(NPS) National Pension Scheme: Features, Tax Benefit, Charges & More

What is NPS
Features
Tax Benefit
Investment Options under NPS
Active Choice
Auto Choice
Exit & Withdrawal
Articles
Videos

What is National Pension System?

A government sponsored retirement savings scheme

Regulated by Pension Fund Regulatory and Development Authority (PFRDA)

Allows regular contribution to a pension fund during working life

Subscribers choose from Equity and Fixed Income funds to grow savings

On retirement, a part of the corpus can be withdrawn in lump sum

Balance corpus is invested in an annuity plan to secure regular income

How it works?

Features

Quick Account Opening

Open your NPS Account digitally in less than 20 minutes

Flexibility

Start with just ₹ 1000 per annum through Lumpsum or SIP

Portability

Seamlessly transfer pension account across jobs and location

Low Cost

Annual fees on investment less than 0.09%

Better Returns

Mix of Equity and Debt offers higher return than traditional retirement schemes

Power of Compounding

Lock-in till 60 years ensure subscribers remain invested for a long period of time.

Tax Benefits

For Salaried Individuals

Category	Section	Investment Limit
Own Contribution	80 CCD (1)	10% of Salary (upto 1.5 lakh)*
Additional Contribution	80 CCD (1B)	₹50,000
Employer Contribution	80 CCD(2)	10% of Salary (upto 7.5 lakh)^#

For Self Employed Individuals

Category	Section	Investment Limit
Own Contribution	80 CCD (1)	20% of Gross Annual Income (upto 1.5 lakh)*
Additional Contribution	80 CCD (1B)	₹50,000

Investment Options under NPS

Risk:
Very High
High
Moderate
Low

Fund Options	Risk Profiling	Exposure Limit
Government Securities	Low	Upto 100%
Corporate Bonds	Moderate	Upto 100%
Equities	High	Upto 75%
Alternate Investment	Very High	Upto 5%

Tier I and Tier II Account

Tier I – Tax Saving Account

Tier 1 account mandatory to join NPS
Investment is locked-in until the age of 60.
Withdrawals are conditional.
Tax benefits can be claimed.

Invest Now

Tier II – Any time Withdraw

Only Tier-I account holders can open it.
No Lock-in period on investment.
Flexible Withdrawal & Exit Rules.
No Tax Exemptions on Contributions.

Invest Now

Active Choice

Under Active Choice, subscribers get the flexibility to decide allocation mix across 4 asset classes

Stocks (max. 75%)

Coporate Debt (max. 100%)

Government Bonds (max. 100%)

Alt. Investment Funds (max. 5%)

Total Allocation 100%

Note: Considering 7 – 10 years weighted average returns for an individual(Source: NPS Trust - 13th May'22 report ). Expected maturity values for an investment of Rs 10,000

High Risk

Expected Returns

10.89%-12.05% p.a.

Expected Maturity Amount*

₹51.90 L - ₹60.20L

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Auto Choice

Under Auto choice, funds are invested across asset classes as per a pre-defined portfolio. Subscribers get to choose from Aggressive, Moderate and Conservative allocation. As a subscriber approaches retirement, exposure to more risky investments reduce automatically.

Conservative - LC25

View Details

10.24%-11.19% p.a. Expected Returns

Stocks
Coporate Debt
Government Bonds

₹1.26Crs- ₹1.53Crs

Expected Maturity Amount* Low Risk

Moderate - LC50

View Details

10.24%-11.19% p.a. Expected Returns

Stocks
Coporate Debt
Government Bonds

₹1.5Crs - ₹1.87Crs

Expected Maturity Amount* Medium Risk

Aggressive - LC75

View Details

11.39%-12.46% p.a. Expected Returns

Stocks
Coporate Debt
Government Bonds

₹1.72Crs - ₹2.17Crs

Expected Maturity Amount* High Risk

* Expected Maturity Amount for an investment of₹10,000 per month for 25 years

Exit & Withdraw

Exit at Maturity (60 years)

Up to 60% of corpus can be withdrawn Tax-Free
Minimum 40% to be invested in annuity for monthly pension
If corpus ≤ to Rs. 5 lakhs, withdrawal of full amount is permitted

Exit on Death

On death 100% of the pension wealth amount will be payable to the nominee/ legal heir of the subscriber.
There would not be any purchase of annuity/monthly pension.

Pre-mature exit

Permitted only after 10 years of participation
Up to 20% of corpus can be withdrawn Tax-Free
Minimum 80% to be invested in annuity for monthly pension
If corpus ≤Rs. 2.5 lakhs, withdrawal of full amount is permitted

Partial Withdrawal

Up to 25% of the contributions deposited can be withdrawn
In the entire life span, up to 3 withdrawals can be made
1st withdrawal can be exercised 3 yrs after a/c opening
2nd & 3rd withdrawal can be exercised anytime after previous one

Charges

Point of Presence (PoP) charges

Charge Head	Charges
Account Opening	₹ 200
Contribution Processing	0.50% subject to min ₹ 30 and max ₹ 25000
Non-Financial Transaction Processing	₹ 30
Persistency	Applicable for subscribers (except corporate NPS) active for more than 6months with a POP.

Pension Fund Manager (PFM) Charges

AUM Slab (in Cr)	PFM charges % for the Slab
Upto ₹ 10,000	0.09%
₹ 10,001 to ₹ 50000	0.06%
₹ 50,001 to ₹ 1,50,000	0.05%
₹ 1,50,001 and Above	0.03%
* UTI Retirement Solutions Ltd charges a fee of 0.07% under this slab.

Central Record Keeping Agency (CRA) Charges

Charge Head	Kfintech	NSDL
PRAN Generation	₹ 39.36	₹ 39.36
Annual Maintenance	₹ 57.63	₹ 69.00
Financial Transaction processing	₹ 3.36	₹ 3.75

Other Intermediaries Charges

Intermediary	Charge Head	Charges (Annual)
Custodian	Custodian Fee	0.0032% p.a
NPS Trust	Reimbursement of Expenses	0.005% p.a

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Asset allocation for Conservative plan

It automatically gets re-adjusted with the age of the subscriber as shown in the chart below:

Your age	Equity	Corporate debts	Govt. bonds
Upto 35 years	25%	45%	30%
36 years	24%	43%	33%
37 years	23%	41%	36%
38 years	22%	39%	39%
39 years	21%	37%	42%
40 years	20%	35%	45%
41 years	19%	33%	48%
42 years	18%	31%	51%
43 years	17%	29%	54%
44 years	16%	27%	57%
45 years	15%	25%	60%
46 years	14%	23%	63%
47 years	13%	21%	66%
48 years	12%	19%	69%
49 years	11%	17%	72%
50 years	10%	15%	75%
51 years	9%	13%	78%
52 years	8%	11%	81%
53 years	7%	9%	84%
54 years	6%	7%	87%
55 years and above	5%	5%	90%

Asset allocation for Moderate plan

It automatically gets re-adjusted with the age of the subscriber as shown in the chart below:

Your age	Equity	Corporate debts	Govt. bonds
Upto 35 years	50%	30%	20%
36 years	48%	29%	23%
37 years	46%	28%	26%
38 years	44%	27%	29%
39 years	42%	26%	32%
40 years	40%	25%	35%
41 years	38%	24%	38%
42 years	36%	23%	41%
43 years	34%	22%	44%
44 years	32%	21%	47%
45 years	30%	20%	50%
46 years	28%	19%	53%
47 years	26%	18%	56%
48 years	24%	17%	59%
49 years	22%	16%	62%
50 years	20%	15%	65%
51 years	18%	14%	68%
52 years	16%	13%	71%
53 years	14%	12%	74%
54 years	12%	11%	77%
55 years and above	10%	10%	80%

Asset allocation for Aggressive plan

It automatically gets re-adjusted with the age of the subscriber as shown in the chart below:

Your age	Equity	Corporate debts	Govt. bonds
Upto 35 years	75%	10%	15%
36 years	71%	11%	18%
37 years	67%	12%	21%
38 years	63%	13%	24%
39 years	59%	14%	27%
40 years	55%	15%	30%
41 years	51%	16%	33%
42 years	47%	17%	36%
43 years	43%	18%	39%
44 years	39%	19%	42%
45 years	35%	20%	45%
46 years	32%	20%	48%
47 years	29%	20%	51%
48 years	26%	20%	54%
49 years	23%	20%	57%
50 years	20%	20%	60%
51 years	19%	18%	63%
52 years	18%	16%	66%
53 years	17%	14%	69%
54 years	16%	12%	72%
55 years and above	15%	10%	75%

Equity

Mutual Fund

Currency

Commodity

Derivative

iLearn

Bonds

What is National Pension System?

A government sponsored retirement savings scheme

Regulated by Pension Fund Regulatory and Development Authority (PFRDA)

Allows regular contribution to a pension fund during working life

Subscribers choose from Equity and Fixed Income funds to grow savings

On retirement, a part of the corpus can be withdrawn in lump sum

Balance corpus is invested in an annuity plan to secure regular income

How it works?

Features

Quick Account Opening

Flexibility

Portability

Low Cost

Better Returns

Power of Compounding

Tax Benefits

For Salaried Individuals

For Self Employed Individuals

Investment Options under NPS

Tier I and Tier II Account

Tier I – Tax Saving Account

Tier II – Any time Withdraw

Active Choice

Under Active Choice, subscribers get the flexibility to decide allocation mix across 4 asset classes

High Risk

10.89%-12.05% p.a.

₹51.90 L - ₹60.20L

Auto Choice

Conservative - LC25

₹1.26Crs- ₹1.53Crs

Moderate - LC50

₹1.5Crs - ₹1.87Crs

Aggressive - LC75

₹1.72Crs - ₹2.17Crs

Exit & Withdraw

Exit at Maturity (60 years)

Exit on Death

Pre-mature exit

Partial Withdrawal

Charges

Point of Presence (PoP) charges

Pension Fund Manager (PFM) Charges

Central Record Keeping Agency (CRA) Charges

Other Intermediaries Charges

Articles

Invest in your retirement travel dreams with NPS(National Pension System)

Better Early than late to Start Saving taxes with NPS!

Securing life?s second innings with NPS (National Pension System)

Videos

Financialmindfulness, NPS - Advantages & Tax benefits

NPS: Pension and Tax saving in one

Investonomics Live Understanding National Pension System with Rahul Bhagat, Sr. Vice President and Business Head- ICICI Prudential Pension Funds