National Pension Scheme (NPS)/ New Pension Scheme

National Pension Scheme (NPS) is a voluntary retirement scheme which aimed to secure future in the form of Pension. The main aim of this scheme is to provide regular income after the retirement to the contributors. Governing body of this scheme is PFRDA (Pension Fund Regulatory and Development Authority). This is a long term investment plan and initiated by the central Government.

Nature of National Pension Fund (NPS):

1.       It is a unique scheme launched by Central Government of India.

2.   It is administered and regulated by Pension Regulatory and Development Authority    (PFRDA), which was setup under PFRDA Act, 2013.

3.     It is safe and provide reasonable market based returns.

4.   A contributor can contribute regularly in pension account during their working life and can withdraw a part of corpus in slump sum and use remaining amount to buy annuity for guaranteed life time income.

Who can join NPS Scheme?

·         Any Indian citizen NRI or Non NRI can join this scheme.

·         Minimum age to join is 18 years and maximum age limit is 70 years.

·         Overseas citizen of India (OCI), Persons of Indian Origin (PIOs) and Hindu Undivided    Families (HUFs) are not eligible to join to NPS.

    Models of NPS Accounts

     There are two types of account under NPS

1.  All Citizen Model: In this model account holder is the only contributor. 

2. Corporate Model: In this model both account holder and employer can contribute.

 

NPS Administration Structure

Who can Open NPS Account

A Citizen of India age between 18-70 years can open NPS account. This pension program is open to employees from the public, private and for unorganized sector also.

NPS Advantages and Features

1.       Tax Benefits:There are multiple tax benefits available under NPS.

1.    High Returns:

If offers high returns compared to other traditional saving investment plans like Public Provident Fund (PPF). However, it is not offer guaranteed returns. Generally, it provides 9-12% annual returns. A portion of the amount goes to equity.

Active Choice: In this option subscriber have the option to decide where he want to invest his fund.

There are various funds available under active choice option of National Pension Fund (NPS)

 

·         Government Securities (Class G)

·         Corporate Bonds (Class C)

·         Equity (Maximum Limit 75%) (Class E)

·         Alternate Fund (Maximum Limit 5%) (Class A)

Auto Choice (Lifecycle Fund):

NPS offers an easy option for those participants who do not have the required knowledge to manage their NPS investments.In this option, the investments will be made in a life-cycle fund.

          In auto choice option 3 life cycle funds are available.

a)      Aggressive: In this investment in equity starts with 75% till age 35 and gradually reduces as per the age of the subscriber.

b)      Moderate:  In this investment in equity starts with50% till age 35 and gradually reduces as per the age of the subscriber.

c)       Conservative: In this investment in equity starts with 25% till age 35 and gradually reduces as per the age of the subscriber.

If subscriber not choose any option mentioned above than default auto choice will be provided which is moderate option 

2.    Liquidity:

Under liquidity option both partial withdrawal and Exit is allowed in National Saving plan (NPS).

(a)    Partial Withdrawal 

A person can withdraw 3 times from the corpus after completing 3 years of contribution. Contributor can withdraw up to 25% of the corpus excluding contribution made by employer & growth generated, in below circumstances.

 

·         Education of self & children

·         Marriage of children

·         Critical illness of self/spouse/children

·         Construction /purchase of residential property

·         For starting a business 

(b)   Exit from Scheme

            There are 3 types to exit

Upon reaching 60 years:

1.       After reaching the age of 60 years you can exit from National Pension Scheme (NPS).  You can withdraw maximum 60 % as lump sum amount of total corpus.

2.       Rest 40 % amount should be used to buy annuity.

3.       If total corpus is less than Rs. 5 lacs then full amount is allowing to withdraw.

Exit before reaching 60 Years (Voluntary Retirement)

1.       This option is available after 5 years of NPS account opening.

2.       Max 20 % amount is allowed to withdraw as lump sum and it is tax free.

3.       Min 80 % of the corpus should be used to buy annuity.

4.       If the corpus is Rs. 2.5 Lacs then full amount is allowed to withdraw.

Upon death:

1.       100 % NPS amount paid to nominee or the legal heir of the deceased member. The nominee can choose to buy annuity also.

However, the subscriber has the option to defer the lump sum withdrawal till the age of 75 years. This option is required to be exercised up to 15 days prior to completion of 60 years. 

3.    Flexibility:

NPS scheme is very flexible. It is providing many options and features.

1.       Choose tier I only or Tier 1 & 2 both:

Tier I: Thisaccount is called pension account. In this contribution of Rs. 50000 is eligible for tax deduction under section 80CCD (1B). This is extra and above the limit of Rs. 1.50 Lacs under section 80C.

Tier II: Additional amount can be investing in this account. In this subscriber is completely free to withdraw any amount at any point of time. This amount is not eligible for tax benefits. Tier II amount can be transfer to Tier I.

Particulars	Tier I (Rs.)	Tier II (Rs.)
Minimum amount to open account	500	1000
Minimum amount to contribute every year	1000	N.A
Minimum subsequent contribution	500	250

4. Portable: 

It is portable scheme; you can operate your NPS account anywhere in the country. Contribution can be made from any POP-SP branch. NPS account can be transfer from one sector to another sector like government Sector to private sector or from one employer to another employer in same sector.

5.    Low Costing:

NPS is considered to be the world’s lowest cost pension scheme. Administrative charges and fund management fee are also lowest. ​

6.    Some other Features:

·         NPS mobile application is available for subscriber to check their NPV (Net Asset value) and other information.

·         NPS is also available in SIP mode. You can choose monthly option to invest.

·         Both online and offline option to join NPS is available.

Permanent Retirement Account Number (PRAN)

National Pension System (NPS) is based on unique Permanent Retirement Account Number (PRAN) which is allotted to every subscriber. In order to encourage savings, the Government of India has made the scheme reassuring from security point of view and has offered some attractive benefits for NPS account holders.

This is a unique number provided to subscriber of NPS account. You can get your PRAN by following below mentioned steps.

1.    Take application from any Point of Presence - Service Providers (POP-SP). Both online and offline facility to get application form is available.

2.    Fill application form with all necessary details, photograph and attached KYC document such as identity proof and address proof and submit it to nearest POP-SP center.

3.    PRAN card will be sent to your correspondence address filled in application form.

How to Log in first time with Permanent Retirement Account Number (PRAN)?

·         To log in first time, visit official portal of NSDL CRA, enter your PRAN number, date of birth, password, confirm password and captcha and then submit.

·         After submit an IPIN will be generated, login to NSDL eNPS page and click on link login with PRAN/IPIN. Fill PRAN or IPIN details and submit.

For more Help about NPS you can contact on below details

NPS Customer Care Number

NPS Call Centre Number: 1800 110 708

NPS SMS Number: NPS to 56677

NPS Toll-Free Number For Registered Subscriber (with PRAN): 1800 222 080