National Pension System (NPS), a brief

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 lumpsum 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 online.

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 empaneled life insurance company or withdraw a part of the accumulated pension wealth as lumpsum, 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.

Who can join?

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 lump sum 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 one-time lump sum 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 11 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.

‒Tax Benefit available to Individual:

Any individual who is Subscriber of NPS can claim tax benefit under Sec 80 CCD (1) with in the overall ceiling of Rs.1.5 lac under Sec 80 CCE.

Exclusive Tax Benefit to all NPS Subscribers u/s 80CCD (1B):

An additional deduction for investment up to Rs.50,000 in NPS (Tier I account) is available exclusively to NPS subscribers under subsection 80CCD (1B) This is over and above the deduction of Rs.1.5 lakh available under section 80C of Income Tax Act, 1961.

Tax Benefits under the Corporate Sector:

a. Corporate Subscriber: Additional Tax Benefit is available to Subscribers under Corporate Sector, u/s 80CCD (2) of Income Tax Act. Employer's NPS contribution (for the benefit of employee) up to 10% of salary (Basic + DA), is deductible from taxable income, up-to 7.5 Lakh.

b. Corporates: Employer’s Contribution towards NPS up to 10% of salary (Basic + DA) can be deducted as ‘Business Expense’ from their Profit & Loss Account. Please note: Tax benefits are applicable for investments in Tier I account only. What will be the investment proof to avail the tax benefit under NPS?

Fee Structure

CHARGES UNDER NPS

BY POINT OF PRESENCE (UPFRONT)
SL NO		DESCRIPTION	FEES	GST	TOTAL	REMARKS
	1	Initial Subscriber Registration Charges	400.00	72.00	472.00
	2	Initial Contribution Upload Charges	30.00	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	30.00	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	30.00	5.40	35.40
	5	Processing of Exit / Withdrawal Form				0.125% of Corpus with Min. Rs.125/- & Max. Rs.500/-

BY CRA
SL NO	DESCRIPTION	PROTEAN-CRA FEE	CAMS-CRA	REMARKS
1	PRAN Opening Charges (One Time)*	40.00	40.00	Through Cancellation of Units
2	Annual PRAN Maintenance Cost Per Account (Per Annum)	69.00	65.00	Through Cancellation of Units
3	Charges Per Transaction (Financial /Non-Financial)	3.75	3.50	Through Cancellation of Units
* In case a subscriber opts not to have a physical PRAN Card or Welcome Kit, reduced account opening charges of CRA are applicable as under:
4	Account opening with Physical PRAN card	40.00	40.00	Through Cancellation of Units
5	Account opening with ePRAN card (Welcome kit sent in hardcopy)	35.00	Option not available	Through Cancellation of Units
6	Through Cancellation of Units	18.00	18.00	Through Cancellation of Units

Tier-II transaction charges are same as Tier-I.

BY OTHER INTERMEDIARIES
SL NO	INTERMEDIARY	DESCRIPTION	FEES	REMARKS
1	NPS Trust	Reimbursement of Expenses	0.005% P.A. of Assets Management	Adjustment in NAV of Scheme
2	Custodian	Asset Servicing charges	0.0032 % pa. of assets in custody	Adjustment in NAV of Scheme
3	Pension Fund Manager	Investment Management Fee	0.03% - 0.09% P.A of Asset under Management	Through NAV Adjustment

Investment Choices & Switching Options

Active Choice : Subscriber will have an option as to how their wealth is to be invested between following 4 options :

Asset Class E	Investments in equities.
Asset Class C	Investments in Fixed Income securities of Corporate.
Asset Class G	Investments in Government Fixed income securities.
Asset Class A	Investments in Alternative Investment Funds (*)

Note:

1. Subscription can be distributed among E,C,G,A with a cap of 75% for Asset Class "E" and 5 % for Asset Class "A".

2. (*) Alternative Investment Funds viz., CMBS (Commercial Mortgage-Backed Securities) MBS (Mortgage-Backed Securities) REITS (Real Estate Investment Trusts) InvITS (Infrastructure Investment Trusts) etc.

Active Choice : (Life Cycle Fund): Subscriber has the choice of three life cycle funds viz.,

Aggressive Life Cycle Fund (LC75) ;
Moderate Life Cycle Fund (LC50) ; and
Conservative Life Cycle Fund (LC25)

Under these options, fund investment is done automatically in a pre-determined proportion as per the age of the Subscriber. to view the pre-determined Matrix under various Choice of Funds.

Auto Choice - Aggressive Risk Profile
Age(years)	Equity(%)	Corporate bonds (%)	Government Securities (%)
Up to 35	75	10	15
36	71	11	18
37	67	12	21
38	63	13	24
39	59	14	27
40	55	15	30
41	51	16	33
42	47	17	36
43	43	18	39
44	39	19	42
45	35	20	45
46	32	20	48
47	29	20	51
48	26	20	54
49	23	20	57
50	20	20	60
51	19	18	63
52	18	16	66
53	17	14	69
54	16	12	72
"55 and above"	15	10	75

Auto Choice - Moderate Risk Profile
Age (years)	Equity(%)	Corporate bonds (%)	Government Securities (%)
Up to 35	50	30	20
36	48	29	23
37	46	28	26
38	44	27	29
39	42	26	32
40	40	25	35
41	38	24	38
42	36	23	41
43	34	22	44
44	32	21	47
45	30	20	50
46	28	19	53
47	26	18	56
48	24	17	59
49	22	16	62
50	20	15	65
51	18	14	68
52	16	13	71
53	14	12	74
54	12	11	77
55 and above	10	10	80

Auto Choice - Conservative Risk Profile
Age (years)	Equity(%)	Corporate bonds (%)	Government Securities (%)
Up to 35	25	45	30
36	24	43	33
37	23	41	36
38	22	39	39
39	21	37	42
40	20	35	45
41	19	33	48
42	18	31	51
43	17	29	54
44	16	27	57
45	15	25	60
46	14	23	63
47	13	21	66
48	12	19	69
49	11	17	72
50	10	15	75
51	9	13	78
52	8	11	81
53	7	9	84
54	6	7	87
55 and above	5	5	90

Moderate Life Cycle Fund (LC50) is the default option under NPS for the subscriber who do not opt any choice.

Annuity & Service Providers

Indian Life Insurance Companies who are licensed by Insurance Regulatory and Development Authority (IRDA) are empaneled by PFRDA to act as Annuity Service Providers to manage funds (allocated for buying annuity) and payment of pension. The following Annuity Service Providers are empaneled :

Aditya Birla Sunlife Insurance Company Ltd
Bajaj Allianz Life Insurance Company Ltd.
Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd.
Edelweiss Tokio Life Insurance Company Ltd.
HDFC Life Insurance Co. Ltd.
ICICI Prudential Life Insurance Co. Ltd.
India First Life Insurance Co. Ltd.

Kotak Mahindra Life Insurance Co. Ltd.
Life Insurance Corporation of India
Max Life Insurance Co. Ltd.
PNB Metlife India Insurance Company Ltd.
SBI Life Insurance Co. Ltd.
Shriram Life Insurance Co Ltd
Star Union Dai-ichi Life Insurance Co. Ltd.
Tata AIA Life Insurance Company Ltd.

For detailed information, please contact our Branches or visit the following websites:

Withdrawal

For Subscribers joining between 18 – 60 Years

Upon attainment of age of 60 years: Atleast 40% of the accumulated pension wealth of the subscriber needs to be utilized for purchase of an annuity providing for the pension and the balance is paid as a lumpsum payment. If the total corpus is less than or equal to Rs.5.00 Lakhs, the subscriber may opt for 100% lumpsum withdrawal. However, the subscriber has the option to defer the lumpsum withdrawal till the age of 75 Years. Subscriber has also got the option to continue contributing upto the age of 75 Years.

At any time before attaining the age of 60 Years: The subscriber may exit from NPS before attaining the age of 60 Years, only if he / she has completed 5 years in NPS. Atleast 80% of the accumulated pension wealth of the subscriber needs to be utilized for purchase of annuity and the balance is paid as a lumpsum payment to the subscriber. In case, the total accumulated corpus is less than Rs.2.50 Lakh, the subscriber may opt for 100% lumpsum withdrawal.

Death of Subscriber: In such an unfortunate event, option will be available to the nominee to receive 100% of the NPS pension wealth in lumpsum/Pension.

For Subscribers joining between 60 – 70 Years

Normal Exit: The Subscriber exiting after completion of 3 years from the date of joining NPS would be treated as Normal Exit. The subscriber will be required to annuitize atleast 40% of the corpus for purchase of annuity and the remaining corpus can be withdrawn in lumpsum. If the total corpus is less than or equal to Rs.5.00 Lakhs, the subscriber may opt for 100% lumpsum withdrawal.

Premature Exit: An exit before completion of 3 years from the date of joining NPS will be treated as premature exit. In such case, the subscriber will be required to annuitize atleast 80% of the corpus for purchase of annuity and the remaining corpus can be withdrawn in lumpsum. In case, the total accumulated corpus is less than Rs.2.50 Lakh, the subscriber may opt for 100% lumpsum withdrawal.

Death of Subscriber: In such an unfortunate event, option will be available to the nominee to receive 100% of the NPS pension wealth in lumpsum.

The subscriber wishing to exit from NPS has to submit a Withdrawal Application Form to the concerned POP along with the documents specified below for withdrawal of the benefits.

PRAN card in original
Attested copy of proof of identity
Attested copy of proof of address
Cancelled cheque or Bank Certificate

The POP would authenticate the documents and forward them to Central Record-keeping Agency (CRA) CRA in turn would register the claim and forward the necessary application form along with the procedure to be followed further. Once the documents are received, CRA processes the application and settles the account.

The Withdrawal process may also be initiated online.