Indians today constantly work to fulfil two life goals – financial security and a comfortable retirement. The National Pension System (NPS) is a trustworthy companion on their journey towards a worry-free future. Since its inception in 2003, the Pension Fund Regulatory and Development Authority (PFRDA) has worked tirelessly to improve the NPS and make it accessible to all. In 2009, every Indian gained the ability to plan a financially secure retirement through the NPS. If you’re ready to take charge of your financial future, read on to learn how to open NPS account.
What Is the NPS?
The National Pension System is a voluntary, long-term retirement savings scheme initiated by the Government of India and regulated by the Pension Fund Regulatory and Development Authority (PFRDA). Individuals use the NPS to contribute towards their pension fund and earn a regular income once they retire.
Who Is Eligible to Join the NPS?
You can open an NPS account if you are an Indian citizen between 18 and 70 years of age who has completed the KYC process.
Types of NPS Accounts
Individuals can choose to open two types of NPS accounts.
Tier I Account
The primary NPS account is the Tier I account. It offers tax benefits on contributions and limits withdrawals. Every NPS subscriber must have a Tier I account. The amount you contribute gets invested in various funds of your choosing. The returns are market-linked and may come with inherent risks. However, you can select low-risk investment options to enjoy steady returns.
Tier II Account
Individuals can choose to open the optional Tier-II savings account. The account allows unrestricted withdrawals but does not offer tax benefits.
How to Open NPS Account
Follow these quick steps to open an account online:
- Visit the HDFC Pension official website.
- Choose a Central Record Keeping Agency (CRA) and click the Buy Now button.
- Enter your details in the form and use an OTP to verify your mobile number.
- Select the NPS Tier I Account.
- Choose a fund manager.
- Choose your investment mode.
- Provide your nominee’s details.
- Upload the required documents.
- Make a minimum contribution of Rs. 500 to register and generate your PRAN.
You can also register for the NPS offline. Visit your nearest Point of Presence – Service Provider (PoP-SP) for a registration form. Submit the completed form with the required documents at the PoP-SP. Make the minimum payment via Demand Draft (DD) or cheque to complete the registration process.
What Documents Do I Need to Open NPS Account?
It’s a good idea to get your paperwork ready in advance. You need the following documents to open your NPS account:
- Permanent Account Number (PAN) Card
- Aadhaar Card
- Address Proof
- Identity Proof
- Passport-Sized Photographs
What Are the Benefits of Opening NPS Account
It’s easy to see why the NPS has become the preferred method to plan for retirement. Once you open NPS account, you can enjoy:
Flexibility and Control
NPS lets you choose the best investment option based on your requirements. You can switch from one fund to the next to maximize your returns based on dynamic market conditions and your evolving risk appetite.
The NPS is regulated by the PFRDA, ensuring transparency, security, and proper governance.
You can claim deductions of up to Rs. 2 lakhs per year against contributions towards your NPS account under Section 80C of the Income Tax Act. Partial withdrawals and withdrawals at retirement are also tax-exempt.
When you open an NPS account, you take the first steps towards a secure and stable financial future. Once you understand how to open NPS account, you can start investing and building a corpus to meet your retirement goals. Planning for retirement is a long-term commitment. The sooner you start, the better. Open your NPS account today and pave the way for a comfortable and financially independent retirement.