National Pension System - Online Services

Highlights 

• NPS - All About

• Tax Benefit

• Account Types/Contributions

• Withdrawal / Cost

• Online Services

NPS 

1. National Pension System - All Citizen Model

National Pension System (NPS) is a voluntary retirement savings scheme laid out to allow the subscribers to make defined contribution towards planned savings thereby securing the future in the form of Pension. It is an attempt towards a sustainable solution to the problem of providing adequate retirement income to every citizen of India.

At the time of normal exit from NPS, the subscribers may use the accumulated pension wealth under the scheme to purchase a life annuity from a PFRDA empaneled life insurance company apart from withdrawing a part of the accumulated pension wealth as lump-sum, if they choose so. PFRDA is the nodal agency for implementation and monitoring of NPS.

2. Who can open a NPS account under All Citizen Model

A citizen of India, whether resident or non-resident, subject to the following conditions:

Applicant should be between 18 – 70 years of age as on the date of submission of his/her application and should comply with KYC norms prescribed.

3. Benefits of NPS Account

i) Low Cost:-

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

ii) Simple:-

All applicant has to do is to open an account with any one of the POPs being run through all Head Posts Offices across india and get a Permanent Retirement Account Number(PRAN)

iii) Flexible:-

Applicant can choose his/her own investment option and Pension Fund or select Auto choice to get better returns.

iv) Portable:-

Applicant can operate an account from anywhere in the country and can pay contributions through any of the POP-SPs irrespective of the POP-SP branch with whom the applicant is registered, even if he/she changes his/her city, job etc and also make contribution through eNPS. The account can be shifted to any other sector like Government Sector, Corporate Model in case the subscriber gets the employment.

Liaison officers 

Tax benefit to employee* :-

Individuals who are employed and contributing to NPS would enjoy tax benefits on their own contributions as well as their employer’s contribution as under: -

Employee’s own contribution -

Eligible for tax deduction up to 10% of Salary (Basic + DA) under Section 80 CCD(1) within the overall ceiling of Rs. 1.50 lacs under Sec 80 CCE.

Employer’s contribution –

The employee is eligible for tax deduction up to 10% of Salary (Basic + DA) contributed by employer under Sec 80 CCD(2) over and above the limit of Rs. 1.50 lacs provided under Sec 80 CCE.

Tax benefit for self-employed:-

Eligible for tax deduction up to 10 % of gross income under Sec 80 CCD (1) with in the overall ceiling of Rs. 1.50 lacs under Sec 80 CCE. Subscriber is allowed deduction in addition to the deduction allowed under Sec. 80CCD(1) for additional contribution in his NPS account subject to maximum investment of Rs. 50,000/- under sec. 80CCD 1(B)

*Tax benefits would be applicable as per the Income Tax Act, 1961 as amended from time to time.

I. Types of Accounts :-

Tier -I Account -

The applicant shall contribute his/her savings for retirement into this condition; & restricted withdrawal account. This is the retirement account and applicant can claim tax benefits against the contributions made subject to the Income Tax rules in force.

Tier-II Account –

This is a voluntary savings facility. The applicant will be free to withdraw his/her savings from this account whenever he/she wishes. This is a not a retirement account and applicant can’t claim any tax benefits against contributions to this account.

II. Contributions :-

The subscriber can contribute the amount through cash, local cheque, demand draft or Electronic Clearing System (ECS) at his/her chosen POP-SP. However, for cash transactions exceeding Rs.50000/- subscriber needs to submit the copy of the PAN card as per the Anti-Money laundering (AML) rules. Also, No outstation cheques shall be accepted.

Minimum Contributions (For Tier-I):-

♦ Minimum contribution at the time of account opening and for all subsequent transactions- Rs 500

♦ Minimum contribution per year - Rs 1,000 excluding charges and taxes 

♦ Minimum number of contributions in a year - 01

Charges and Penalty for non-compliance of mandatory minimum contributions:-

♦ If the subscriber contributes less than Rs. 1,000 in a year, his/her account would be frozen and the facilities provided by CRA such as online view of account etc. will be restricted.

♦ In order to reactivate the account, the subscriber would have to pay the minimum contributions of Rs. 500/-

♦ A frozen account shall be closed when the account value falls to zero.

Minimum Contributions (For Tier-II):-

♦ Minimum contribution at the time of account opening - Rs.1000/- and for all subsequent transactions a minimum amount per contribution of Rs.250/-

♦There is no minimum contribution requirement for the financial year and also there is no cap on maximum contribution

 III. How to open NPS Account :-

Procure your Permanent Retirement Account Number (PRAN) application form:-

♦ "As a Subscriber between the age brackets of 18 to 65 years of age, you can procure your PRAN application form from any of the Point of Presence - Service Providers (POP-SP) you wish to register with. You can also procure the PRAN application form from our website by clicking here."

♦ "You have to ensure that your PRAN application form is filled up i.e. photograph, signature, mandatory details, scheme preference details etc and also submit KYC documentation with respect to proof of identity and proof of address. For detailed information on NPS, please refer to the offer document prescribed by the Pension Fund Regulatory and Development Authority (PFRDA)."

Submit PRAN application form to your nearest Point of Presence - Service Provider (POP-SP):-

You can go to your nearest POP-SP and submit the PRAN application along with the KYC documents. PRAN card will be sent to your correspondence address by CRA.

Track your PRAN application:-

At the time of submission of the PRAN application, POP-SP shall give you a receipt number. You can track the status of your PRAN application by entering the receipt number in the following link: https://cra-nsdl.com/CRA/pranCardStatusInput.do

Submit your first Contribution Slip:-

You are required to make your first contribution (minimum of Rs 500) at the time of applying for registration to any POP-SP. For this, you will have to submit NCIS (Instruction Slip) mentioning the details of the payment made towards your PRAN account.

The applicant has to ensure that subscriber registration application form is duly filled up i.e. photograph, signature, mandatory details, scheme preference details etc and also submit Know Your Customer (KYC) documentation with respect to proof of identity and proof of address. The applicant is advised to read the instructions given at the back of the form. NRIs should have an account with a bank based in India to open an account under NPS and also should have a local address. The contributions made by the NRI would be subject to regulatory requirements as prescribed by RBI from time to time and FEMA requirements. Once the application form is duly filled in applicant can go to the nearest POP-SP and submit the PRAN application along with the KYC documents. PRAN card will be sent to applicant’s correspondence address by CRA. The list of POP –SP (Service Provider branches) is available on the CRA website www.npscra.nsdl.co.in and on the website of the concerned POP. To know the nearest POP-SP branch of your choice applicant may visit https://www.npscra.nsdl.co.in/pop-sp.php.

After the account is opened, CRA shall mail a “Welcome Kit” containing the subscriber’s unique Permanent Retirement Account Number (PRAN) Card and the complete information provided by the subscriber in the Subscriber Registration form. This account number will be the primary means of identifying and operating the account. The applicant will also receive a Telephone Password (TPIN) which can be used to access an account on the call Centre number (1-800-222080). Applicant will also be provided an Internet Password (IPIN) for accessing an account on the CRA Website (www.npscra.nsdl.co.in) on a 24X7 basis.

IV. Investment Options :-

Under NPS, how the money is invested will depend upon subscriber’s own choice. NPS offers a number of funds and multiple investment options to choose from. In case subscriber does not want to exercise a choice, his/her money will be invested as per the Default choice of “Moderate Life Cycle Fund” under "Auto Choice" option, where money will get invested in various type of schemes as per subscriber’s age. The NPS offers two approaches to invest subscriber’s money:

Active choice:-(Asset Class E, Asset Class C, and Asset Class G and Asset Class”A”)

Subscriber will have the option to actively decide as to how his/her NPS pension wealth is to be invested in the following three options:

Asset Class E - Investments in predominantly equity market instruments.

Asset Class C- investments in fixed income instruments other than Government securities.

Asset Class G - investments in Government securities.

Asset class A: Investment in Alternative Investment Schemes including instrument like CMBS, MBS, REITS, AIFs, InvIts etc.

Subscriber can choose to invest his/her entire pension wealth in C or G asset classes and up to a maximum of 50% in equity (Asset class E) and upto a maximum of 5% in asset class “A”. Subscriber can also distribute his/her pension wealth across E, C, G and A asset classes, subject to such conditions as may be prescribed by PFRDA.

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 case subscribers are unable/unwilling to exercise any choice as regards asset allocation, their funds will be invested in accordance with the Auto Choice option.

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), with the investment in E decreasing and in C & G increasing with the age of the subscriber.

Three Life Cycle funds are available under this Auto Choice:

(i) LC75 – Aggressive Life Cycle Fund: In this Life Cycle Fund, the exposure in Equity Investments starts with 75% till age 35 and gradually reduces as per the age of the subscriber.

(ii) LC50- Moderate Life Cycle Fund : In this Life Cycle Fund, the exposure in Equity Investments starts with 50% till age 35 and gradually reduces as per the age of the subscriber.

(iii) LC 25- Conservative life cycle fund : In this Life Cycle Fund, the exposure in Equity Investments starts with 25% till age 35 and gradually reduces as per the age of the subscriber.

The default auto choice if the subscriber is not choosing any of the above option is Moderate life Cycle Fund.

The subscriber’s personal information will not be disclosed to a third party (outside National Pension System (NPS) which includes Annuity Service Providers empanelled by PFRDA) without the express or implied consent of the subscriber. The information may be used internally or for creating awareness (telephonic/written) of new services of NPS. However, there are some exceptions, viz. disclosure of information under compulsion of law, where there is a duty to the public to disclose and where interest of the NPS requires disclosure.

Withdrawal /Exit :-

1. Upon attainment of the age of 60 years : -

At least 40% of the accumulated pension wealth of the subscriber needs to be utilized for purchase of annuity providing for monthly pension to the subscriber and balance is paid as lump sum payment to the subscriber. In case the total accumulated corpus is less than Rs. 5 Lacs, the subscriber may opt for 100% lumpsum withdrawal.

However, the subscriber has the option to defer the lump sum withdrawal till the age of 75 years. Subscriber has also got the option to continue contributing upto the age of 75 years. This option is required to be exercised upto 15 days prior to completion of 60 years.

2. 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 has completed 10 years in NPS. At least 80% of the accumulated pension wealth of the subscriber needs to be utilized for purchase of annuity providing for monthly pension to the subscriber and the balance is paid as a lump sum payment to the subscriber.

In case the total accumulated corpus is less than Rs. 2.5 Lac, the subscriber may opt for 100% lumpsum withdrawal

3. Death of the subscriber: –

In such an unfortunate event, option will be available to the nominee to receive 100% of the NPS pension wealth in lump sum. However, if the nominee wishes to continue with the NPS, he/she shall have to subscribe to NPS individually after following due KYC procedure Under National Pension System, PFRDA has entrusted the responsibility of receiving, processing and settlement of all withdrawal claims made to Central Recordkeeping Agency (CRA) and CRA has created a special NPS claim processing cell (NPSCPC) for this purpose for handling all types of withdrawal claims. The CRA will monitor the performance of NPSCPC on the withdrawal processing as per the instructions provided by PFRDA in this regard. At present the NPSCPC is fully functional.

The subscribers can submit their claims online for withdrawal from NPS

Finance Cap :

Minimum Initial Contribution with Registration Rs. 500 (excluding taxes).

Minimum Subsequent Contribution Rs. 500 (excluding taxes).

Maximum Contributions No limit.

Minimum Contributions in a Financial Year   

Rs.1,000 in Tier I.

Minimum transactions in a Financial Year One.

Transactional Charges :

Registration Charges Rs. 200 (excluding taxes).

Contribution charges Rs.30 (excluding taxes)

All Service Charges (Except all type of withdrawals) Rs.30 (excluding taxes).

All type of withdrawals Rs.125 (excluding taxes).