PFRDA (Pension Fund Regulatory and Development Authority), India has opened National Pension System (NPS) / New Pension Scheme to all Indian citizens starting today, on 1st May, 2009.
Its a safe, flexible and portable scheme introduced by Indian Government’s cell PFRDA; to replace the existing System of Pension System in the country and to provide income security after retirement.
PFRDA was established by the Government of India to promote old age income security by establishing, developing and regulating pension funds, to protect the interests of subscribers to schemes of pension funds.
National Pension System (NPS) Highlights
Any Indian citizen will be able to start a National Pension System account and can start investing any amount up for a pension.
- Open to all citizens aged between 18-60 years
- Exit age for national pension system will be 60 years.
- Attractive investment schemes to choose from
- Professional record-keeping and fund management
- Technology driven, Transparent fee based system
- Withdrawal facility as and when you wish, under Tier II
- No entry and exit loads
- Multiple fund managers
- Multiple investment options
- Minimum Contribution per installment: Rs 500
- Minimum Contribution per year: Rs 6000
- Minimum Contributions per year : 1
Under this scheme, an investor can deposit their contributions in Bank Branches and Post offices all over the country. Unlike EPF (employee provident fund schemes), there will be only one number allotted to each investor, In case of change of job or location of job, it can be easily transferred to another branch. Each Investor will be allotted a unique 16 digit Permanent Retirement Account Number (PRAN) it will valid for life like current PAN number. There will be no need to open a new account every time you change job or location unlike the current EPF (Employee Provident Fund)
In starting, there will be 23 Points of Presence (POP) including PSU banks and post offices, and they will be provide account opening and other transactions facility. Following is the participating POP list: Allahabad Bank, Axis Bank, Bajaj Allianz General Insurance Co, Central Bank of India, Citibank, CAMS (Computer Age Management Services), ICICI Bank, IDBI Bank, IL&FS Securities, Kotak Mahindra Bank, LIC (Life Insurance Corporation of India), Oriental Bank of Commerce, Reliance Capital, State Bank of Bikaner & Jaipur, State Bank of Hyderabad, SBI (State Bank of India), State Bank of Indore, State Bank of Mysore, State Bank of Patiala, State Bank of Travancore, South Indian Bank, Union Bank of India, UTI.
There will be multiple choices of investment and pension fund managers. All records will be kept by Central Record-keeping Agency (CRA). Central authorities and fund manager will be providing performance reports and NAVs (Net Asset value) regularly, so investor can track and invest accordingly. In Starting, NAVs will be declared once every year and switching fund manager will be allowed only once a year.
Currently seven fund managers have been chosen LIC Pension Fund Limited, SBI Pension Funds Private Limited, IDFC Pension Fund Management Company Limited, Kotak Mahindra Pension Fund Limited, Reliance Capital Pension Fund Limited, UTI Retirement Solutions Limited and ICICI Pension Fund Management Company Limited that will manage investment money for NPS.
Fund Managers will charge very low fund management charges as compared to mutual funds.
Investment Options:
Individual will also have choice to choose from 3 different asset classes: equity (E type), Govt securities(G Type) and Credit Risk-bearing Debt/fixed income based investments (C Type).
Active Choice investment: Investor can mix these three types also as per his choice. Invester actively decide as to how NPS investment is divided into 3 options (E, C and G).
Auto Choice investment: Another option will be Auto Choice life cycle fund and the investment allocation will be done based of investor’s age. In this scheme, equity portion (Asset class E) will be 50 per cent till age 35 after which it will reduce 2 per cent per year until it becomes 10% by age 55. Credit risk portion (Asset class C) will be 30 per cent till age 35 after which it will reduce 1 per cent per year until it becomes 10% by age 55.
Investor will have option of investing monthly/quarterly, but minimum 4 investments in a year will be compulsory.
As per the notification by PFRDA, Currently only half of investment can go into equities, even if investor chooses the equities type funds. This limit will only be reviewed after a year. Deepak Parekh had suggested PFRDA to allow public to invest all saving in equities but board was not ready to do that.
There will be regular account statements and information desks to keep information transparent.
Govt has extended Swavalamban initiative under which it will contribute 1,000 Rs per year (for a period of four years) to every national pension system (NPS) account opened this year with at least a matching contribution from the subscriber.
How to make investment in NPS
Biggest problem is investment is that, a person has to visit personally to POP office every-time he/she need to make contribution. There has been some respite to investors as some of the POPs have started taking deposits online.
India’s largest bank State Bank of India has started taking NPS contribution online through the onlineSBI login account. If you have internet banking of SBI, you can make payment to NPS online. You can check NPS contribution section under Payments/Transfers tab after login.
If you have NPS account opened with ICICI and you also have bank account with ICICI, you can also transfer amount online to NPS account. You need to add NPS account as biller in online ICICI account. You can go to ‘Bill Pay’ section and add a biller under Pension category. Once biller is added you can make payment to this account. The facility for online contribution payment towards national pension system (NPS) is allowed only for NPS accounts opened through ICICI Bank. Your registration for NPS contribution will be cancelled if the NPS account has not been opened through ICICI Bank. Any payments made towards such account will be reversed within three working days. Please make contribution towards the above NPS account only after you have received confirmation for registration into the mail box of your Internet Banking account.
NPS account holders can also invest through SIP or in lump-sum from their ICICI securities account (demat and online share trading account). But as this account is held by limited Indians, its of not much help.
CAMS service for online NPS payment has not started yet and page on their site shows under construction.For Govt Employees:
All new government employees (central and state) will no longer have GPF accounts and NPS account will be mandatory for them. So all who have joined government services after 1st Jan, 2004, will have NPS account.
NPS will work on defined contribution basis and will have two parts – Part I and Part II.
Tier I – Mandatory non-with-drawable Pension Account – Monthly contribution will be 10 percent of basic salary and equal amount will be deposited by Govt. This amount will be kept in a non withdrawal Pension Tier I account.
Tier II – Voluntary with-drawable Savings Account – It will be voluntary tier-II with-drawable account from which individual can withdraw money anytime without giving reason. There will not be any contribution from Govt. side in this account.
Govt Employee can exit after age of 60 years from Tier I Scheme and it will be mandatory for him to invest 40% of pension amount to purchase an annuity through a Life Insurance Company, It will provide pension for the life time. In case of employee wants to leave NPS before age of 60, the mandatory annuity will be 80 per cent of the pension amount.
Charges:
For account opening and issuance of PRAN : 50 Rupees
Annual maintenance charge: 350 280 Rupees per year
Initial subscriber registration charge: 100 Rupees
Transaction charges and contribution upload– 0.25% of the amount, subscribed by the NPS subscriber, subject to minimum of Rs.20 and a maximum of Rs. 25000.
Fund management charge: 0.0009% per year on the fund value.
Fund switch charges: 20 Rupees.
Any other transaction not involving a contribution from subscriber – Rs 20
As of now, this charge appears to be high. Considering 12 transaction a year (one every month), investor has to pay 470 Rs a year. That’s on higher side. These charges will reduce in coming years, as number of subscriber increases.
PFRDA may ask Government to partly pay the maintenance cost to reduce overall cost for investor.
Income tax treatment:
The bad part about NPS is that the returns will be fully taxable not like EPF and PPF. It will come under exempt-exempt-taxed (EET) regime, the amount would be taxed at the time of withdrawal. NPS will not attract any Security Transaction Tax (STT) and Dividend Distribution Tax (DDT).
However PFRDA has suggested government to exempt scheme from tax, but that decision will only be taken by new government.
Update: As per new notification by Finance ministry, under Direct Tax Code (DTC), NPS will also come under EEE and withdrawal will also be non-taxable from 2011. So national pension system could become the best long-term savings option.
From April 1, 2011. Employer contribution from employer towards NPS will not be included in the Section 80 C deductions (Like what happens in case EPF currently). So if employer contributes 50,000 to your account and you contributes same amount, Your 50000 will be available for exemption under 80-C and there won’t be any income tax on rest 50,000 deposited by employer. This increasing your overall deduction claim.
Where to apply for NPS
NPS is available at selected Service Provider (SP) branches of various Point(s) of Presence, Click on link for each POP for branches address. You may also view list by state-city on this link: POP/POP-SP location details.
- Allahabad Bank 033-22104754
- Axis Bank 1800 233 5577 / 1800 209 5577 / 1800 103 5577
- Central Bank of India 022-22153691
- Citi Bank- 1800-180-0123
- Computer Age Management Services Private Ltd. 044 – 30611606 / 07/ 08
- ICICI Bank 022-28308110
- IDBI Bank Toll Free Number for MTNL/BSNL subscribers 1800-22-1070 Toll Free Number for other than MTNL/BSNL subscribers 1800-200-1947
- IL&FS Securities Ltd. 022-42493000
- Oriental Bank of Commerce 011-47651319
- Reliance Capital Ltd. 022-3046 2300
- State Bank of Bikaner & Jaipur 18001806005
- State Bank of Hyderabad 09866582590/04023387471
- State Bank of India 1800 112211
- State Bank of Indore 1800-425-2241
- State Bank of Mysore 1800-425-2244
- State Bank of Patiala 1800 180 2010/0172-2648011
- State Bank of Travancore 18004255566
- The South Indian Bank 1800 843 1800 (Toll free)/1800 425 1809(Toll free)/0484 235 1923
- Union Bank of India 1800-022-2244
- UTI Asset Management Co. Ltd 1800221230
- Kotak Mahindra Bank 1800-102-6022
For more information, application form & offer document, walk into your nearest Service Provider branch of the above-mentioned Point(s) of Presence.
Application Forms
NPS (New Pension Scheme/System) - Application Form (456.0 KiB, 19,163 hits)
New Pension Scheme/System (NPS) - Offer Document (2.9 MiB, 13,976 hits)
New Pension System (NPS) - Welcome Kit (1.2 MiB, 9,166 hits)
NPS (New Pension Scheme) - Investment Guidelines (73.8 KiB, 10,438 hits)
New Pension System (NPS) Contribution Instruction Slip (NCIS) (15.1 KiB, 8,376 hits)
NPS Scheme Preference Change/Switch form (26.9 KiB, 3,221 hits)
Swavalamban Yojana Declaration Form (139.7 KiB, 3,460 hits)
Subscriber request form to change Point of Presence (POP) (63.3 KiB, 3,292 hits)
Subscriber request form to change POP-SP (16.4 KiB, 3,277 hits)
UOS-S12 Withdrawal form for Tier II account under NPS (47.0 KiB, 3,069 hits)
Request form for change in signature and/or change in photograph (12.8 KiB, 2,859 hits)
Request For Change/Correction in Subscriber Master details And/Or Reissue of I-Pin/T-Pin/PRAN Card (402.9 KiB, 3,175 hits)
Request for Activation of Tier-II account under New Pension System (NPS) (215.3 KiB, 3,626 hits)
S1 - Subscriber Registration form to get PRAN (61.3 KiB, 3,378 hits)
Can I pay for NPS without employer contribution. How Gov. is going to check that I contribute maximum 10% of basic. Or can i contribute to NPS more than 10% of basic salary?
@Adi
NPS account can be opened and operated without employer contribution as well.
There is no maximum limit of investment. Minimum Rs 6000 has to be invested per year.
Dear Pankaj Batraji,
Pl. This Product is Help ?
Nikunj Patel
Mo. 9909980194
how to pay for pran to online facility
@V.Srinu
As of now you can contribute to your NPS account using online SBI accounts only.
Sir, many of my friend are willing to do NPS ,but no bank in Shillong(Meghalaya) are able to open the account. so please tell me is there any facility to open a NPS account through online.
@Debojyoti
You need to visit local bank/POP location only to open an account.
There are many POPs in Shillong as per NPS website, check it on this page: https://www.npscra.nsdl.co.in/pop-sp.php
Select State and City to show all POPs.
I was working in Bank Of Baroda,since last one and a half year, I need to apply for refund of my NPS amount? I have filled up the form for refunding of amount 3 months back, but have still not got it..
Please tell me how to get my amount refunded,is there any other form also that has to be filled and from where to enquire about it all this?
@Ritika
If a subscriber wishes to exit from NPS before attaining the age of 60, he/she can withdraw upto 20% of the sum accumulated till that point of time. The subscriber has to buy annuity with the rest of the money.
I am Central Government employee covered under New Pension Scheme having Tier 1 Account. Sir PFRDA and Government always issue circulars regarding withdrawal at retirement or death. We all have regular life so as there will be requirement of money at any stage and in any year and in any emergeny.
(1) Are Government And PFRDA deciding about withdrawal in a year ?
(2 ) Is there facility of Tier 2 account for Central Government employee?
Please help me sir, In my NPS Account there is 2,44000/- available at this time but there is no provision or rule of withdrawal therefore I took personal loan on 17% interest from Private Bank in an emergency.
@Shashikant
1. As of now, if withdrawal is made before 60 years (that too on resignation only), 20% amount would be provided and with rest amount, annuity has to be bought. We would update this post once Govt/PFRDA change this rule.
2. Tier 2 account can be opened by any Indian who already has Tier 1 account.
Hi Pankaj
My question is same as Shashikant.. Are there any discussions going on with the government from Central Govt Employees representatives regarding the withdraw of NPS money at certain intervals? It would be helpful for the needy if certain amount can be withdrawl from the NPS
Hi Pankaj,
This is Varun again. I just want to conform whether the amount of my contribution in the TIER-I from my side can be increased?
@Varun
Yes, you can get your contribution into tier 1 account increased.
You can invest into Tier-1 directly also quoting your PRAN number from any POP branch.
what about arrears received in salary. is there NPS deduction and the same amount from government.
@AK
NPS amount contribution would be done for arrears also.
IS NPS AMOUNT REFUNDED AFTER RESIGNED FROM GOVT SERVICE?
@Vipul
No, amount won’t be refunded after leaving job.
sir, i was working in epfo till 2012.which is not covered under nps in that time but my pension contribution has been cut per month from my salary. in jan 2013 i have resigned from epfo and joined ag office jharkhand without proper channel. here they issue me a pran no. in march 2013, i came to know that i have to open new pran no. to withdraw my pension contribution from epfo. what should i do.
@Vinay
PRAN is unique for a person. You should use your existing PRAN details for new contribution as well.
Dear Sir Is Govt have any contribution in this fund for unorganized sector employees, in any ratio? or its just own Source of investment.
Dear sir
Your information is highly appriciable. I need one clarification. Please help
I had opened an NPS Account with post office with initial deposit of ₹500 . Yet now i hadnt received PRAN no. As i had deposited 500 so my annual deposit is 6000 INR . But i need to deposit 2000 INR Monthly which means 24000 INR Anually.
Kindly help whether i had right to deposit more or how can i manage to deposit more
Waiting for your reply.
@Kashif
If post office has provided you acknowldgement slip, you can track status of PRAN here: https://cra-nsdl.com/CRA/subRegReqSts.do
If not, you should contact the post office branch where you got account opened.
Wait before you are allotted PRAN before depositing more amount.
Sir, i want to know i leave central gov.job and join state gov without proper chanel my new pran will be alloted or not?
@Sonu
You can provide them your old PRAN details saying that you opened NPS account yourself.
Sir new pran can alloted or not
I am Renjith Soman, I was junior asst in Rubber Board (o/o Rubber Board Head Quarter, Kottayam, Kerala) form 19 January 2012 to 11 Oct 2012 and resigned form the job. Now i wish to withdraw the amount , so i kindly request you to please provide procedure of NPS amount withdrawal
@Renjith
At any point of time before 60 years of age, a subscriber would be required to invest at least 80% of the pension wealth to purchase a life annuity from any IRDA – regulated life insurance company. Rest 20% of the pension wealth can be withdrawn as lump sum.
can we rejoin after exiting?
@Rupert
You can apply for NPS again. I think, there should not be an issue.
Dear Sir,
What will be the Tax implication on withdrawal of a large amount (say, One Lakh) from Tire II of NPS?
@Siddharth
Gains from withdrawals would be considered as capital gains. Before one year will be short term capital gains (taxed @ 15% in case of equity fund, as per slab rates for debt fund). For withdrawals after one year, you will have to pay long-term capital gains which is 10% for debt funds (or 20% after indexation benefit) and nil for equity funds.
Sir,
What is PFRDA?
@Abhijit
PFRDA stands for Pension Fund Regulatory and Development Authority. It regulates NPS.
Sir, let me know how many digits are there in PRAN Number. Some of my friends have 16 digits where as I have 12.
@Sandhya
PRAN is 12 digit only.
Even login page accepts only 12 digits (https://cra-nsdl.com/CRA/)
ThankYou, sir for reply. But actually what the thing is someone technically resigned from Railway department and joined in CBEC, they have mentioned in his LPC NPS Number is……. of 16 digits. so, what it will be??
@Sandhya
I think, it should be Permanent Pension Account Number (PPAN) and not PRAN.
Then what is the difference between them, Sir?
@Sandhya
Existing Subscriber who have been allotted PPAN have to be registered afresh in CRA system by submitting Annexure S1. Fresh registration is required to enable CRA to issue Permanent Retirement Account Number (PRAN) card to the Subscriber containing PRAN, photograph and signature of the Subscriber.
ThankYou, Sir.
sir,what is procedure of portality of pran no when a person changes his job from one employer to other
@Rabindra
Same PRAN number should be used if job is changed.
I am a central govt employ and i am under NPS since 2005. Can i take loan from my NPS.If yes how it is possible and what is the maximum amount and how is the the repayment method
@Smitha
No. At present, a subscriber cannot avail a loan against his/her NPS holdings.