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Types of Charges under the National Pension System

8 Mins 19 May 2023 0 COMMENT

The world of retirement is a big one to explore. Chances are that you may have heard about the National Pension System (NPS) as a means of saving for your old age, as it is a great way to save for your future financial needs. National Pension System or NPS is a voluntary retirement savings scheme by the Central Government of India. It is valid for public and private sector employees. NPS helps its subscribers to invest in a pension during their employment lifecycle only. When you invest in NPS, it is necessary for you to understand the overall NPS charges.

NPS subscribers must understand the complete fee structure, total charges, and other costs. In this article, we will explore how NPS costs will be charged to subscribers.

NPS Charges - Types and Methods Of Deduction

The different types of charges apply to NPS subscribers. Below is a detailed list of the top six types of these charges and the associated details of how NPS cost will be charged. So, here you go:

  • Central Recordkeeping Agency or CRA charges

In the case of government employees, the Central Recordkeeping Agency or CRA charges for the Tier-1 account are paid by the respective Government. It excludes special cases like scheme preference change, partial withdrawal, or voluntary contribution. Hence, the CRA charges include the following:

Sr. No.

Type of charges

Amount

Method of deducting the charges

1

PRA opening charges

Charges for account opening if subscriber selects the physical PRAN card option- Rs. 40

Charges for account opening if subscriber selects the e-PRAN card option

Welcome kit sent in physical- Rs. 35

Welcome kit sent through email- Rs. 18

 

Through unit deduction

2

Annual PRA maintenance costs per account

Rs. 69

Through unit deduction

3

Charges per transaction

Rs. 3.75

Through unit deduction

  • Points of Presence or POP charges

The Point of Presence or POP charges for private employees in NPS in India are:

Sr. No.

Type of charges

Amount

Method of deducting the charges

1

Initial subscriber registration and contribution upload charges

Minimum Rs. 200 Maximum Rs. 400

POP collection only

2

Other subsequent charges

0.50% subject to a minimum of Rs. 30 and a maximum of Rs. 25,000

Non-financial charges- Rs. 30

POP collection only

3

Contribution through eNPS

0.20% of contribution with range of 15 INR to 10,000 INR

These are collected upfront

4

Withdrawal or exit fees

0.125% of corpus with range of Rs. 125 to Rs. 500

POP collection only

5

Persistency charges

For contributions of Rs. 1,000 to Rs. 2,999 – Rs. 50 per annum

For contributions of Rs. 3,000 to Rs. 6,000 – Rs. 75 per annum

For annual contributions of above Rs. 6,000 – Rs. 100 per annum

 

Through unit deduction.

  • Pension fund manager or PFM charges

The charges levied in the account of the Pension Fund Manager or PFM charges are:

Sr. No.

Type of charges

Amount

Method of deducting the charges

1

Investment management fees

AUM slabs managed by the PFM are:

Up to Rs. 10,000 crores - 0.09%

Between Rs. 10,001 crores to Rs. 50,000 crores - 0.06%

Between Rs. 50,001 crores to Rs. 1,50,000 crores - 0.05%

Above Rs. 1,50,000 crores - 0.03%

Through AUM.

  • Custodian charges

The custodian NPS charges include the asset servicing charges. The details of these charges are as follows:

Sr. No.

Type of charges

Amount

Method of deducting the charges

1

Asset servicing charges

For both electronic and physical segment- 0.0032% per annum

Through AUM

  • NPS trust charges

The NPS trust charges a small amount in lieu of expense reimbursement. These are deducted annually from the subscriber's account and are as mentioned below:

Sr. No.

Type of charges

Amount

Method of deducting the charges

1

Reimbursement of expenses

0.05% per annum

Through AUM

  • NPS payment gateway service charges

Last, but not least are the different NPS payment gateway service charges applicable for different transactions on the NPS portal. These are deducted at the time of the transactions, and their details are as follows:

Sr. No.

Type of charges

Rate of Quotation Per Transaction

Charges

1

Debit card charges

Free

Not applicable

2

Credit card charges

Percentage of Transaction Value

0.75%

3

UPI charges

Free

Not applicable

4

Internet banking charges

Flat rate as per INR

0

Conclusion

In conclusion, the National Pension System (NPS) is a comprehensive retirement planning instrument that provides a range of charges to meet the interests of different investors.  The key six types are CRA charges, POP charges, PFM charges, Custodian charges, and NPS payment gateway service charges. Not to miss are the details of methods adopted by the organization in charging these fees. Understanding the various NPS charges can help you make an informed decision and select a plan to support your retirement objectives.

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