About NPS

 

A citizen of India, whether resident or non – resident can join the NPS subject to following conditions:

  1. Subscriber should be between 18 – 65 years of age as on the date of submission of her application.
  2. Subscriber should comply with the prescribed Know Your Customer (KYC) norms as detailed in the Subscriber Registration Form for NPS.

NRIs and OCIs can join NPS. However, HUF and PIO cannot.

The scheme is based on unique Permanent Retirement Account Number (PRAN) which is allotted to each Subscriber upon joining. Subscriber contributes towards NPS (directly or through the Employer he/she is working with) during his/her working life. On retirement or exit from the scheme, the Corpus is made available to him/her with the mandate that some portion of the Corpus must be invested in to Annuity to provide a monthly pension post retirement or exit from the scheme.

 

NPS Accounts

 

No. At a time the subscriber can have only one NPS account.  The NPS Account number which is also called PRAN is fully portable across job and geography.

No. Tier II NPS Account is optional to the Subscriber. Subscriber can open Tier – II NPS Account later on as well.

No. Active Tier – I NPS Account is a must criterion for opening Tier – II NPS Account. Subscriber cannot apply for only Tier – II NPS Account.

Investment Of Funds Under NPS

 

There are two investment options available under NPS:

Active Choice: under this option, Subscriber gets the flexibility to choose her own asset allocation across Equity, Corporate Bonds, Government Securities and Alternative Investment Funds.Investment in Equity is restricted to 75% of Contribution amount. However, in Corporate Bonds and Government Securities Subscriber can invest 100% of Contribution amount. Please click here to know more.

Auto Choice: under this option investment across Equity, Corporate Bonds and Government Securities is done as per the age of the Subscriber as per this chart. Please click here to know more.

NPS returns are market linked. Depending on the returns generated under Equity, Corporate Bonds, Government Securities and Alternative Investment funds, the Corpus will be created.

Yes. Subscriber can switch the asset allocation pattern under Active Choice twice in a financial year.

Yes. Subscriber gets this flexibility. This can be done twice in a financial year.

Joining NPS

 

Yes. For account opening, a minimum contribution is required as shown below: For Tier I account opening: Rs. 500. For Tier II account opening: Rs. 1,000. If Subscriber is opening Tier I and Tier II account simultaneously, minimum Rs.1,500 needs to be deposited as initial contribution. However in order to avail of tax benefit u/s 80CCD (1B) you can deposit Rs. 50K at once in Tier I Account.

 

Contribution Towards NPS Accounts

 

There is no restriction in terms of frequency of contribution. Subscriber has the option to make the contribution in any mode – monthly, quarterly, half yearly or yearly. Also, subscriber can set NPS SIP by clicking here.

Yes, NPS offers this flexibility. Subscribers are allowed to alter the contribution amount as per the suitability. An annual contribution of Rs. 1000/- must be deposited to keep the account active.

Yes, once the contribution is credited to Subscriber’s NPS account, an email alert as well as a SMS alert is sent to the registered email ID and mobile number of the Subscriber.

Account Maintenance

 

Yes. An annual statement containing details of the unit holdings is issued by CRA to Subscriber’s registered address within 3 months of the end of every financial year.

Yes. In case of loss or damage of PRAN Card, the Subscriber needs to submit a duly filled S2 form to the POP for issuance of duplicate PRAN Card. Rs.50 plus applicable Service Tax will be deducted by CRA for issuing duplicate PRAN.

Non Fulfillment Of Required Contribution Criteria

 

Yes, if Tier I account of an Subscriber is frozen because of non fulfillment of criteria, Tier II account is automatically get frozen.

Subscriber can unfreeze the NPS Account by paying Rs.500 as minimum contribution amount and Rs.100 as penalty. POP charges to be added to it.

Partial Withdrawal From NPS Account

 

Subscriber is allowed to withdraw from Tier I NPS account twice after a gap of 5 years after first withdrawal

Withdrawal from Tier – I NPS account would be permitted for specific purposes like Child’s marriage, higher education, treatment of critical illnesses etc.

In order to withdraw from Tier – II NPS Account, the Subscriber needs to submit a duly filled UOS-S12 form to the associated POP branch.

Exit From NPS

 

Primary objective of Tier – I NPS Account is to create a Corpus which can be used at the time of retirement to buy pension for the Subscriber / Nominee. Hence, there is a restriction imposed on lump sum amount accessible to Subscriber on exit as mentioned below.

Exit before the age 60 years Exit at the age 60 years
  • Up to 20% of Corpus can be withdrawn in lump sum
  • Balance amount needs to be invested in Annuity
  • Up to 60% of Corpus can be withdrawn in lump sum
  • Balance amount needs to be invested in Annuity
If the Corpus is less than or equal to Rs.1 lakh, there is no need to invest into Annuity. Entire amount can be withdrawn in lump sum If the Corpus is less than or equal to Rs.2 lakhs, there is no need to invest into Annuity. Entire amount can be withdrawn in lump sum

In case of exit from NPS on retirement age defined by the Corporate, Subscriber can defer the withdrawal option till 10 years depending on the market condition. Subscriber can withdraw this amount either in lump sum or take the same in 10 installments before attaining the age 70 years.However, in case of pre – mature exit from NPS (before attaining the age of 60 years), Subscriber does not have option to defer the option.

The fund would continue to remain invested. The Pension Fund Manager, Scheme Preference and Asset Allocation Pattern will remain the same as these were at the time of vesting.

Investment In Annuity

 

In case of pre-mature withdrawal, Subscriber needs to invest in Annuity immediately. Depending on the Annuity Plan he / she has invested in, annuity would start.

It will depend on the kind of annuity plan opted for the Subscriber. For an example, if the annuity plan is joint life annuity plan, on death of Subscriber, the spouse will get the annuity till he / she is alive.

Death Proceedings

 

The beneficiary needs to submit the request to POP.

Charges Under NPS

 

No, the POP charges would be deducted from the Contribution amount.

Transactions like change of address, contact details etc are called non – financial transactions.

Subscriber needs to pay Rs.20 + Service Tax by Cheque at the time of submitting request for process any Non – Financial transaction.

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