National Pension Schemes

PFRDA (Pension Fund Regulatory & Development Authority) is the regulator for NPS.

Any citizen of India, whether resident or non-resident can join NPS, subject to the following conditions: a) Individuals who are aged between 18-70 years as on the date of submission of his/her application to the POP/POP-SP. b)The citizens either as individuals or as employee-employer groups corporates subject to submission of all required information and Know your customer(KYC) documentation.

At present, there are seven Pension Fund Managers in the country: Aditya Birla Sun Life Pension Management Limited. HDFC Pension Management Company Limited. UTI Retirement Solutions Limited. SBI Pension Funds Private Limited. ICICI Prudential Pension Funds Management Company Limited. Kotak Mahindra Pension Fund Limited. LIC Pension Fund. SBI Pension Fund, LIC Pension Fund, and UTI Retirement Solutions are the only fund managers who manage pension contributions of government employees under NPS.

PRAN (Permanent Retirement Account Number) is the unique and portable number provided to each subscriber under NPS and remains the same throughout. On successful registration, a PRAN will be allotted to the subscriber. It is a 12 digit number.

Yes, an NRI client can open an NPS account. The contribution made by NRI is subject to regulatory requirements as prescribed by RBI and FEMA from time to time. If the subscriber’s citizenship status changes, his/her NPS account would be closed.

Under the NPS account, two sub-accounts – Tier I & II are provided. Tier I: This is the basic tier in NPS. It is a mandatory account. The investment amount is locked till 60 years of age. At the age of 60, 60% of the accumulated amount can be withdrawn, and the remaining amount will be paid out as a monthly pension. Only Tier I is eligible for tax exemption. This is a non-withdrawable retirement account that can be withdrawn only upon meeting the exit conditions prescribed under NPS. Tier-II: This is a more flexible tier of NPS, it’s a voluntary savings facility available as an add-on to any Tier-1 account holder. Subscribers will be free to withdraw their savings from this account whenever they wish. This carries no tax benefit. An investor needs to have a Tier I investment before they can invest in Tier II. Investors of NPS need to choose one of the above tiers to make their contribution.

The NPS offers two approaches to invest subscriber’s money: a) Active choice – Here the individual would decide on the asset classes in which the contributed funds are to be invested and their percentages NPS offers 4 funds to subscribers – Equities (E), Corporate Bonds (C) Government Securities(G), and Alternate Investment (A) Equity (E): Scheme invests predominantly in Equity market instruments. Corporate Debt (C): Scheme invests in Bonds issued by Public Sector Undertakings (PSUs), Public Financial Institutions (PFIs), Infrastructure Companies and Money Market Instruments Government Securities (G): Scheme invests in Securities issued by Central Government, State Governments and Money Market Instruments Alternative Investment Funds (A): In this asset class, investments are being made in instruments like CMBS, REITS, AIFs, etc. NPS restricts investment towards Equities Funds to 75% of contribution amount for both Tiers I and Tier II NPS Accounts. However, subscribers can invest up to 100% in Corporate Bonds or Government Bank Fund. Further, Investment in Alternate Funds is restricted to 5% of the contribution amount. The alternate Funds option is there for Tier I NPS account only. b) Auto choice – This is the default option under NPS and wherein the management of investment of funds is done automatically based on the age profile of the subscriber. There are 3 Life Cycle Funds – LC 75, LC 50, and LC 25. These are also known as Aggressive, Moderate, and Conservative Life Cycle Funds respectively. Aggressive – LC75 In this choice, max 75% is given to E (equity) in the beginning and slowly moves to C and G near retirement age. Moderate – LC50 In this choice, max 50% is given to E (equity) in the beginning and slowly moves to C and G near retirement age. Conservative – LC25 In this choice, max 25% is given to E (equity) in the beginning and slowly moves to C and G near retirement age.

Yes. Subscribers can exercise this option twice in a financial year.

Yes, NPS offers its subscribers the option to change the scheme preference. Subscriber has the option to realign his investment in asset classes E, C, A, and G based on age and future income requirement. Also, the subscriber has the option to change the PFM and the investment option (active /auto choice).

An additional deduction for investment up to Rs. 50,000 in NPS (Tier I account) is available exclusively to NPS subscribers under subsection 80CCD (1B). This is over and above the deduction of Rs. 1.5 lakh is available under section 80C of the Income Tax Act.

Yes, one can defer the withdrawal of the eligible lump sum amount payable under NPS till the age of 70 years.

Yes. Subscriber can withdraw up to 25% of contributed in her Tier – I NPS Account after 3 years of Account opening. Additionally, the subscriber is allowed to withdraw from the Tier I NPS account twice after the first withdrawal. Withdrawal is allowed from Contribution deposited by Subscriber to avail of tax benefit u/s 80CCD (1B).

No. In the entire life span, an individual will be allowed to open only one PRAN.

Subscriber can exit from NPS after 10 years of account opening or attainment of superannuation age (retirement age) whichever is earlier.

No, this option is not available. At the time of investing in Annuity, Subscriber gets an option to select any of the Annuity Service Providers registered with PFRDA. Once the choice is made and pension starts coming, there is no option of changing the Annuity Service Provider.

Yes. Subscriber needs to submit the request along with the Service Charge of Rs. 20 plus GST for initiating the modification.

Subscriber needs to deposit Rs.250 to the POP in order to unfreeze Tier II NPS Account.

Subscribers can unfreeze the NPS Account by paying Rs.500 as the minimum contribution amount and Rs.100 as the penalty. POP charges to be added to it. Subscribers can deposit Contribution using the eNPS platform as well.

Yes, once the contribution is credited to the Subscriber’s NPS account, an email alert, as well as an SMS alert, is sent to the registered email ID and mobile number of the Subscriber.