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On retirement, a part of the corpus can be withdrawn in lump sum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

How-NPS-Works How-NPS-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 enusres 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 ₹50,000 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

NPS-investment-options NPS-investment-options
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

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.

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

  • 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

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

Articles

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Videos

Financialmindfulness, NPS - Advantages & Tax benefits

NPS: Pension and Tax saving in one

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