Opening NPS Account Online — Step-by-Step + Documents

The National Pension Scheme (NPS) is an initiative by the Government of India to encourage citizens to save for retirement. It is a voluntary contribution scheme managed by a professional fund manager and linked to the market. In this article, we will guide you through the process of opening a National Pension Scheme account online.

Eligibility Criteria for National Pension Scheme (NPS)

Any person fulfilling the criteria below is eligible to invest in a National Pension Scheme Account:

• The person should be an Indian Citizen (Resident/ Non­-Resident) or a Non-Resident Indian (NRI).
• You can start an investment in NPS if you are between 18 and 70 years of age.
• The person should comply with all Know-Your-Customer (KYC) norms detailed in the application.
• People who are not eligible for NPS are Overseas citizens of India (OCI), Persons of Indian Origin (PIOs), and Hindu Undivided Families (HUFs).
• An NPS account cannot be opened on behalf of a third person since it is an individual account.
• When you invest in NPS, your funds are spread across different financial instruments such as Equities, Government Securities, Corporate Debt, and Alternative Investment Funds. This diversifies your investment and generates attractive returns.
• With NPS, you have the flexibility to decide how to allocate your funds across these asset categories based on your risk tolerance and goals. There are two strategies to approach NPS asset allocation, Active choice, and Auto Choice. You can learn more about these two choices in detail by clicking here.
• NPS is a Voluntary Retirement Scheme (VRS), which means that there is no mandate (besides the minimum yearly contribution) for the maximum contribution amount, payment date, and payment frequency. You can modify the amount to meet your requirements and pay anytime during the year and as often as possible.
• On maturity of your NPS account, you can withdraw up to 60% of your corpus as a lump sum, which is tax-free when you retire. The remaining corpus must be used to purchase annuities to receive a regular pension income for the rest of your life.

Basics of the National Pension Scheme You Should Know

• When you invest in NPS, your funds are spread across different financial instruments such as Equities, Government Securities, Corporate Debt, and Alternative Investment Funds. This diversifies your investment and generates attractive returns.
• With NPS, you have the flexibility to decide how to allocate your funds across these asset categories based on your risk tolerance and goals. There are two strategies to approach NPS asset allocation, Active choice, and Auto Choice. You can learn more about these two choices in detail by clicking here.
• NPS is a Voluntary Retirement Scheme (VRS), which means that there is no mandate (besides the minimum yearly contribution) for the maximum contribution amount, payment date, and payment frequency. You can modify the amount to meet your requirements and pay anytime during the year and as often as possible.
• On maturity of your NPS account, you can withdraw up to 60% of your corpus as a lump sum, which is tax-free when you retire. The remaining corpus must be used to purchase annuities to receive a regular pension income for the rest of your life.

Types of NPS Accounts Explained

There are two types of NPS accounts available for investing in NPS Tier 1 and NPS Tier 2.

The NPS Tier 1 account is mandatory for anyone who wants to invest in NPS. Withdrawals from this account can be made as per the rules and regulations mentioned. By investing in this account, you can avail tax benefits of up to ₹2 lakhs under Section 80C and 80CCD. The minimum amount required to open the account is ₹500, and you can contribute a minimum of ₹500 per month or ₹1000 per annum. There is no maximum NPS contribution limit.

The NPS Tier 2 account is optional, and withdrawals are permitted. However, only government employees can avail tax exemption of up to ₹1.5 lakhs for investing in this account. The minimum amount required to open the account is ₹1000, and the minimum contribution is ₹250. There is no maximum limit on NPS contributions for this account.

You can click here to know more about the tax benefits of NPS. Next, lets learn how to start NPS account.

How to Open a National Pension Scheme (NPS) Account

Begin securing your future now by understanding how to open national pension scheme account with ICICI Direct. Just follow the steps outlined below to get started:

Step-by-Step Online Process to Open NPS Account

Step 1: Log-in to ICICI Direct.com and visit the NPS section.

Step 2: Select Tier 1 as your account type and click proceed.

Step 3: Provide your preference for a Pension Fund Manager (PFM) and the scheme you want to choose.

Step 4: Provide your personal details and upload all the required documents (Scanned copy of your photograph and signature).

Step 5: Congratulations! You have successfully opened your NPS account. All you need to do now is electronically sign the document.

Conclusion

Planning for the future is an important step when it comes to investing or creating a diversified portfolio. Opening a National Pension System (NPS) account is a simple process that offers long-term financial security and tax benefits. You can take a step ahead in the financial game by initiating your retirement investment journey today with ICICI Direct investment app.