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.
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
- LIC Pension Fund Limited
- Axis Pension Fund Management
Limited
- Max Life Pension Fund Management
Limited
- DSP Pension Fund Managers Private
Ltd
- SBI Pension Funds Private Limited
- HDFC Pension Management Company
Ltd.
- TATA Pension Management Limited
- ICICI Prudential Pension Funds
Management Company Limite
- UTI Retirement Solutions Limited
- Kotak Mahindra Pension Fund 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:
- 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.
- 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?
Tax Benefits under the Corporate Sector:
| 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 |
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.
Moderate Life Cycle Fund (LC50) is the default option under NPS for the
subscriber who do not opt any choice.
Balanced Life Cycle Fund: (BLC): Subscriber need not make any choice
of asset classes and it will be automatically re-balanced according to the
age of subscriber. to view the
pre-determined matrix of different
asset classes under BLC.
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:
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.
Why NPS Vatsalya?
NPS Vatsalya is a contributory pension scheme, part of the National Pension
System (NPS), designed specifically for minor children. It allows parents or
guardians to open a pension account for their children and contribute towards
their retirement savings while they are minors. The goal is to encourage early
savings and create a culture of financial planning from a young age. It's main
objective is to create a pensioned society and encourage children by inculcating
the habit of saving from an early age.
Who can join?
NPS Vatsalya is open to all citizens of India who are under the age of eighteen
years. The account will be opened and operated by the Parents / legal guardian
on behalf of the minor.
Benefits of NPS Vatsalya
NPS Vatsalya can be an immortal gift of parents to their Kids ensuring their
children's financial security even in their absence. By contributing to the
Vatsalya account from a young age, children can potentially accumulate a
significant amount by the time they retire, offering them a strong financial
foundation. Additionally, it can instil financial discipline and responsibility
in children from an early age.
Fee Structure
The charges and fee to be levied on the account at any time shall be same as the
charges under NPS-All Citizen Model, as stipulated by PFRDA from time to time.
NPS Vatsalya – Withdrawal Guidelines
Partial Withdrawal (Before Age 18)
- Allowed after 3 years of account
opening.
- Up to 25% of contributions
(excluding returns).
- Permitted 3 times during tenure.
- Valid reasons include:
- Child's education
- Treatment of specified illnesses
- Disability of child (≥ 75%)
On Attaining 18 Years (Account Conversion)
- Account automatically converts to a
regular NPS Tier I account.
- Standard PFRDA Tier I rules apply.
Withdrawal at Maturity (Post-18 Tier I Rules)
- If corpus > ₹2.5 lakh:
- 80% must go to annuity purchase.
- 20% can be withdrawn as lump sum.
- If corpus ≤ ₹2.5 lakh:
- 100% lump sum withdrawal permitted.
In Case of Death (Guardian or Minor)
Entire corpus is paid to the nominee or legal guardian.
