NPS
What is NPS?
National Pension System in India (NPS) is an initiative by the Pension Fund Regulatory and Development Authority (PFRDA) to develop retirement savings amongst the citizens of India. It is a voluntary, contribution scheme / Plan which allows an individual to contribute during his working life, build a corpus and enjoy regular income in the form of pension and lump sum withdrawal post retirement. Now Corporate Entities can also contribute to their employees pension account under “NPS – Corporate Sector Model”. NPS is the best national pension plan in India.
Greater the value of investment made, longer the term over which the fund accumulates and the lower the charges deducted, the larger would be the eventual benefit of the accumulated pension wealth. You can also contribute to your fund nps india online.
Open a NPS account:
Select any one NPS Service Provider
Why NPS?
The main objectives of NPS are
- To provide income for old age
- Reasonable market based returns over the long term period
Under the NPS, an individual’s savings is pooled in a pension fund. These funds are invested by Pension Fund Regulatory and Development Authority (PFRDA) regulated Professional Fund Managers in the diversified portfolios comprise of government bonds, bills, corporate debentures and shares. These contributions would grow and accumulate over the years, depending on the returns earned on the investment made.
At the time of a normal exit from NPS, the subscribers may use the accumulated pension wealth under the scheme either to purchase a life annuity from a PFRDA empanelled life insurance company or withdraw a part of the accumulated pension wealth as lump-sum, if they choose to do so.
The National Pension System or NPS is one of the most cost effective retirement planning investment options available to an individual today.
NPS – Architecture:
NPS has an unbundled architecture where each function is performed by different entities as mentioned below
- Point of Presence – Points of Presence (POPs) are the first points of interaction of the NPS subscriber with the NPS architecture. The authorized branches of a POP, called Point of Presence Service Providers (POP-SPs), will act as collection points and extend a number of customer services to NPS subscribers
- Central Recordkeeping Agency – The recordkeeping, administration and customer service functions for all subscribers of the NPS are being handled by NSDL e-Governance Infrastructure Limited & KFin Technologies Private Ltd, who are acting as the Central Record-keepers for the NPS.
- Pension Fund Managers – The Pension Funds (PFs) appointed by PFRDA would manage your retirement savings under the NPS
- Annuity Service Providers – ASPs would be responsible for delivering a regular monthly pension to you after your exit from the NPS
- Trustee Bank – The Trustee Bank appointed under NPS shall facilitate fund transfers across various entities of the NPS system viz. PFMs, ASPs, Subscribers, etc. Axis Bank has been appointed as the Trustee Bank
- NPS Trust – The NPS trust has been set up and constituted for taking care of the assets and funds under the NPS in the interest of the beneficiaries (subscribers)
- PFRDA – An autonomous body set up by the Government of India to develop and regulate the pension market in India
Eligibility Criteria for Subscriber
A citizen of India, whether resident or non-resident can join NPS subject to the following conditions:
- Subscriber should be between 18 – 70 years of age as on the date of submission of his / her application.
- Subscriber should comply with the prescribed Know Your Customer (KYC) norms as detailed in the Common Subscriber Registration Form (CSRF).
- pre-existing account holders under NPS cannot join again as existing account is portable across geographies.
Benefits of NPS:
1. FLEXIBILITY IN CONTRIBUTIONS:
A subscriber has the flexibility to alter his contributions on a yearly basis subject to minimum contribution being ₹1000 p.a for a Tier 1 account.
It also allows flexibility to contribute lumpsum amounts whenever an investor chooses to do so. For example on certain occasions like receipt of a bonus, maturity of a FD / Life Insurance plan a subscriber can make a onetime lumpsum contribution.
A subscriber can also choose to gradually increase his contributions as his income goes up i.e link contributions to one’s earnings, or as he gets closer to his retirement.
2. REGULATED
NPS is regulated by PFRDA, with transparent investment norms, regular monitoring and performance review of fund managers by NPS Trust.
3. CHOICE OF FUND MANAGERS
A subscriber has the option to choose from any of the 10 fund managers; further a subscriber can change his fund manager on a yearly basis. This provides the subscriber an option to invest funds with the best performing fund manager.
- ADITYA BIRLA SUN LIFE Pension Management Limited
- Axis Pension Fund Management Limited
- DSP Pension Fund Managers Private Ltd
- HDFC Pension Management Company Ltd.
- ICICI Prudential Pension Funds Management Company Limited
- KOTAK MAHINDRA Pension Fund Limited
- LIC Pension Fund Limited
- MAX LIFE Pension Fund Management Limited
- SBI Pension Funds Private Limited
- TATA Pension Management Limited
- UTI Retirement Solutions Limited
4. PORTABILITY
A subscriber can operate his account from anywhere in the country. A large number of entities working as Points of Presence or POPs licensed by the PFRDA provide easy access as NPS service centers. A subscriber can therefore operate his or her account even if he or she has moved cities, changed jobs or Pension Fund Managers.
5. TAX BENEFITS
From Investment to Exit, NPS offers exclusive tax saving opportunities.
- Investment in NPS is eligible for Income Tax benefit u/s 80CCD(1) upto Rs.1,50,000/-. This is within the overall limit of Rs.1,50,000/- u/s 80C & 80CCC.
- An additional exclusive Tax Benefit of upto Rs.50,000/- u/s 80CCD (1B).
- Upto 10% of Salary (Basic + DA) on Employer’s Contribution to Employee’s Account u/s 80CCD(2). Such a contribution is also allowed as a deductible expenditure in the hands of the Employer.
- Amount transferred for the purchase of Annuity is TAX FREE.
- Lumpsum amount withdrawn (upto 60%) at exit is TAX FREE.
In short, Investment in NPS enjoys Triple Tax Benefit viz.,
- Tax Benefits on Contributions made.
- No Tax in the growth and accumulation phase.
- No Tax at the time of exit.
CHARGES UNDER NPS
| SL NO | DESCRIPTION | FEES | GST | TOTAL | REMARKS |
| 1 | Initial Subscriber Registration Charges | 400 | 72 | 472 | |
| 2 | Initial Contribution Upload Charges | 30 | 5.40 | 35.40 | 0.50% of The Contribution Amount Subject to a Min of Rs.30/- and a Maximum of Rs.25000/- |
| 3 | Any Subsequent Contributions | 30 | 5.40 | 35.40 | 0.50% of The Contribution Amount Subject to a Min of Rs.30/- and a Maximum of Rs.25000/- |
| 4 | Any Other Transaction Not Involving a Contribution Upload | 30 | 5.40 | 35.40 | |
| 5 | Processing of Exit / Withdrawal Form | 0.125% of Corpus with Min. Rs.125/- & Max. Rs.500/- |
Open a NPS account:
To invest in NPS, you will be required to open a NPS account through the Point of Presence (POP) – INTEGRATED 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. Proof of Address, Proof of ID and Proof of DoB is required to be submitted along with the duly filled-in form.
Points of Presence (POPs) are the first points of interaction of the NPS subscriber with the NPS architecture. The authorized branches of a POP, called Point of Presence Service Providers (POPSPs), will act as collection points and extend a number of customer services to NPS subscribers including requests for withdrawal from NPS.
Select any one NPS Service Provider
Terms: Referral links
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