PFRDA Mandates Audits for National Pension System Points of Presence

The Pension Fund Regulatory and Development Authority (PFRDA) has directed Points of Presence (PoPs) offering National Pension System (NPS) services to subscribers to get their NPS operations audited by a chartered accountant or an audit firm.

The audit will check whether PoPs, such as banks, financial institutions and intermediaries, are following NPS rules, complying with Know Your Customer (KYC) norms, handling NPS subscriber money, resolving grievances timely and maintaining records properly.

The order will be effective from April 1, 2026, to March 31, 2027.

PFRDA said that the audit frequency of PoP records will depend on their subscriber base.

The pension body has issued similar circulars to PoPs providing NPS Lite and Atal Pension Yojana (APY) services.

What does PFRDA circular order to PoPs offering NPS services?

The PFRDA circular says: “PoPs performing activities of NPS (PoPs-NPS) shall ensure that the accounts and processes maintained under NPS are audited as per the provisions of Operational Guidelines issued vide Circular dated February 27, 2026, issued under PFRDA (PoP) Regulations, 2018 and amendment thereof and as per the periodicity prescribed by the Authority by an independent external chartered accountant/audit firm.”

Which records should PoPs maintain for audit?

PFRDA says PoPs must maintain books of accounts and records including electronic records and documents as stipulated in the regulations issued by the pension body from time to time.

What will be the frequency of the audit of PoPs’ records?

For the submission of an audit report, PoPs have been categorised based on the number of associated subscribers as on the last day of the financial year. The same will apply from the period of April 1, 2026, to March 31, 2027.

The following table lists the categories for the same.

Category Subscriber base Audit frequency Due date of first audit report I Less than 10,000 Once in three financial years (covering all three years) June 30, 2029* II 10,000 and above Every financial year 30-Jun-27

*Applicable if the audit report for FY2025-26 has already been submitted.

The regulator has also provided relief to very small PoPs. Entities having fewer than 100 NPS accounts will not be required to submit an audit report. However, once such a PoP acquires 100 or more subscribers, it will have to submit audit reports for all preceding financial years as well.

Failure to submit report may invite regulatory action

The regulator has clarified that audit reports submitted by PoPs will be reviewed and appropriate action may be taken if the reports do not meet the prescribed requirements.

Key areas that auditors will examine

Auditor will conduct the audit of the PoP for activities related to NPS including NPS Vatsalaya.

The audit will cover key areas of PoP operations, including subscriber onboarding under NPS and NPS Vatsalya, compliance with KYC and anti-money laundering norms, collection and processing of contributions, uploading of Subscriber Contribution Files (SCFs), and timely transfer of funds to the Trustee Bank.

It will also examine the maintenance of collection accounts and books of accounts, reconciliation of subscriber contributions, handling of unreconciled amounts pending for over seven years, grievance redressal, processing of service requests and withdrawals, adherence to turnaround times (TATs), payment of compensation for delays, compliance with prescribed charges, engagement of pension agents, information and cyber security measures, fraud prevention systems, and the status of observations raised during PFRDA inspections over the past three financial years.