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NPS Brochure
The National Pension System (NPS) is a defined contribution pension. NPS is voluntary for subscription by an individual to make contributions to his/her Individual Pension Account during the working life for creating a pension corpus from which regular income will be generated after retirement / working age.
NPS is mandatory for the Central Government recruits w.e.f. 1st Jan 2004 (except armed forces) which replaced the earlier defined benefit pension and has been subsequently adopted by almost all State Governments for their employees.
Regulated - NPS is regulated by PFRDA, which is established through an Act of Parliament. (PFRDA Act 2013)
Pension for All - can be voluntarily subscribed by any Indian Citizen (resident/non-resident/overseas citizen).
Low Cost – NPS is one of the lowest cost pension schemes in the world.
Flexible - Subscribers have choices of Point of Presence (PoP), Central Recordkeeping Agency (CRA), Pension Fund and Asset Allocation. The choices exercised can be changed subsequently.
Portable – NPS accounts can be transferred across employment, location/geography.
Tax efficient – Tax incentives are available to subscribers under the Income Tax Act 1961.
Optimum returns – Market linked returns based on investment choice made by the subscriber.
Transparent – Subscribers can access their NPS accounts online 24X7 and public disclosures mandated.
Every individual subscriber is issued a Permanent Retirement Account Number (PRAN) card and has a 12-digit unique number. In case of the card being lost or stolen, the same can be reprinted with additional charges.
The entities involved in NPS are as follows: -
NPS Trust: The NPS trust has been constituted for taking care of the assets and funds held under NPS in the interest of the beneficiaries (subscribers). The Trust issues the investment guidelines and regularly monitors and reviews the performance of Pension Fund Managers.
Central Recordkeeping Agency (CRA): Central Recordkeeping Agency performs various functions like recordkeeping, administration, issuance of PRAN and customer service functions for all subscribers of NPS. National Securities Depository Limited (NSDL) is the Central Record-keeper for the NPS.
Pension Funds (PFs): The eight Pension Funds (PFs) appointed by PFRDA manage the retirement savings under the NPS.
Trustee Bank: The Trustee Bank manages the banking functions across various entities of the NPS system viz. PFs, ASPs, Subscribers, etc. Axis Bank has been appointed as the Trustee Bank.
Annuity Service Providers (ASPs): ASPs would be responsible for delivering a regular monthly pension to the subscriber after exit from the NPS.
Point of Presence Service (POP-SPs): are the designated branches of registered POPs to extend the reach of NPS. POP/POP-SP will perform the functions relating to registration of subscribers, undertaking Know Your Customer (KYC) verification, receiving contributions and instructions from Corporates and transmission of the same to the designated NPS intermediaries.
Custodian: Stock Holding Corporation of India Ltd. (SHCIL), the Custodian is responsible for custody of underlying securities.
Any Indian citizen between the ages of 18 years and 70 years can subscribe to NPS.
Yes, An NRI can open an NPS account. Contributions made by NRI are 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. NRIs are only allowed to open Tier 1 accounts.
As an individual subscriber through the “All Citizens Model”
As an employee through the company of which he is an employee under the “Corporate Model”.
No, multiple NPS accounts for a single individual are not allowed and there is no necessity also as the NPS is fully portable across sectors and locations.
Tier I – A NPS account with restrictions on withdrawal
Tier II – A voluntary savings NPS account from which a subscriber can withdraw anytime. Read more
| Particulars | Tier I | Tier II |
|---|---|---|
| Minimum Contribution at the time of account opening | Rs. 500 | Rs. 250 |
| Minimum amount per contribution | Rs. 500 | Rs. 250 |
| Minimum total contribution in the year | Rs. 1000 | - |
To read more: Click Here
Contribution to NPS are *tax deductible under 80CCD(1), Section 80CCD(1B) and Section 80CCD(2) of the Indian Income Tax Act, 1961.
To read more: Click Here
In such an unfortunate event, the nominee will receive 100% of the NPS pension wealth in lump sum.
Yes. NPS can be voluntarily subscribed to along with any other pension scheme(s). However, an individual cannot have multiple NPS accounts.
The amount of pension will depend on the contribution amount, accrual/returns on the investments and the portion of corpus utilized by the subscriber for purchasing annuity plan from any of the Annuity Service Providers empaneled with PFRDA.
Calculate your pension amount: Click Here
Yes, a minor can be a nominee. In such cases, subscribers will be required to provide guardian's details and date of birth of the minor.
One read about all the NPS related charges here: Click Here
An employee in a company that is registered under the NPS Corporate Model can contribute to NPS in addition to his PF contribution. The employer can offer NPS as a benefit and will need to make a contribution to the scheme in the employee's NPS account. This contribution can be made only in tier I accounts. The employer can claim tax benefit for its contribution on behalf of an employee (up to 10% of basic + DA) by showing it as business expense. Under Section 80CCD(2) this amount contributed by the employer to NPS is not included in the employee's income for tax computation.
Employee of a corporate / entity which has implemented NPS.
Indian Citizen (resident or non-resident) and Overseas Citizen of India (OCI).
aged between 18-70 years.
Compliant to Know Your Customer (KYC) norms.
Subscribers can subsequently request to change the choices exercised as under:
| Choice | Frequency | Mode / method |
|---|---|---|
| Pension Fund | Once in a Financial Year |
i. Online – Login to your account or ii. Offline - Physical Application to PoP |
| Investment Choice | Four times in a Financial Year | i. Online – Login to your account or ii. Offline - Physical Application to PoP |
If the Employer/Corporate exercises choice of Pension Fund and Asset Allocation on behalf of Employee/Subscriber, then such Employee/Subscriber will have the option to revise the choices after 1(one) year (i.e 365 days) or else will continue with the existing choices made by employer (applicable to corporates adopting NPS on or after 14th Nov 2018).
The employer cannot forfeit pension corpus from an NPS account if an employee resigns from the organization. However, in case of employer being owned and controlled, either by the Central / State Government or a Government company, if so specifically provided in the service rules governing the terms of employment of the subscriber with it, the employer has the right to withhold its co-contributions including accruals hereon, for the purpose of recovery of the whole or part of any pecuniary loss caused, provided such loss is established, in any departmental or judicial proceedings, initiated against such subscriber by such employer.
There is flexibility to select scheme and Pension Fund either at corporate level or Subscriber Level. Corporations may opt for Pension Fund and investment choice or leave the option to employees.
Subscriber can access their Pension Account through:
Physical mode – by visiting his/her service provider (Employer/PoP)
Online - using login credentials provided by CRA in the Account Opening Kit
Web-based login
Mobile Application
Telephone - using the T-Pin received in the Account Opening Kit.
Toll Free numbers – NSDL 1800 222 080 and Kfintech 1800 208 1516
It normally takes three working days for the contributions to get reflected in your NPS. account. The process flow entails:
Receipt/realization of contribution in service provider’s (PoP) bank account
Upload of details by service provider (PoP) to CRA and fund remittance to Trustee Bank
Transfer of the funds from the Trustee Bank to Pension Fund based on CRA instructions.
Investment of the funds by Pension Fund and declaration of scheme NAV
Allocation of units by CRA for the contributed amount
Reflection of corresponding units in the subscriber’s NPS account.
Subscribers will receive SMS & Email confirmations for credit of units in account.
For changing the account details as recorded with CRA, subscriber must submit the request to the Service Provider (PoP) or Employer, as the case may be: -
| Parameter of Change | Mode / method to change |
|---|---|
| Name | Physical Application – Form S2 |
| Address | Physical Application – Form S2 |
| Contact Details | i. Online – Login to your account or ii. Offline - Physical Application – FormS2 |
| Nomination | i. Online – Login to your account or ii. Offline - Physical Application – FormS2 |
| Bank Details | i. Online – Login to your account or ii. Offline - Physical Application – FormS2 |
Subscriber can compare the performance of his/her Pension Account vis a vis the performance of each Asset Classes and each Pension Funds which is available at the following web link http://npstrust.org.in/returncalc
The returns generated by the Pension Funds For each Asset Class Is published on a weekly basis by NPS Trust and available at the following web link http://npstrust.org.in/return-of-npsscheme
The portfolio of Asset Classes managed by each Pension Fund is periodically published by the PensionFunds on their websites. http://npstrust.org.in/content/scheme-portfolio
A subscriber can withdraw from NPS in the following circumstances/conditions:
i) Partial Withdrawal - after completion of 3 years subscriber can withdraw 25% of his/her own contributions for specific reasons viz illness, disability, education or marriage of children,purchasing property, starting a new venture. A subscriber can partially withdraw upto a maximum of 3 times during his/her entire tenure in NPS.
ii) Premature Withdrawal – Any time before attaining age of 60 years or superannuation or before completion of 03 years (if subscriber joined NPS after attaining 60 years of age), subscriber can withdraw maximum 20% of the corpus as lump sum and minimum 80% of the corpus must be utilized for purchasing an annuity plan for receiving the pension. If the accumulated corpus is less than Rs 2.5 lakh, the entire corpus is paid as lump sum to the subscriber.
Normal Withdrawal –on attaining age of 60 years or superannuates in accordance with the service rules applicable to such subscriber (if subscriber has joined NPS before 60 years of age) or after completion of 03 years (if subscriber has joined NPS after 60 years of age), subscriber can withdraw maximum 60% of the corpus as lump sum and minimum 40% of the corpus must be utilized for purchasing an annuity plan for receiving the pension. If the accumulated corpus is less than Rs 5 lakhs, the entire corpus is paid as lump sum to the subscriber.
Subscriber also has the option to: -
(i) Continue in NPS till the age of 75 years or exit any time after such continuance before75 years.
(ii) While exiting from NPS, subscribers can.
Defer receiving the lump sum (60% corpus) till the age of 75 years or withdraw the same installments till 75 years
Defer Annuity purchase (40%corpus) till the age of 75.
In case of an unfortunate event of death of a subscriber, the nominee/legal heir can withdraw. the entire accumulated corpus. The nominee / family members of the deceased subscriber can also purchase annuity if they so desire.
On attaining the age of 60 years or superannuation, the NPS account of a corporate subscriber will be auto- continued under All Citizen Model up to 75 years of age.
Subscriber can exercise the option of normal exit from NPS at any point of time he/she wishes, after attaining the age of 60 years / superannuation.
At the age of 75 years, the account must be closed mandatorily.
Partial withdrawals from your NPS account are allowed for dealing with contingency. situations and following are the reasons/conditions for which partial withdrawal is allowed:
Higher education of his/her children
Purchase or construction of residential house or flat
Treatment of specified illnesses
Disability of more than 75%
Skill development/re-skilling or any other self-development activities
Establishment of own venture or any start-ups
Requests for withdrawals from NPS can be initiated by the subscriber by login to his/her Pension Account or by submitting a physical form to the service provider (PoP) directly along with the specified documents.
How will I receive my pension?
Subscriber will receive pension from the Annuity Service Provider (ASP) according to the Annuity Plan chosen and purchased by the subscriber from the ASP (Insurance Company) and the terms and conditions therein.
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