National Pension System (NPS) is an investment cum pension scheme initiated by Government of India to provide old age security and pension of all citizen of India. The NPS was rolled out for all citizens of India on May 01, 2009. The Scheme is regulated by Pension Fund Regulatory and Development Authority (PFRDA).
A citizen of India, whether resident or non – resident can join the NPS subject to following conditions
No, HUF, OCI and POI are not allowed to join NPS
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 she is working with) during her working life. On retirement or exit from the scheme, the Corpus is made available to 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
|Tier I NPS Account||Tier II NPS Account|
|It is also known as Pension account||It is known as investment account|
|Withdrawal from this account is permitted after 10 years of account opening or attaining the age 60 years whichever comes early||Withdrawal from this account can be done at any point of time as per Subscriber’s need|
|Minimum annual contribution required for this account is Rs. 1000||NA|
No. In the entire life span Subscriber will be allowed to open 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
NPS offers 3 funds to Subscribers
NPS restricts investment towards Equities Fund to 50% of contribution amount for both Tier I and Tier II NPS Accounts. However, Subscriber can invest up to 100% in Corporate Bonds or Government Securities Fund.
There are two investment options available under NPS
LC 75 – Aggressive Life Cycle Fund
|Age||Asset Class E||Asset Class C||Asset Class G|
|Up to 35 years||75||10||15|
|55 years & above||15||10||75|
LC 50 – Moderate Life Cycle Fund
|Age||Asset Class E||Asset Class C||Asset Class G|
|Up to 35 years||50||30||20|
|55 years & above||10||10||80|
LC 25 – Conservative Life Cycle Fund
|Age||Asset Class E||Asset Class C||Asset Class G|
|Up to 35 years||25||45||30|
|55 years & above||5||5||90|
The first allocation is made as per the age of the Subscriber at the time of joining the Scheme as shown in the chart. For example, if the entry age of Subscriber is 42 years, her allocation towards E, C and G would be 36%, 23% and 41% respectively. On the next date of birth of the Subscriber, the portfolio will be re-aligned as per the next level chart i.e for the age 43. The re-alignment of portfolio is system driven
NPS returns are market linked. Depending on the returns generated under Equity, Corporate Bonds and Government Securities 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.
yes, it is possible once in a financial year
subscriber needs to send duly filled NPS Application Form along with KYC documents (self attested copy of PAN card and Address Proof) and filled NCIS form to below address for account opening. Upon joining, Permanent Retirement Account Number (PRAN) is allotted to Subscriber. Further PRAN Card, IPIN and TPIN are sent to Subscriber address by CRA
Priyanka Jaisinghani, HDFC Pension Management Company Limited, 14th floor, Lodha Excelus, Apollo Mills Compound, N M Joshi Marg, Mahalaxmi, Mumbai – 400 011.
Yes. For account opening, a minimum contribution is required as shown below:
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
Subscriber can contribute towards NPS through any of the POPs by Cheuqe / Demand Draft / Cash.
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 make ad – hoc contribution as well.
Yes, NPS offers this flexibility. Subscribers are allowed to alter the contribution amount as per the suitability.
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
Yes. Subscriber needs to submit the request along with the Service Charge of Rs. 20 plus Service Tax to the POP for initiating the modification.
The same can also be obtained from CRA website: The link is https://npscra.nsdl.co.in/non-goverment-form.php
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
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
Subscriber can get POP branch to obtain the account statement. Subscriber can also view / print the SOTs by logging into CRA website https://cra-nsdl.com/CRA/ using the I-PIN
In case the Subscriber fails to contribute minimum Rs.1000 in Tier - I NPS Account, the PRAN is frozen. Once the PRAN is frozen, Subscriber is not allowed to do any transaction (financial / non – financial) in both - Tier - I and Tier - II NPS Accounts.
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.
Subscriber gets the following tax benefits on contributions
|NPS Account||Tax Benefit||Tax Treatment
Self Employed Professionals
|Tier II||There is no tax benefit on investment towards Tier II NPS Account||Indexation benefit can be claimed|
Yes. Subscriber can withdraw up to 25% of contributed amount towards Tier - I NPS Account after 10 years. Additionally, 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
Subscriber can exit from NPS after 10 years of account opening or attaining 60 years of age whichever is early.
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 Retirement age defined by the Corporate|
|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
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.
No, this option is not available.
Yes. Subscriber can use 100% of accumulated wealth to buy annuity plan
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
In case of death of the Subscriber, option will be available to the nominee to receive 100% of the NPS pension wealth in lump sum. In case, nominee is not there legal heir to the Subscriber can claim the corpus.
The beneficiary needs to submit the request to POP
There are various intermediaries involved under NPS. The charge for these intermediaries is regulated by PFRDA. Below are the details of charges under NPS (exclusive of Service Tax)
|Intermediary||Charge Head||Charge||Frequency of deduction||Mode of deduction|
|PoP||Subscriber Registration Charge||Rs.125||One time at the time of registration||Deducted from the initial contribution amount deposited by Subscriber|
|Contribution processing charge||0.25% of the Contribution amount subject to minimum Rs.20 and maximum Rs.25,000||On each transaction||Deducted from the amount deposited by the Subscriber|
|Non – Financial Transaction Processing Charge||Rs.20||On each transaction||Collected from Subscriber separately|
|CRA (NSDL)||NPS Account opening charge||Rs.40||One time||Collected by cancelling units on a quarterly basis|
|Account Maintenance charge||Rs.95||Annual|
|Financial transaction processing charge||Rs.3.75||On each transaction|
|Pension Fund Manager||Asset Management Charge||0.01%||Annual||Adjusted before NAV publication|
|Custodian||Asset Servicing Charge||0.0032%||Annual|
|NPS Trust||Trust Management Charge||0.01% (no Service Tax applicable)||Annual|
*subject to minimum Rs.20 and maximum Rs.25000 per PRAN per Transaction
**Service Tax is not applicable on Trust Management Charge.
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