NATIONAL PENSION SYSTEM(NPS)

National Pension System (NPS) is a defined contribution pension system introduced by the Government of India as a part of Pension Sector reforms, with an objective to provide social security to all citizens of India. It is administered and regulated by PFRDA

Features of NPS scheme

Eligibility

All Citizens of India

Age

Individuals aged between 18-65 years

Covered under any pension scheme

Eligible to subscribe

Two Tier Structure

 

  • Tier I – Pension account (Mandatory A/C - Tax benefit available)
  • Tier II – Investment account (Optional A/C – No tax benefit but corpus is withdrawable anytime)

 

Minimum Contribution during A/C opening

 

  • Tier I – Rs.500
  • Tier II – Rs.1,000

 

Minimum total contribution in a year

 

  • Tier I – Rs.1,000 (Min. amount per contribution Rs.500)
  • Tier II – N.A. (Min. amount per contribution Rs.250)

 

Part Withdrawals under Tier I

 

  • A partial withdrawal of accumulated pension wealth, not exceeding 25% of the employee contributions, after a lock in period of 3 years.
  • Allowed to withdraw only a maximum of three (3) times during the entire tenure subject to conditions prescribed by the Regulator.

 

Exit Option under Tier I

1. On attaining age of 60 years:

  • Min. 40% of the corpus needs to be invested in Annuity Scheme
  • 60% of the corpus can be commuted/withdrawn in lump sum/ staggered anytime upto age of 70 yrs; 40% of total corpus withdrawn is tax free

 

2. Before 60 years of age (after completion of 10 years):

  • 20% of the corpus can be withdrawn in lump sum
  • 80% of the corpus will be invested in a ‘Annuity Scheme’

 

1. Benefits of investing in NPS for pension purpose


Tax Benefit available under Tier I Account:

a. Employee Contribution:

i. Tax deduction u/s 80CCE for investments (10% of Basic & DA) within overall limit of Rs. 1.50 lacs.

ii. Exclusive tax savings provision: Tax deduction u/s 80CCD (1B) on contribution of Rs.50,000.

b. Employer contribution: Tax deduction upto 10% of salary (Basic + DA) u/s 80CCD (2) without any monetary ceiling

2. Low Cost – A very low-cost product with Fund Management Charges of 0.01%.

3. Superior returns – Attractive market linked returns

4. Flexibility of Investments – Subscriber may select a Pension Fund Manager (PFM) of their choice. Subscriber is allowed to change PFM once during a Financial Year. Subscribers may also define their asset allocation, which may be changed twice in a given Financial Year.

5. Portability – Portable across jobs and geographies.

6. Online Access to NPS account – 24 X 7 X 365 through Web & Mobile App of Central Recordkeeping Agency (CRA)

7. One-time shift to NPS - Existing corpus under Superannuation can one-time be transferred to NPS without any Tax Incidence

8. Continuation in NPS scheme post retirement – Provision to contribute till 70years or to differ withdrawal upto the age of 70 years.

9. Complete withdrawal for corpus less than Rs.2 lacs - In case total accumulated corpus is less than Rs. 2 Lacs on attaining the age of 60 or later, subscriber may withdraw entire corpus.


How to Subscribe


Subscribers can apply for NPS through the below mentioned routes:

  • Online Mode: Subscribers can apply for NPS account online. Desirous subscriber may visit www.onlinesbi.com and click on ‘NPS Registration’, which is available under ‘e-Services’ menu.
  • Offline Mode: Subscriber desirous to join NPS can visit nearest registered State Bank of India branch for NPS and submit Registration Form & NPS Contribution Instruction Slip (NCIS) along with self-attested KYC documents.

Click to download the following forms:


Registered branch list for NPS business is available at ‘POP-SP locations’ menu under ‘Quick Links’ at https://npscra.nsdl.co.in/index.php.


How to make subsequent contributions


Subscribers can apply for NPS through the below mentioned routes:

  • Online Mode: Subscriber may visit www.onlinesbi.com and click on ‘NPS Contribution’, which is available under ‘Payments/ Transfers’ menu.
  • Offline Mode: Subscriber may visit nearest registered State Bank of India branch for NPS and submit NPS Contribution Instruction Slip (NCIS) along with the contribution amount.

Standing Instruction (SI)

Standing Instruction (SI) functionality is available to average cost of purchase just like Systematic Investment Plan (SIP) facility in Mutual Funds. Interested subscribers can give SI/ Auto Debit instructions for processing their monthly contributions either online through ‘NPS Contribution’ menu available at www.onlinesbi.com or by submitting physical request form to a registered Bank branch for NPS. SI request form may be downloaded by clicking on the link below.

Point of Presence (POP) / Bank Charges:

Following costs are to be borne by the Subscriber at the time of registration and/or performing any transaction through Point of Presence (POP)/ Bank. The contribution will be remitted net of bank charges.

Type of Service Service charges to be paid to the Point of Presence (POP) by the Subscriber (excluding GST)

Initial Subscriber Registration/per subscriber

Rs .200/-

Initial Contribution amount / per subscriber

Ad valorem 0.25% of the contribution amount (Minimum: Rs.20/- & Maximum: up to Rs.25000/-)

Subsequent Contribution Transaction Charge/ per subscriber

Ad valorem 0.25% of the contribution amount (Minimum: Rs.20/- & Maximum: up to Rs.25000/-)

Any other transaction not involving a contribution from subscriber/ per subscriber

Rs. 20/-

Persistency

Rs 50/- per annum (only for NPS- All citizen model) – recovered through cancellation of units

Service tax and other levies, as applicable, will be levied as per the existing tax laws. There are no additional CRA charges for the maintenance of Tier - II account. Also, please note that the fee structure may change from time to time as may be decided by PFRDA.


For more product information, please call Customer Care.