Policy for Prevention and Reporting of Fraud Under NPS Architecture for Government Sector and its implementation: PFRDA

Policy for Prevention and Reporting of Fraud Under NPS Architecture for Government Sector and its implementation: PFRDA Circular dated 20.12.2023

PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY

File No. PFRDA-09/01/0003/ 2023-SUP-SG

Date: 20.12.2023

To,

PCDA (Western Command), Chandigarh,
Sector 9 C,
Chandigarh,
Chandigarh, 160009.

Dear Sir/Madam,

Subject: Request for framing a policy for Prevention and Reporting of Fraud Under NPS Architecture for Government Sector and its implementation.

You may be aware that, the NPS is mandatory for Central Government employees (except armed forces) joining services on or after 1st January 2004. Subsequently, most of the State Governments have also adopted NPS at different dates for their employees.

2. The Central Civil Services (Implementation of National Pension System) Rules, 2021 notified on 30.03.2021 by DoP&PW, provides for specific roles and responsibilities of nodal offices under the NPS architecture, including the penal provisions, in case of any deviation.

3. It is almost two decades since the Central Government and most of the State Governments (including Autonomous bodies under it) adopted NPS for their underlying employees and the sector has also witnessed substantial growth in terms of the number of Subscribers and its associated Assets under the Management (AUM).

4. The corpus of individuals has also grown and hence the need for greater vigilance against fraudulent activities. Fraudulent activities can range from misappropriation of funds to identity theft and unauthorized access to individual NPS accounts. These actions can lead to severe financial losses for both individuals and the pension system as a whole.

5. To address these risks and uphold the integrity of the NPS, there is an urgent necessity for the establishment of the “Framework for Prevention and Reporting of Fraud Under NPS Architecture” for Nodal offices of Central/State Government (including autonomous bodies under it).

6. In view of the above, you are hereby requested to examine and take up the matter with your concerned Administrative Department/ Ministry for framing a policy for the Prevention and Reporting of Fraud Under NPS Architecture for the Government Sector and its implementation.

7. The objective of the above-mentioned “Anti-fraud Policy” is to set guidelines as measures of prevention and reporting of fraud to your administrative controlling offices, Law enforcement Agencies, and Authority. The framework shall interalia aims to achieve the following:

I. Fraud Prevention: Evolve mechanisms to clearly Identify fraud and implement swift and effective mechanisms to mitigate the risk of fraud within the entity. This involves internally promoting a strong culture of fraud prevention, implementing robust controls, and raising awareness among all stakeholders.

II. Timely Detection: Enhance monitoring, data analytics, and reporting mechanisms to facilitate the early detection of fraudulent activities within the entity.

III. Subscriber protection : safeguard the interests of subscribers and beneficiaries by ensuring that intermediaries within the NPS Architecture adhere to high and diligently protect the interest of the subscriber. This objective aims to enhance subscriber confidence and maintain integrity. Further, immediate measures are to be taken to stop the cascading impact of fraud to contain further monitory loss, once it is detected.

IV. Recovery and indemnification: To establish provisions to recover the monetary loss caused on account of fraud and provision for indemnifying the affected parties.

V. Regulatory Compliance: Promote compliance with provisions of the PFRDA Act 2013, rules, regulations, and guidelines issued by the Authority from time to time. The objective is to ensure that all entities operating within the system fulfil their obligations and responsibilities in effectively combating fraud.

VI. Continuous Improvement: Foster a culture of continuous improvement by regularly reviewing and updating the framework in response to evolving fraud risks, technological advancements, and emerging industry practices.

VII. Reporting of Fraud: The fraud after detection is to be reported to your administrative controlling offices, Law enforcement Agencies, and “The Surveillance and Investigation Department of Authority. In this regard, the suggestive format and frequency for reporting fraud to PFRDA are as below.

8. A copy of the Fraud Risk management Policy for Intermediaries(in Hindi and English) is available on PFRDA website and English version of the same is attached herewith for ready reference please. We would be glad to provide any clarification , if required.

Yours Sincerely,

(Vikas Kumar Singh)
Chief General Manager

Source: PCDAWC