, connect with your existing POP to get it activated and then submit a request to HDFC
Pension.

3. If you have a PRAN with KFintech (CRA), submit your NPS account details in the given excel format to
hroperations.india@novartis.com.

4. If you have a PRAN with NSDL (CRA), submit your NPS account details in the given excel format to hroperations.india@novartis.com.
In addition, email an ICSS form to kirtishankarp@hdfclife.in with cc to
rekha_g@hdfclife.com to shift your CRA from NSDL to KFintech.

5. Submit your PRAN shifting request latest by April 7, 2020.

6. For any assistance, contact HDFC help desk SPOC Ms. Kirti Patil on + 91 9004 816 765 or write to kirtishankarp@hdfclife.in (refer to
Slide 22 for details of the designated HDFC representatives).

7. Declare your contribution level on the ADP portal (https://www.ess.adp.in/ESS4/) between April 10 and April 17, 2020.

Exit from Novartis: You can get your account mapped to your new employer if your new employer is registered with NPS. You can also choose to
unsubscribe from the Corporate Model, in which case your account will remain active under the All-Citizen Model. However, you will not be able to
withdraw the contributions routed through Novartis.

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Agenda for today

Section 1 | Introduction to NPS

Section 2 | Few key considerations

Section 3 | NPS enrollment process

Section 4 | What’s next

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Next steps
New PRAN: visit HDFC Pension NPS HDFC Pension will generate / Your PRAN will be activated post
page and furnish details along with the migrate your unique Permanent verification and you will receive a
necessary documents Retirement Account Number notification via mobile and e-mail as
Existing PRAN: Complete the excel (PRAN) well as details of your account
based form with payroll team, sector
shifting request with HDFC April 8-17 April 8-17

March 16 – April 7

Your contributions will Choose your contribution level on the ADP

reflect in your PRAN Your NPS contributions will be deducted on a
monthly basis and contributed to your NPS account portal (up to 10% of your basic salary,
accounts subject to INR 500 p.m.)*

Early May 2020 Payroll processing

April 10-17
date

Exit from Novartis: You can get your account mapped to your new employer if your new employer is registered with NPS. You can also
choose to unsubscribe from the corporate model, in which case your account will remain active under the All-Citizen Model. However, you
will not be able to withdraw the contributions Novartis made on your behalf till you exit NPS.
Note: 1) NPS is a completely voluntary programme and all transactions are made between the employee and the service provider (POP).
2) Admin charges are levied and borne directly by the subscriber
3) *You can change your contribution level, asset allocation or even opt out of the Corporate NPS program twice a year – April and October. You can change your PFM once
a year.

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NPS awareness sessions
Mumbai and Hyderabad

Medium Date Meeting Link Timing SPOC

https://twmeetingcenter.webex.com/tw
Vandana Agarwal (Hyd)
WebEx 20/03/2020 meetingcenter/j.php?MTID=mad28c9e 2 pm to 3:30 pm
Urmila Suvarna (Mum)
80c818f6e7b467a7e59971ab7
https://twmeetingcenter.webex.com/tw
meetingcenter/onstage/g.php?MTID=e Vandana Agarwal (Hyd)
WebEx 24/03/2020 11 am to 12:30 pm
e1d3a977c72a62b77e7c25bca2630d9 Urmila Suvarna (Mum)
e
https://twmeetingcenter.webex.com/tw
Vandana Agarwal (Hyd)
WebEx 26/03/2020 meetingcenter/onstage/g.php?MTID=e 10 am to 11:30 am
Urmila Suvarna (Mum)
0edd1e07144cebefbb413d3d5938fa61
https://twmeetingcenter.webex.com/tw
meetingcenter/onstage/g.php?MTID=e Vandana Agarwal (Hyd)
WebEx 30/03/2020 2 pm to 3:30 pm
0b9db37754b02c66d811095d763dbe4 Urmila Suvarna (Mum)
5

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Additional support available
Help is available – see below for various channels for enrollment- and PRAN -
related queries
Hierarchy of Escalations Contact Person Name Email ID Contact Number

Level 0 Customer Support Customercare@life99.in + 91 8916687777

Level 1 Kirti Patil kirtishankarp@hdfclife.in +91 9004 816 765

Level 2 Saloni Singh s_saloni@hdfclife.com +91 97117 91502

Level 3 Rekha Gangwani Rekha_g@hdfclife.com +91 9820 825 587

For any payroll-related queries, please reach out to hroperations.india@novartis.com.

Note: NPS is a completely voluntary programme and all transactions are made between the employee and the service provider (POP).

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Questions?
Appendix
Key parties in NPS (back)

10 Empaneled Pension
7 Empaneled PFMs Providers
• HDFC Pension Management Co. Ltd. 1. Life Insurance Corporation of India
2. SBI Life Insurance Co. Ltd.
• ICICI Prudential Pension Fund Management Co. Ltd.
3. ICICI Prudential Life Insurance Co. Ltd.
• Kotak Mahindra Pension Fund Ltd.
4. HDFC Standard Life Insurance Co Ltd
• LIC Pension Fund Ltd.
5. Star Union Dai-ichi Life Insurance Co. Ltd
• SBI Pension Funds Pvt. Ltd 6. Bajaj Allianz Life Insurance Co. Ltd.
• UTI Retirement Solutions Ltd 7. Edelweiss Tokio Life Insurance Co. Ltd.
• Birla Sun Life Pension Management Ltd 8. IndiaFirst Life Insurance Co. Ltd
9. Canara HSBC OBC Life Insurance Co. Ltd.
10.Kotak Mahindra Life Insurance Co. Ltd.

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Fund performance (back)
CAGR for 1 year for the various PFMs (as on January 31, 2020)

Scheme Tier SBI UTI LIC Kotak ICICI HDFC Birla Sun Life
E – Equity I 8.89% 8.52% 8.88% 12.16% 10.52% 12.76% 12.08%
C – Corporate Debt I 11.62% 10.62% 11.20% 9.63% 10.74% 12.17% 12.00%
G – Government Securities I 12.82% 13.27% 14.29% 12.90% 12.57% 12.89% 12.95%
CAGR for 5 year for the various PFMs (as on January 31, 2020)

Scheme Tier SBI UTI LIC Kotak ICICI HDFC Birla Sun Life
E – Equity I 6.83% 7.25% 5.66% 7.15% 6.71% 7.83% -
C – Corporate Debt I 8.88% 8.55% 8.84% 8.53% 9.10% 9.10% -
G – Government Securities I 9.00% 8.65% 9.89% 9.15% 8.86% 8.88% -
EPF Returns
Schemes 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19* 2019-20*
Provident Fund 8.75% 8.75% 8.80% 8.65% 8.55% 8.65% 8.50%
Source: http://www.npstrust.org.in/
• Returns are CAGR – Compounded Annual Growth Rate.
• The returns have been calculated with NAV declared by the respective fund house.
• For latest available fund returns, click here.
* Declared in March 2020 – yet to be credited.

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Asset classes (back)
Active Choice: Choose allocation

Up to 100% in G Up to 100% in C Up to 75% in E (Equity) Up to 5% in A

G (Government
Securities) C (Corporate Bonds)
E A (Alternative
Investments)

Auto Choice: Choose Life Cycle Fund

(default allocation based on age)
Conservative Life Cycle Fund Conservative Life Cycle Fund Conservative Life Cycle Fund
(LC-25) (LC-50) (LC-75)
Conservative Life Cycle Fund (LC-25) Moderate Life Cycle Fund (LC-50) Aggressive Life Cycle Fund (LC-75)
20% 15%
30%
10% 45%
50%

% allocation
% allocation

% allocation
60%
30%
80% 75%
90%
45% 20%
20% 75%
25% 50%
35% 10%
25% 30% 10%
15% 5% 10% 15%
5%

35 45 55 35 45 55 35 45 55
Age (years) Age (years) Age (years)

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NPS charges (back)
Intermediary Charge head Service charges Method of Deduction
Initial subscriber registration INR 0

Contribution uploads: 0.1%,

POP – HDFC Pension Initial contribution uploads, and To be included in your payroll
minimum INR 20
subsequent contribution deduction

other non-financial transactions INR 0

PRAN Generation INR 39.36

Central Recordkeeping Agency Annual maintenance cost Through cancellation
INR 57.63
(KFintech ) per account of units
Charge per transaction INR 3.36

Custodian Asset servicing 0.0032% p.a.

PFM charge Investment management fee 0.01% p.a. Through NAV deduction

NPS Trust Reimbursement of expenses 0.005% p.a.

Note: Charges under NPS are defined by the regulator and are exclusive of GST (18%).

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Benefit payment – withdrawal and exit
(back)
Lump
Usage of Corpus Pension
Sum Current Proposed*
Min of
Before age 60 Up to 20% Amount
80% Head Amount (INR)
(INR)
Min of
At age 60 Up to 60% Amount at exit 100 100
40%
At age before 60 Commuted 60 60
(balance < INR 100,000) Option to take all as a Tax free 40 60
At age at or after 60 lump sum
(balance < INR 200,000) Tax on 20 0
Tax@30% 6 0
Optional deferment of proceeds at Up to age Up to 3
retirement 70 years
Cash 54 60

Partial withdrawal 25% NA Annuitized 40 40

* Proposed in Budget 2018, not yet notified.

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Annuity options (back)
Annuity Option Description

Life Annuity • Annuities payable for annuitant’s life

Life Annuity with Return • Annuities payable for annuitant’s life

of Purchase Price • Return of original purchase price to beneficiary on annuitant’s death

• Annuities payable to annuitant/ beneficiary for 5/10/15 years irrespective

Life Annuity Guaranteed
of the annuitant’s existence
for 5, 10, or 15 years
• If annuitant lives beyond the stated years, annuities payable for his/her life

• Annuities payable to annuitant for life and after death to his/her spouse
Joint Life Last Survivor
(if alive) for life

• Annuities payable to annuitant for life and after death to his/her spouse (if
Joint Life Last Survivor with Return of
alive) for life
Purchase Price
• Original purchase price returned to beneficiary on spouse’s death

Click here to see an illustration.

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Illustration of annuity amounts (back)
60-year-old male with a purchase price of INR 1,000,000 and annuity is payable monthly.
S. No. Annuity Option LIC ICICI Prudential Life HDFC Life SBI Life
1 Life Annuity 7,083 6,600 7,100 7,648
2 Life Annuity with ROP 5,150 5,100 5,600 5,718
3 Life Annuity GT for 5 years 7,025 6,600 NA 7,586
4 Life Annuity GT for 10 years 6,892 6,500 NA 7,432
5 Life Annuity GT for 15 years 6,692 6,400 NA 7,218
6 JLLS without ROP 6,125 5,400 NA 6,718
7 JLLS with ROP 5,125 5,100 5,500 5,678
• ROP – Return of Purchase Price or Return of Capital
• JLLS – Joint Life Last Survivor
• GT – Guarantee Period
• Annuity rates are assumed at a band of INR 200,000. A higher purchase price will have higher annuity rates.
• SBI life annuity rates are assumed at a band of INR 500,000.
• The value mentioned in the table are monthly annuity payouts in INR.
The rates mentioned above are meant for illustrative purposes and may have been revised by the providers.

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Thank you