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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?

ICICI direct
Brokerage Plan

Quick Account Opening

Open your NPS account digitally in less than 20 mins

Brokerage Plan

Flexibility

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

Brokerage Plan

Portability

Seamlessly transfer pension account across jobs & location

Brokerage Plan

Well-regulated

PFRDA regulates and monitors investment norms & performance of fund managers

Brokerage Plan

Professionally Managed

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

Brokerage Plan

Low Cost

Annual fees on investment less than 0.09%

Brokerage Plan

Better Returns

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

Brokerage Plan

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

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

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.

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

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.

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

Login to www.icicidirect.com account — Click on NPS — Click on Transact — Click on Place contribution.