What is NPS?

National Pension Scheme (NPS) is a retirement benefit scheme introduced by GOI (Government of India) to facilitate a regular income post retirement to all the subscribers. It is a voluntary and a long-term investment plan for retirement under the purview of PFRDA (Pension Fund Regulatory and Development Authority) and Central Government.

Benefits

Regulated

NPS is regulated by PFRDA ensuring transparent investment norms. Also it ensures regular monitoring & performance review of fund managers.

Voluntary

NPS is a voluntary scheme where subscribers can contribute at any point of time and can also change the amount he wants to set aside and save.

Flexibility

Subscriber gets flexibility to choose or change their own investment options & pension fund allowing user to optimize their returns as per their comfort.

Investment Diversification

Diversify your portfolio between equities and debt instruments & it also allows subscriber to choose from two investment options, Auto Choice or Active Choice.

Tax Benefits

The subscriber can claim any additional self-contribution up to Rs. 50000 under section 80CCD(1B). The total tax deduction is up to Rs. 2 lakhs.

Online Registration

Easy online account opening for both Tier I and Tier II accounts and get online access for investing and view your contributions.

How NPS Works?

FAQ's

Who can Join NPS?

Any citizen of India, whether resident or non-resident, subject to the following conditions: - Individuals who are aged between 18 – 60 years as on the date of submission of his/her application to the POP/ POP-SP. The citizens can join NPS either as individuals or as an employee-employer group(s) (corporates) subject to submission of all required information and Know your customer (KYC) documentation. After attaining 60 years of age, you will not be permitted to make further contributions to the NPS accounts.

How and where can I open a NPS account?

NPS is distributed through authorized entities called Points of Presence (POP’s) and almost all the banks (both private and public sector) are enrolled to act as Point of Presence (POP) under NPS apart from several other financial institutions. To invest in NPS, you will be required to open a NPS account through the Point of Presence (POP) and who will assist the subscriber in opening the account including the filling up of necessary forms, providing the information about NPS and any other relevant information in this regard.

What are the features of the retirement account provided under NPS?

The following are the most prominent features of the retirement account under NPS: Every individual subscriber is issued a Permanent Retirement Account Number (PRAN) card and has a 12 digit unique number. In case of the card being lost or stolen, the same can be reprinted with additional charges.

Under NPS account, two sub-accounts – Tier I & II are provided. Tier I account is mandatory and the subscriber has option to opt for Tier II account opening and operation.

What are the Types of NPS Account?

The two primarily accounts under NPS are Tier I and Tier II


Basis NPS Tier-I Account NPS Tier-II Account
Status Default Voluntary
Withdrawals Not permitted Permitted
Tax exemption Up to Rs 2 lakh P.a.(Under 80C and 80CCD) 1.5 lakh for government employees Other employees-None
Minimum NPS contribution Rs 500 or Rs 500 or Rs 1,000 p.a. Rs 250
Maximum NPS contribution No limit No limit

Can I have more than one NPS account?

No, multiple NPS accounts for a single individual are not allowed and there is no necessity also as the NPS is fully portable across sectors and locations.

How to withdraw the benefits available under NPS?

The subscriber wishing to exit from NPS has to submit a withdrawal application form to the concerned POP along with the documents specified for withdrawal of the benefits and the POP in turn would authenticate the documents and forwards them to CRA M/s NSDL. CRA in turn would register your claim and forward you the necessary application form along with the procedure to be followed and documents that need to be submitted. Once the documents are received, CRA processes the application and settles the account.

What is the difference between Active Choice and Auto Choice?

The NPS scheme allows you to diversify your portfolio between equity and debt instruments and offers its subscribers two approaches to invest.

  • Active Choice: If you choose this option you can actively decide as to how the NPS pension wealth is to be invested across Asset classes namely; Equity (up to 75%), Asset Class C (100%), Asset Class G (100%) and Asset Class A (5%). You will be allowed to change your asset allocation twice in a financial year.
  • Auto Choice: In this option, the investments will be made in a life-cycle fund. Here, the proportion of funds invested across three asset classes will be determined by a pre-defined portfolio (which would change as per age of subscriber). The equity exposure will automatically decrease as the age of subscriber increases.

There are three different options available within 'Auto Choice' -

  • Aggressive – LC 75- Equity exposure up to 75%
  • Moderate – LC 50- Equity exposure up to 50%
  • Conservative – LC 25- Equity exposure up to 25%