The National Pension System (NPS) is a voluntary retirement savings scheme launched by the Government of India to provide long-term financial security for citizens. Managed by the Pension Fund Regulatory and Development Authority (PFRDA), NPS is open to Indian citizens aged 18 to 65, including NRIs. It offers a mix of equity, corporate bonds, and government securities, allowing subscribers to choose their investment options and fund managers. NPS features two types of accounts: Tier I, a mandatory retirement account with tax benefits, and Tier II, a flexible voluntary savings account. Contributions to NPS Tier-I enjoy tax benefits.
Frequently Asked Questions (FAQ) on National Pension System (NPS)
The National Pension System (NPS) is a voluntary retirement savings scheme designed to enable subscribers to make defined contributions towards their retirement. It was launched by the Government of India to promote old age income security. The scheme is managed by the Pension Fund Regulatory and Development Authority (PFRDA).
Any Indian citizen, both resident and non-resident, aged between 18 and 65 years can join NPS.
There are two types of NPS accounts:
- Tier I Account: This is a non-withdrawable permanent retirement account.
- Tier II Account: This is a voluntary savings facility that allows withdrawals and is available to those who have an active Tier I account.
- We can help you open an NPS account.
- - Tax Benefits: Contributions to NPS qualify for tax deductions under Section 80C and an additional deduction under Section 80CCD(1B). - Market-Linked Returns: NPS invests in various asset classes, including equities, providing potentially higher returns. - Flexible: Allows choice of investment mix and fund managers. - Portable: The NPS account can be operated from anywhere in India.
Contributions are managed by professional fund managers appointed by PFRDA. The contributions are invested in a mix of government bonds, corporate bonds, and equities as per the subscriber’s choice.
NPS offers two investment choices:
- - Active Choice: Subscribers can decide the asset classes in which the contributions are to be invested. - Auto Choice: The investment is made in a life-cycle fund, where the proportion of funds invested across asset classes is determined by the age of the subscriber.
- - Before 60 years of age: 20% of the corpus can be withdrawn as a lump sum, while the remaining 80% must be used to purchase an annuity. - At 60 years of age or above: Up to 60% of the corpus can be withdrawn as a lump sum, and at least 40% must be used to purchase an annuity. - Partial Withdrawals: Allowed for specific purposes like higher education of children, marriage of children, purchase/construction of a house, or treatment of critical illnesses after 3 years of account opening.
Yes, the NPS account is fully portable. You can transfer your account from one PoP to another, from one fund manager to another, or from one employer to another.
NPS charges include a registration fee, transaction fee, and annual maintenance charges, which are relatively low compared to other retirement products.
Subscribers can check their NPS account balance online through the https://cra-nsdl.com/CRA/ website by using their Permanent Retirement Account Number (PRAN) and password.
In the event of the death of the subscriber, the entire accumulated pension wealth (100%) would be paid to the nominee/legal heir.
Yes. For more detailed information, you can contact us, and we can assist you.
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