NPS

All about NPS (National Pension System)

What is NPS?

NPS is a new pension cum investment scheme launched by the Government of India to provide old age security to Citizens of India. It brings an attractive long-term saving avenue to effectively plan your retirement through safe and regulated market-based returns. The Scheme is regulated by Pension Fund Regulatory and Development Authority (PFRDA). National Pension System Trust (NPST) established by PFRDA is the registered owner of all assets under NPS.

Introduction

The Central Government has introduced the National Pension System (NPS) with effect from January 01, 2004 (except for armed forces). NPS was made available to All Citizens of India from May 01, 2009. Pension Fund Regulatory and Development Authority (PFRDA), the regulatory body for NPS, has appointed Protean eGov Technologies Limited as Central Recordkeeping Agency (CRA) for National Pension System (NPS). CRA is the first of its kind project in India which will carry out the functions of Record Keeping, Administration and Customer Service for all subscribers under NPS. CRA shall issue a Permanent Retirement Account Number (PRAN) to each subscriber and maintain a database of each Permanent Retirement account along with recording transactions relating to each PRAN.

National Pension System (NPS), Regulated By PFRDA, is an important landmark in the development of a sustainable and efficient voluntary defined contribution pension system in India. It has the following broad objectives:

• Provide the old age income
• Market-based returns over the long-term contributions
• Extending old age security coverage to all citizens

NPS/eNPS

For online registration:

• Opening of Individual Pension Account under NPS (Tier-I or Tier-II) by all Indian Citizens (including NRIs) between the ages 18 to 70 yrs.
• Making an initial and subsequent contribution to your NPS Account Tier-I as well as Tier-II.

For NPS Account Opening, You have must require to

• Have a Bank Account with a net banking facility enabled
• Have an active mobile number
• Have an email ID
• If a candidate selects to open an individual pension account with PAN, the activation of the PRAN is subject to KYC verification by the empanelled POP (name and address should match with the POP record) selected by the applicant during the registration process
• Fill up all the mandatory details online
• Aadhar is must required
• Scanned copy of your photograph and signature
• Make online payment (Minimum contribution amount is Rs.500/-)

Any Indian Citizen (18-70 yrs.) can open an individual Pension account under NPS through e-NPS using one of the following options:

Option- 1: Registration using PAN (KYC verification by Bank/Non-Bank POP)

✔  You must have a PAN (Permanent Account Number).

✔  Bank / Demat /Folio account details with the empanelled Bank/Non-Bank for KYC verification for subscriber registration through e NPS

✔  Your KYC verification will be done by the Bank/Non-Bank POP selected by you during the registration process. The name and address provided during registration should match with POP records for KYC verification. If the details don’t match, the request is liable for rejection. In case of rejection of KYC by the selected POP, then please requested to contact the POP

✔  You need to fill up all the mandatory details online

✔  You need to upload a scanned copy of your PAN card and Cancelled Cheque in jpeg/ jpg/ png format with having file size between 4 KB – 2 MB

✔  You need to upload your scanned Photograph and Signature in jpeg/ jpg/ png format with having file size between 4KB – 5MB

✔  You will be paid towards your NPS account through Internet Banking

✔ Subscribers have an option to follow OTP Authenticate or e-Sign the registration form

✔  Contributions are credited in PRANs on a T+2 basis (subject to receipt of clear funds from Payment Gateway Service Provider)

Option- 2: Registration using Aadhaar Offline eKYC

✔  You must have an Aadhar Registered Mobile Number

✔  You should upload an Aadhar Paperless Offline e-KYC ZIP file. If Zip File is not generated, Click Here to log in with Aadhar and download the e-KYC ZIP File from the UIDAI website. Please note UIDAI website best support on Google Chrome 6.0+  / Internet Explorer 9.0+  /  Safari 4.0+

✔  Enter the Share code of 4 characters created at the UIDAI website

✔  Demographic details (Name, Gender, Date of Birth, Mobile number, Full Address and Photo) will be fetched from Aadhar Offline e-KYC Zip after Successful authentication and other mandatory details need to be filled up online.

✔  You need to upload a scanned copy of your PAN card and Cancelled Cheque in jpeg/ jpg/ png /pdf (unsigned) format having file size between 4 KB – 2 MB

✔  You need to upload your scanned Signature in jpeg/jpg/ png format with having file size between 4 KB – 5 MB

✔  You will be paid towards your NPS account through Internet Banking

✔ Subscribers have an option to follow OTP Authenticate or eSign the registration form

✔  Contributions are credited in PRANs on a T+2 basis (subject to receipt of clear funds from Payment Gateway Service Provider)

Option 3: Registration using a Driving License through Digilocker

✔  You must have a valid Driving License uploaded in Digilocker

✔  Demographic details (Name, Gender, Date of Birth, Address and Photo) will be fetched from Digilocker after Successful authentication and other mandatory details need to be filled up online.

✔  You need to upload a scanned copy of your PAN card and Cancelled Cheque in jpeg/ jpg/ png /pdf (unsigned) format having file size between 4 KB – 2 MB

✔  You need to upload your scanned Signature in jpeg/jpg/png format with having file size between 4 KB – 5 MB

✔  You will be paid towards your NPS account through Internet Banking

✔ Subscribers have an option to follow OTP Authenticate or eSign the registration form

✔  Contributions are credited in PRANs on a T+2 basis (subject to receipt of clear funds from Payment Gateway Service Provider)

✔ Subscribers have an option to follow OTP Authenticate or eSign the registration form

In addition, NRI subscribers should,

✔  Select the Bank Account Status i.e., Non-Repatriable account or Repatriable account

✔  Provide the NRE/NRO bank account details and upload a scanned copy of the passport

✔  Select the preferred address for communication i.e., Overseas Address or Permanent Address (communication at an overseas address would entail extra charges)

Processing of Subsequent Contribution:

All existing Subscribers (Registered through both online and offline modes) can contribute to Tier I & Tier II accounts using ‘eNPS’. To contribute online, you need to

✔  Have an active Tier I / Tier II account

✔  Authenticate your PRAN using the OTP sent to your registered mobile number

✔  Pay through your Debit / Credit card or UPI or use the Internet Banking option. Click Here to know more about UPI

✔  POP Service Charges will be applicable on the contribution amount @ 0.10% (subject to a minimum of ₹ 10 and a maximum of ₹ 10,000 per transaction). These service charges will not be applicable for subscribers registered in eNPS.

✔  Contributions are credited in PRANs on a T+2 basis (subject to receipt of clear funds from Payment Gateway Service Provider)

For any more queries please contact no. 022  24993499

NPS ONLINE WITHDRAWAL

New Pension Scheme (NPS) has introduced by the Indian Govt. in the year 2004. All citizens of India can avail of NPS, which has regulated by Pension Fund Regulatory and Development Authority (PFRDA). This is a monthly contribution system for NPS Pension Fund. There are 08 different pension funds has been managed for the whole amount of NPS. These are:

• SBI Pension Fund Pvt. Ltd.
• UTI Retirement Solutions Ltd.
• LIC Pension Fund Ltd.
• HDFC Pension Management Co. Ltd.
• Birla Sunlife Pension Management Ltd.
• Reliance Capital Pension Fund Ltd.
• Kotak Mahindra Pension Fund Ltd.
• ICICI Prudential Pension Fund Management Ltd.

For Partial Withdrawal: You can withdraw partially from the NPS corpus for specified purposes. Under existing NPS withdrawal rules, the maximum amount that you can withdraw is up to 25% of your total contribution (not calculated on the total NPS account balance). However, to avail of the NPS partial withdrawal benefit, you need to have been an NPS subscriber for at least 5 years at the time of withdrawal. Partial withdrawals can only be made up to three times during the entire tenure of your NPS account. Under existing rules of the national pension system, these partial withdrawals are completely tax-free.

Partial NPS withdrawals can be requested for the following reasons :

1. Higher education for children
2. Marriage of children
3. For the purchase or construction of a residential house or flat either in your own name or jointly with your spouse. However if you already own or jointly own a house or flat other than ancestral property, this will not be permitted.
4. For the treatment of any of the illnesses mentioned below. The patient can be the subscriber, his spouse, children or dependent parents.
5. Cancer
6. Kidney Failure
7. Preliminary Pulmonary Arterial Hypertension
8. Multiple Sclerosis
9. Major Organ Transplant
10. Coronary Artery Bypass Graft
11. Aorta Graft Surgery
12. Heart Valve Surgery
13. Stroke
14. Myocardial Infarction
15. Coma
16. Total Blindness
17. Paralysis
18. Accident of serious/life-threatening nature
19. Any other critical illness of a life-threatening nature specified by the PFRDA from time to time

In case of retirement:

NPS withdrawal rules in case of retirement are detailed below –

If the accumulated corpus in one’s NPS account is equal to or less than Rs.2 Lakh, then he/she can withdraw their entire fund.

If one’s accumulated corpus is more than Rs.2 Lakh, then 40% of this fund will go towards purchasing an annuity plan.

The balance can be withdrawn in a lump sum and can also be postponed till one reaches 70 years of age.

Example – 

Mr X has retired and plans to withdraw from his NPS account. The accumulated corpus in his account is Rs.25 Lakh. According to requisite NPS withdrawal rules, he will be able to withdraw Rs.15 Lakh (60% of Rs.25 Lakh). The remaining Rs.10 Lakh will be used to purchase an annuity.

In case of voluntary exit:

NPS subscribers can get voluntarily exit from this scheme before the completion of their tenure in such cases is:

Subscribers have to hold an account for a minimum time period of 10 years to be eligible for the voluntary exit.

An account holder can withdraw the entire amount if the accumulated corpus is less than Rs.1 Lakh.

If the accumulated fund is more than Rs.1 Lakh, 80% of this amount will go towards the purchase of an annuity plan.

Example –

Mr Y plans to prematurely exit from NPS at the age of 40. He has Rs.20 Lakh in his account. Now, as per the NPS withdrawal rules, he will be able to withdraw only Rs.4 Lakh (20% of Rs.20 Lakh). The remaining Rs.16 Lakh will be used to purchase an annuity.

It should be noted that both the withdrawn amount and the annuity will be taxable. The corpus withdrawn will be added to the subscriber’s income and taxed as per the income tax slab he/she belongs to.

NPS Tier-I account withdrawal Online process:-

The steps for NPS withdrawal online from a Tier-I Account are mentioned below:

Visit the official website of NSDL-CRA.

Enter your user ID (PRAN) and password to log in.

Under the “Transact Online” tab, select “Withdrawal”.

Select “Partial withdrawal from Tier-I” from the available options.

Confirm your PRAN and click the “Submit” button.

Enter the percentage of funds to be withdrawn along with the reasons for withdrawal.

And Click “Submit”.

An online form will be generated which subscribers have to submit to the nodal office along with the following documents:

Original PRAN card

KYC documents.

Advance stamp receipt filled and cross-signed on the revenue stamp by the account holder.

Bank letterhead, bank passbook, bank certificate or a cancelled cheque that contains the account holder’s name, bank account number, and bank IFSC code.

Request cum undertaking form if the subscriber is eligible to withdraw the complete corpus.

Offline method:

Subscribers have to download appropriate forms for withdrawal (partial withdrawal, exit, or retirement), fill them with relevant details, and attach them with the supporting documents mentioned above. They have to submit these forms at the nearest Point of Presence Service Provider (PoP/PoP- SP).

NPS Tier-II withdrawal

Tier-II account withdrawal can only be carried out offline through a PoP-SP. To do the same subscribers have to fill out a UOS-S12 form and attach it with the supporting documents. The PoP will initiate the withdrawal request and disburse the amount within 3 days.

What are the Tax Implications on NPS?

Provisional Income tax benefits on the National Payment System are available under the following sections:-

Section	Exemptions Ceiling
Section 80CCD (1)	Rs.1.5 Lakh – Available under the overall tax exemptions offered under Section 80C.
Section 80CCD (2)	14% of salary (basic + DA) contributed by the employer Over and above Section 80CCD (1)
Section 80CCD (1b)	Rs. 50,000 – Over and above Section 80CCD (1) and Section 80CCD (2)

Different Sectors in NPS

NPS is generally classified into two categories and it is further customized for different sectors as mentioned below:

1. Government Sector:
   1. Central Government:
      The Central Government introduced the National Pension System (NPS) with effect from January 1, 2004 (except for the armed forces). All the employees of Central Autonomous Bodies who have joined on or after the above-mentioned date are also mandatorily covered under the Government sector of NPS. Central Government/CABs employee contributes towards pension from their monthly salary along with a contribution from the employer.
   2. State Government:
      Subsequent to Central Government, various State Governments adopted this Pension system and implemented NPS with effect from different dates. A State Autonomous Body (SAB) can also adopt NPS if the concerned State Government/UT have adopted the NPS and initiated implementation of the same. State Government employees should also contribute towards pension from their monthly salary along with contributions from the employer.

• Private Sector (Non-Government Sector):
  • Corporate:
    NPS Corporate Sector Model is the customized version of NPS to suit various organizations and their employees to adopt NPS as an organized entity within the purview of their employer-employee relationship.
  • All Citizens of India:
    Any individual not being covered by any of the above sectors has been allowed to join NPS architecture under the All Citizens of India sector from May 01, 2009.

Advantages of the opening NPS:

Opening an NPS account has its own advantages as compared to other pension products available. Below are a few features which make NPS different from others:

1. Low-cost product
2. Tax breaks for Individuals, Employees and Employers
3. Good market-linked returns
4. Easily portable
5. Professionally managed by experienced Pension Funds
6. Regulated by PFRDA, a regulator set up through an act of Parliament

Click here to get all forms and click here to go POP (Point of Presence) corner.

Overview

Introduction

National Pension Scheme (NPS) is a voluntary, defined contribution retirement savings scheme, launched by the Government of India on 1st January 2004, for the benefit of citizens aged 18-65 years. The scheme aims to provide retirement income to all its subscribers, in addition to various tax benefits, and has been designed to help citizens save for their retirement years. The scheme is regulated by the Pension Fund Regulatory and Development Authority (PFRDA) and has been gaining popularity among the Indian population, with over 1.8 crore subscribers and assets under management (AUM) of over Rs. 5.5 lakh crore as of January 2021.

Salient Features of NPS

The NPS is a market-linked pension scheme, where the returns are linked to the performance of the underlying assets. The scheme offers two types of accounts – Tier 1 and Tier 2. The Tier 1 account is the mandatory retirement account, while the Tier 2 account is a voluntary savings account that can be opened along with the Tier 1 account or later. The key features of the NPS are as follows:

1. Voluntary and Portable: The NPS is a voluntary scheme, which means that individuals can join the scheme at any time, even after retirement. The scheme is portable, which means that subscribers can operate their accounts from any location in India, irrespective of where the account was opened.
2. Defined Contribution: The NPS is a defined contribution scheme, which means that the pension amount that the subscriber will receive at the time of retirement is determined by the number of contributions made by the subscriber, the investment returns earned on those contributions, and the annuity rates prevailing at the time of exit.
3. Flexible Contribution: The subscribers have the flexibility to contribute any amount at any time, as per their convenience. There is no fixed contribution amount, and subscribers can make contributions as and when they have surplus funds.
4. Multiple Investment Options: The NPS offers three investment options – Equity, Corporate Bonds, and Government Securities. Subscribers can choose to allocate their contributions among these three asset classes as per their risk appetite and investment objectives.
5. Low Charges: The NPS has some of the lowest charges among pension schemes in India. The scheme charges a one-time account opening fee, an annual maintenance fee, and a fund management fee. The fund management fee is currently capped at 0.01% of the AUM, which is significantly lower than the charges levied by other pension schemes.
6. Tax Benefits: The NPS offers tax benefits to subscribers under Section 80C, Section 80CCD(1B), and Section 10(12A) of the Income Tax Act, 1961. Subscribers can claim a deduction of up to Rs. 1.5 lakh under Section 80C for their contributions to the NPS. An additional deduction of up to Rs. 50,000 can be claimed under Section 80CCD(1B), which is over and above the limit of Rs. 1.5 lakh available under Section 80C. The entire amount received on maturity or withdrawal of the NPS is tax-free up to 40% of the corpus, and the remaining 60% is subject to tax as per the subscriber’s tax slab.
7. Annuity Options: At the time of exit from the scheme, the subscriber can use up to 60% of the corpus to purchase an annuity from an annuity service provider. The remaining 40% of the corpus can be withdrawn in a lump sum or used to purchase an additional annuity. The NPS offers multiple annuity options, including a lifetime annuity, a joint-life annuity etc.