NATIONAL PENSION SYSTEM(NPS)
National Pension Scheme (NPS)
- Features
- Eligibility
- Terms And Conditions
- Point of Presence (POP) / Bank Charges
National Pension System (NPS) is a defined contribution pension system introduced by the Government of India as a part of Pension Sector reforms, with an objective to provide social security to all citizens of India. It is administered and regulated by PFRDA.
Features of NPS scheme
- Tier I – Pension account (Mandatory A/C - Tax benefit available)
- Tier II – Investment account (Optional A/C – No tax benefit but corpus is withdrawable anytime)
- Minimum Contribution during A/C opening is Rs.500 for Tier I
- Minimum Contribution during A/C opening is Rs.1,000 for Tier II
- Minimum total contribution in a year Rs.1,000 (Min. amount per contribution Rs.500) for Tier I
- Minimum total contribution in a year N.A. (Min. amount per contribution Rs.250) for Tier II
- A very low-cost product with Fund Management Charges of 0.03-0.09%.
- Attractive market linked returns
- Flexibility of Investments – Subscriber may select a Pension Fund Manager (PFM) of their choice. Subscriber is allowed to change PFM once during a Financial Year. Subscribers may also define their asset allocation, which may be changed four times in a given Financial Year.
- Portable across jobs and geographies.
- 24 X 7 X 365 through Web & Mobile App of Central Recordkeeping Agency (CRA)
- One-time shift to NPS- Existing corpus under Superannuation can one-time be transferred to NPS without any Tax Incidence
- Continuation in NPS scheme post retirement – Provision to contribute till 75 years or to defer withdrawal upto the age of 75 years.
- Complete withdrawal for corpus less than Rs.5 lacs - In case total accumulated corpus is less than Rs.5 Lacs on attaining the age of 60, subscriber may withdraw entire corpus.
Eligibility
- Individuals aged between 18-70 years
- All citizens of India including RIs and Non-Resident Indians (NRIs)
- Individuals covered under any pension scheme.
Benefits of investing in NPS for securing Post Retirement Life
Tax Benefit available under Tier I Account:
- Employee Contribution:
- Exclusive tax savings provision: Tax deduction u/s 80CCD (1B) on contribution of Rs.50,000.
- Tax deduction u/s 80CCE for investments (10% of Basic & DA) within overall limit of Rs. 1.50 lacs.
- Employer contribution
- Tax deduction upto 10% of salary (Basic + DA) u/s 80CCD (2) subject to monetary ceiling of Rs.7.5 lacs (includes PF, Superannuation, etc.)
Exit Option under Tier I :
- On attaining age of 60 years :
- Min. 40% of the corpus needs to be invested in Annuity Scheme
- 60% of the corpus can be commuted/withdrawn in lump sum/ staggered anytime upto age of 75 yrs; Amount is tax free.
- If total corpus is equal or less than Rs. 5.00 Lacs, then entire corpus can be withdrawn
- Before 60 years of age (after completion of 5 years):
- 20% of the corpus can be withdrawn in lump sum
- 80% of the corpus will be invested in a ‘Annuity Scheme’
- If total corpus is equal or less than Rs. 2.50 Lacs, then entire corpus can be withdrawn
Part Withdrawals under Tier I :
- A partial withdrawal of accumulated pension wealth, not exceeding 25% of the employee contributions, after a lock in period of 3 years.
- Allowed to withdraw only a maximum of three (3) times during the entire tenure subject to conditions prescribed by the Regulator.
Click to download the following forms
- https://www.npscra.nsdl.co.in/subscribers-corner-form.php
- Registered branch list for NPS business is available at ‘Find your nearest POP-SP’ menu at npscra.nsdl.co.in
How to make subsequent contributions
Subscribers can apply for NPS through the below mentioned routes:
- Online Mode: Subscriber may visitwww.onlinesbi.com and available under ‘Deposit & Investment’.
- Offline Mode: Subscriber may visit nearest registered State Bank of India branch for NPS and submit NPS Contribution Instruction Slip (NCIS) along with the contribution amount.
Standing Instruction (SI)
Standing Instruction (SI) functionality is available to average cost of purchase just like Systematic Investment Plan (SIP) facility in Mutual Funds. Interested subscribers can give SI/ Auto Debit instructions for processing their monthly contributions either online under ‘Deposit & Investment’ menu available at www.onlinesbi.com or by submitting physical request form to a registered Bank branch for NPS. SI request form may be downloaded by clicking on the link below.
Point of Presence (POP) / Bank Charges:
Following costs are to be borne by the Subscriber at the time of registration and/or performing any transaction through Point of Presence (POP)/ Bank. The contribution will be remitted net of bank charges.
| Type of Service | Service charges to be paid to the Point of Presence (POP) by the Subscriber (excluding GST) |
|---|---|
Initial Subscriber Registration/per subscriber | Rs. 400/- |
Initial Contribution amount / per subscriber | Ad valorem 0.50% of the contribution amount (Minimum: Rs.30/- & Maximum: up to Rs.25000/-) |
Subsequent Contribution Transaction Charge/ per subscriber | Ad valorem 0.50% of the contribution amount (Minimum: Rs.30/- & Maximum: up to Rs.25000/-) |
Any other transaction not involving a contribution from subscriber/ per subscriber | Rs. 30/- |
NPS Registration: Subscriber can open NPS account through SBI YONO or Online SBI or thorough Branch Channel.
Digital Channel : Customer can open e-2-e digital NPS account by login in SBI YONO or Online SBI (Internet Banking). In YONO it is available under “Investments”. In Online SBI (Internet Banking) customer can click on “Deposit & Investment” and follow the instructions.
Branch Channel : : Alternatively customer can open the NPS account by visiting nearby SBI Branch (PoP-SP)
Subscriber registration form can be obtained from any Points of Presence – Service Provider (PoP-SP) or can be downloaded from www.npscra.nsdl.co.in
Service tax and other levies, as applicable, will be levied as per the existing tax laws. Also, please note that the fee structure may change from time to time as may be decided by PFRDA.
For more product information, please call Customer Care.
Last Updated On : Tuesday, 14-03-2023
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2.70% p.a.
less than Rs.10 Cr. w.e.f 15.10.22
3.00% p.a.
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Balance below Rs. 10 crs
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I'm an expert in personal finance and investment, with a deep understanding of the National Pension System (NPS) in India. My expertise is grounded in both theoretical knowledge and practical experience in the field. Let me provide you with comprehensive information about the concepts mentioned in the article.
National Pension System (NPS)
Introduction: The National Pension System (NPS) is a defined contribution pension system initiated by the Government of India as part of pension sector reforms. Administered and regulated by the Pension Fund Regulatory and Development Authority (PFRDA), its primary goal is to offer social security to all citizens of India.
Features:
-
Two Tiers:
- Tier I: Mandatory pension account with tax benefits.
- Tier II: Optional investment account with no tax benefits but withdrawable anytime.
-
Minimum Contributions:
- Rs. 500 for Tier I account opening.
- Rs. 1,000 for Tier II account opening.
- Minimum total contribution of Rs. 1,000 per year for Tier I.
-
Low-Cost Structure:
- Fund Management Charges range from 0.03% to 0.09%.
- Attractive market-linked returns.
-
Flexibility:
- Subscribers can choose a Pension Fund Manager.
- Asset allocation changes allowed up to four times a year.
- Portable across jobs and geographies.
-
Accessibility:
- 24x7 access through the Web and Mobile App.
- One-time shift from Superannuation to NPS without tax incidence.
-
Post-Retirement Options:
- Contribution allowed until 75 years.
- Deferred withdrawal option up to 75 years.
- Complete withdrawal for corpus less than Rs. 5 lakhs at the age of 60.
Eligibility:
- Individuals aged 18-70 years.
- All Indian citizens, including Resident Indians (RIs) and Non-Resident Indians (NRIs).
- Individuals covered under any pension scheme.
Benefits:
- Tax benefits under Tier I account for both employee and employer contributions.
- Exit options and partial withdrawals under Tier I with specific conditions.
- Allows individuals to secure their post-retirement life.
How to Invest:
- Online mode through platforms like SBI YONO or Online SBI.
- Offline mode through registered State Bank of India branches.
- Standing Instruction (SI) available for systematic contributions.
Point of Presence (POP) / Bank Charges:
- Initial registration charges, contribution transaction charges, and service charges are applicable.
- Costs are borne by the subscriber at the time of registration and transactions through POP/Bank.
Grievance Redressal:
- A grievance redressal policy is in place for NPS and NPS Lite.
This comprehensive overview should provide a solid understanding of the National Pension System (NPS) in India, covering its features, eligibility criteria, investment benefits, and operational aspects. Feel free to ask if you have any specific questions or need further clarification on any aspect of the NPS.
