What is NPS?

Features of NPS

Charges

What is National Pension System?

National Pension System (NPS) is a low-cost and tax-efficient voluntary retirement savings scheme launched under the purview of Pension Fund Regulatory & Development Authority (PFRDA) and Government of India.

It is a social security initiative that encourages people to invest in a pension account at regular intervals during the course of their employment. Here, individual savings are invested by PFRDA regulated professional fund manager into diversified portfolio comprising of Equity, Bonds & Debentures. On retirement, subscribers take out a certain percentage of the corpus upfront & receive the remaining amount as a monthly pension.

Any Indian citizen from the age group of 18 years to 70 years can open a NPS account. Subscribers can start with a lumpsum contribution of Rs. 1,000 in a financial year or through monthly investment of Rs. 500.

How NPS Works?

Quick Account Opening

Open your NPS account digitally in less than 20 mins

Flexibility

Start with just Rs. 1000 per annum through Lumpsum or SIP

Portability

Seamlessly transfer pension account across jobs & location

Well-regulated

PFRDA regulates and monitors investment norms & performance of fund managers

Professionally Managed

Choose from a range of investment options managed by India’s best pension fund managers

Low Cost

Annual fees on investment less than 0.09%

Better Returns

Combination of Equity & Debt offers higher return than traditional retirement schemes

Power of Compounding

Lock-in till the age of 60 years ensures subscribers remain invested for a long period of time

Charges

Point of Presence (PoP) charges

Charge Head	Charges
Account Opering	200
Contribution Processing	0.50% subject to min 30 and max 25,000
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 - 50,000	0.06%
50,001 - 1,50,000	0.05%
1,50,000 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	Charges for Kfintech CRA	Charges for NSDL CRA
PRAN Generation	39.36	40.00
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

Payment Gateway Charges

Mode of Payment	Charges
Rupay Debit Card	Nil
UPI	Nil
Net Banking	Nil
Credit Card	Not Available

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FAQs

Who is eligible to subscribe for NPS (National Pension System)?

A citizen of India, whether resident or non – resident can join the NPS subject to following conditions:

a. Subscriber should be between 18 – 70* years of age as on the date of submission of her application

b. Subscriber should comply with the prescribed Know Your Customer (KYC) norms as detailed in the NPS -Subscriber Registration Form

NPS is a unique account. Existing NPS subscriber cannot open another NPS account. In case of duplication of NPS account, CRA shall reject subscriber request.

*Note: Currently, ICICI Securities Ltd. is not offering NPS to NRI

What are the tax benefits under NPS?

Tier-I account:

i. NPS Contributions are eligible for tax deduction u/s 80 CCD (1) of Income Tax Act upto 10% of basic + DA or upto 20% of Gross Income for self-employed within the overall ceiling of Rs. 1.50 Lacs under Sec. 80 CCE.

ii. An additional deduction upto Rs. 50,000/- is available u/s 80CCD 1(B) of Income Tax Act.

iii. In case the subscriber receives contributions from the employer also, tax deduction under section 80 CCD (2) of Income Tax Act may be claimed by the subscriber in addition to the tax benefits available under Sec. 80 CCE.

Tier-II account:

i. No tax benefits are available on contributions made in an NPS Tier-II account.

ii. No tax rebates/special treatment for the gains arising out of investment in NPS Tier-II. The assessee shall be liable for taxation as per the marginal tax rate applicable to him/her.

What are different types of NPS account?

There are 2 types of NPS account: Tier 1 and Tier 2.

Tier 1

- It is a mandatory account for those subscribing for NPS.

- You can avail tax benefits on investment in NPS Tier 1 account

- It is non-withdrawable retirement account. Withdrawal is allowed upon meeting the withdrawal conditions prescribed under NPS as per regulation. Partial withdrawal is allowed up to 25% of his own contribution (excluding employer contribution) for Marriage or Higher education of children or purchase of house/flat or for prescribed illness (subject to certain conditions) if subscriber has been in NPS for at least 3 years).

Tier 2

- It is voluntary saving facility as an add-on to any NPS Tier 1 account holder.

- You can withdraw from NPS Tier 2 account whenever you wish

Particulars	NPS Tier 1	NPS Tier 2
Minimum Contribution at the time of account opening	Rs. 500	Rs. 1000
Minimum amount per contribution	Rs. 500	Rs. 250
Minimum amount to be invested every financial year (Note: applicable from second Financial year from the date of PRAN allotment date)	Rs. 1000	NA
Minimum no. of contribution (Note: applicable from second Financial year from the date of PRAN allotment date)	1 per FY	NA

Can I register a SIP request for making investment in my NPS account? How will the SIP request work?

Yes, I-Sec offers you a facility to place a SIP request for making periodical investment in your NPS account on www.icicidirect.com after T+3 working days of online NPS subscription.

How can I make lump contribution in NPS through www.icicidirect.com ?

You can make Lump sum contribution by following below mentioned path:

NPS Tier I v/s Tier II a/c

Features	Tier I	Tier II
Mandatory for investing in NPS?	Yes	No
Who can Open?	Any Indian Citizen (Resident or NRI) between 18 and 70 years of age	Only Members of Tier I
Liquidity	Lock-in till the age of 60 yrs, conditional withdrawal possible	At any point of time
Minimum Contribution per year	Rs. 500 on account opening & Rs. 1,000 each year thereafter	Rs. 1,000 on account opening & not mandatory thereafter
Minimum number of contribution in a year	1	Not mandatory
Minimum amount per contribution	500	250
Available Asset Classes	Same for both Tier I & Tier II a/c’s – Equity (E), Corporate Bonds (C), Government Securities (G) & Alternative Investment (A)
Fund Management Charges	Same for both Tier I & Tier II a/c’s
Tax Benefits on Investment	Eligible for tax deduction under Section 80CCD of the Income Tax Act, 1961. 80CCD (1): Permitted deduction is 10% of monthly income for salaried individual and 20% for theself-employed individual, limited to a maximum of Rs.1.5 Lac. 80CCD (1B): A maximum of Rs.50,000, regardless of your profession. 80CCD (2): Employer’s contribution up to 10% of salary over and above 80DCCD (1). The deduction is 14% for central government employees. ^@ Within the overall limit of Rs.1.5 Lac deduction under Section 80C. ^## Over and above the deduction under Section 80C. ^@ Over and above the deduction under Section 80C” (under Tier I) and “No Tax Benefits” (under Tier II)
Taxation on yearly earning	Not Taxable
Taxation on withdrawal	On maturity, upto 60% of the corpus can be withdrawn and the same is tax-exempt. Remaining 40% is used to purchase an annuity plan” (under Tier I) and “The entire corpus to be withdrawn is added to subscribers income and taxed as per the marginal tax slab” (under Tier II)

Auto Choice Table

Age	LC 75			LC 50			LC 25
	Asset Class			Asset Class			Asset Class
	E	C	G	E	C	G	E	C	G
Up to 35	75%	10%	5%	75%	10%	5%	75%	10%	5%
36	75%	10%	5%	75%	10%	5%	75%	10%	5%
37	75%	10%	5%	75%	10%	5%	75%	10%	5%
38	75%	10%	5%	75%	10%	5%	75%	10%	5%
39	75%	10%	5%	75%	10%	5%	75%	10%	5%
40	75%	10%	5%	75%	10%	5%	75%	10%	5%
41	75%	10%	5%	75%	10%	5%	75%	10%	5%
42	75%	10%	5%	75%	10%	5%	75%	10%	5%
43	75%	10%	5%	75%	10%	5%	75%	10%	5%
44	75%	10%	5%	75%	10%	5%	75%	10%	5%
45	75%	10%	5%	75%	10%	5%	75%	10%	5%
46	75%	10%	5%	75%	10%	5%	75%	10%	5%
44	75%	10%	5%	75%	10%	5%	75%	10%	5%
45	75%	10%	5%	75%	10%	5%	75%	10%	5%
60	75%	10%	5%	75%	10%	5%	75%	10%	5%

What is National Pension System?