National Pension System(NPS)

What is NPS ( National Pension System )?

National Pension System (NPS) is a voluntary, defined contribution retirement savings scheme designed to enable subscribers to make optimum decisions regarding their future through systematic savings during their working life.

Under the NPS, individual savings are pooled into a pension fund which is invested by PFRDA-regulated professional fund managers into diversified portfolios comprising of government bonds, bills, corporate debentures, and shares. These contributions grow and accumulate over the years, depending on the returns earned on the investment made.

Features & Benefits of NPS:

• A safe retirement fund: Introduced by the Government of India and regulated by the Pension Fund Regulatory & Development Authority (PFRDA).

• Simple: Opening an account with NPS provides a Permanent Retirement Account Number (PRAN), which is a unique number that remains with the subscriber throughout his lifetime.

• Portable: NPS provides seamless portability across jobs and locations, unlike all current pension plans, including that of the EPFO. It would provide a hassle-free arrangement for individual subscribers.

• Flexible: NPS offers a range of investment options and choices of Pension Fund Managers (PFMs) for planning the growth of your investments. Individuals can switch over from one investment option to another or from one fund manager to another subject to conditions.

Who can Join NPS?

• Citizen of India; Resident or Non-Resident,

• Age between 18-65 years, as of the date of joining,

• Salaried or Self Employed.

Tax benefits for Individuals (All Citizen Model)

• A self-employed individual is eligible for a tax deduction of up to 20% of Gross Income under section 80CCD (1) of the Income Tax Act, 1961 within the Rs.1.5 Lacs limit under section 80CCE.

• An additional investment of Rs.50,000 will be eligible for tax deduction under section 80CCD (1B) of the Income Tax Act, 1961. This is over and above Rs. 1.5 lacs limit under section 80CCE.

Tax benefits for Salaried Individuals (Corporate Model):

A contribution made by Employee: A salaried individual is eligible for a tax deduction of up to 10% of Salary (Basic + Dearness Allowance) under section 80CCD (1) of the Income Tax Act, 1961 within Rs.1.5 Lacs limit under section 80CCE. An additional investment of Rs.50,000 will be eligible for tax deduction under section 80CCD (1B) of the Income Tax Act, 1961. This is over and above Rs. 1.5 lacs limit under section 80CCE.

A contribution made by Employer: The employee is eligible to claim a tax deduction on the employer’s contribution up to 10% of salary (Basic + Dearness Allowance) under section 80CCD(2) of IT Act. This is over and above of Rs. 1.50 lac limit available under section 80CCE. There is no upper cap in terms of absolute value on employer contribution.

Tax benefits for Corporate: Corporate can claim tax benefits for the amount contributed towards the pension of employees. Up to 10% of the salary (basic and dearness allowance) of employers' contribution can be deducted as ‘Business Expense’ from the Corporates Profit & Loss Account as per section 36(1)(iv)(a) of the IT Act.

Types of Accounts: Under NPS account there are two types of accounts – Tier I & Tier II.

Tier I is the Individual Pension Account, which is the default pension account having all the tax incentives under the Income Tax Act.

Tier-II is an optional investment account available to a subscriber having an active Tier-I account. This account has no withdrawal restrictions and tax benefits. Tier II is not a Pension Account.

Contribution: 

A subscriber can make any number of contributions to his/her Tier-I or Tier-II account without any upper limit of amount through any of the following modes:

i. Physical mode – by visiting any of the registered service providers (PoP) and depositing cheques/cash along with the NPS contribution slip.

Cheque name accepted only  "Religare Broking Ltd Collection A/c NPS- NPS Trust”

ii. Online mode -

 a.   Web-based [(i) log in to Pension Account (ii) online facility provided by PoPs (iii) eNPS platform of NPS Trust]

b.   NPS Mobile Application login

The contributions made by the subscriber will get invested as per the subscriber's choice (Pension Fund and Asset allocation) exercised and recorded with CRA.

Investment choices:

The NPS contributions made by a subscriber will get invested as per the subscriber choices (Pension Fund and Asset allocation) exercised and recorded with CRA.

The following choices are available to the subscribers:

 (A) Selection of Pension Funds:

The subscriber can choose any one of the Pension Funds registered with PFRDA. To see the list of Pension Funds registered with PFRDA please click here.

 (B) Investment Choice for Asset Allocation:

The contributions of subscribers are invested by the Pension Funds (chosen by the subscriber) in compliance with the investment guidelines prescribed by PFRDA

for each Asset Class i.e. Equity, Corporate Bonds, Government Securities, and Alternate Assets.

An NPS subscriber has the freedom to allocate his/her contributions to different Asset Classes through Active Choice or Auto Choice

 Active Choice:  Subscriber actively decides on the allocation of funds across:

Asset class E or Equity up to a maximum of 75%

Asset Class C or Corporate Bonds upto a maximum of 100%

Asset Class G or Government Securities up to a maximum of 100%

Asset Class A or Alternate Assets up to a maximum of 5%

                                                     Or

Auto Choice: The funds of the subscriber get invested across three asset classes (Equity, Corporate Bonds & Government Securities) in pre-determined proportion as per the age of the subscriber. The initial allocation across three asset classes remains constant till 35 years of age and thereafter allocation to equity gradually declines every year. 

 Following are the 03 Life Cycle Funds:

  i.  Conservative Life Cycle Fund (LC25)

  ii.  Moderate Life Cycle Fund (LC50) – Default

  iii.  Aggressive Life Cycle Fund (LC75)

Exit from National Pension System (NPS)

A subscriber can exit from National Pension System (NPS) only in accordance with PFRDA (Exits and Withdrawals under NPS) Regulations, 2015 which are notified on 11th May 2015.  The said regulation is a comprehensive document giving details of all the benefits that can be withdrawn under the National Pension System and the applicable conditions thereof.   The said regulation is available on our website at www.pfrda.org.in.

Online Withdrawal Process for NDSL

• Online Demo for Subscribers
• Online Demo for Nodal Offices-Central Government
• Online Demo for Nodal Offices-State Government
• FAQs on Exits for Government Sector Model (CG & CAB)
• FAQs on Exits for Government Sector Model (SG & SAB)
• FAQs on Exits for All Citizen Model
• FAQs on Exits for NPS Corporate Model
• FAQs on Exits for NPS Lite Model
• FAQ UoS & Corporate - PoP
• FAQ NPS Lite - Aggregator

 For detailed investment guidelines refer to the Circular Section of PFRDA website 

Retired life ka sahara, NPS hamara