PFRDA (Pension Fund Regulatory and Development Authority), India has opened New Pension System/ Scheme (NPS) 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.
Highlights
Any Indian citizen will be able to start a New Pension Scheme account and can start investing any amount up for a pension.
- Open to all citizens aged between 18-60 years
- Exit age for new pension scheme 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 New Pension Scheme (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 New 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 New Pension Scheme 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, 10,197 hits)- New Pension Scheme/System (NPS) - Offer Document (2.9 MiB, 8,240 hits)
- New Pension System (NPS) - Welcome Kit (1.2 MiB, 4,421 hits)
- NPS (New Pension Scheme) - Investment Guidelines (73.8 KiB, 6,061 hits)
- New Pension System (NPS) Contribution Instruction Slip (NCIS) (15.1 KiB, 4,311 hits)
- NPS Scheme Preference Change/Switch form (26.9 KiB, 589 hits)
- Swavalamban Yojana Declaration Form (139.7 KiB, 657 hits)
- Subscriber request form to change Point of Presence (POP) (63.3 KiB, 494 hits)
- Subscriber request form to change POP-SP (16.4 KiB, 461 hits)
- UOS-S12 Withdrawal form for Tier II account under NPS (47.0 KiB, 514 hits)
- Request form for change in signature and/or change in photograph (12.8 KiB, 423 hits)
- Request For Change/Correction in Subscriber Master details And/Or Reissue of I-Pin/T-Pin/PRAN Card (402.9 KiB, 630 hits)
- Request for Activation of Tier-II account under New Pension System (NPS) (215.3 KiB, 606 hits)
- S1 - Subscriber Registration form to get PRAN (61.3 KiB, 669 hits)
Launch Notification:
HII
GR8 INFORMATION OF NPS IN UR WEBSITE
I am 26 yrs old guy just wanna know how to apply for an NPS scheme? i am working in private firm for past 5 yrs an hv s/b in SBI
Which NPS scheme shud i opt for?
How to generate PRAN?
Wht is min amt shud b contributed to NPS?
What is detaild procedure for the same??
1. You need to open Tier-I acct compulsarily. T-II is optional
2. Pl read the Opening post & the links provided. Once you submit application form to open T-1 acct along with cheque payment, then pFRDA will generate & mail you the PRAn card.
3. Min amt & prcess is in above post. Pl read the post & then post queries, if any.
4. You can goto any POP to open your T-1 acct. It can be linked to any SB acct
All the best
mast hai yr..
@BhimSingh : Now that you have a PRAn, Pl apply to your Dept for Credit of Contribution. If you dont get a response, approach your Detp’s Grievance cell. If that too fails to get you the credit, use RTI to find the details & account to which your contribution has been credited. Also, pl note that if NPS cont is deducted from your salary, it will appear in your payslip as deduction. If deduction is not appearing then dept may not have deducted the same for want of PRAn no. I am not aware of exact method of NPS cont at your dept. If you share the terms & conditions then I can advise again.
i am not aware which pran plan is adopted in my office the only thing i know that is that my office regualary deducted 10%of salary every month of my service . and that contribution is still lying with PAO because my pran was alloted becasue i did not filled the form now they are also confused under what rule .. it should be refunded. kindlly tell me the rule under which i can get my contribution back …. reaply asap…
@Bhimsingh…..Pl dont ask for Refund from your office. That is not possible. Just give them your PRAN no and ask them to credit all your contributions to your PRAN no including earlier deductions. It must be pending with them under your salary ledger
Dear Sir, I have joined the services of Govt of Uttarakhand w.e.f. 17 Jan 2012 I was allotted the PRAN No on 27 April 2012. My deductions have not yet started. Kindly guide me whether I am entitled to receive the arrears of the period from Jan and April as govt contribution as well they would deduct the same amount from my salary.
@Pankaj : I feel that you are entitled to credit to pran from your date of joining the service. Pl confirm from your office and also chk your offer letter. As your deduction have not yet started, pl convey your pRAN to your payroll section asap. Also give an application that all contribution from your date of joining should be credited to PRAN no. Take an ack on duplicate. This will help if in future you face any issues.
What is the average return in the last two years of launching of the NPS.
The returns are not matching to saving bank accounts maintained with Banks.
A good scheme but failed in delivery
Pl read my posts… I have mentioned it
sir, by mistake i have given my monthly contribution of Rs 1000 to nps account in tier II instead of tier I through sbi net banking. but i didnot open tier II account,so is it possible to transfer that money to tier I account and how? PRAN NO 110092300257,CONTRIBUTION RECEIPT NO 12604877060004937 DATED 8th june.
@debojyoti gupta roy.As you dont have a T-2 acct, your contribution will be rejected & you will get the credit back into your SBI acct in few days. Pl let me know here if they deduct any POS charges or credited Rs 1000. Thanks
thanks for reply.they have credited Rs 1000 to my account on 9/6/12
Hi Pankaj,
I have opted for NPS through my employer (an IT MNC) and contribute 10% of my basic salary every month into Tier I. I did not open a Tier II account. Now, I want to contribute personally (employee’s contribution) which I tried through SBI online only to see that Tier II is the only option for organized sector accounts. If I select ‘unorganized’ sector then I get the option to contribute towards Tier I account which is the only account I hold. Could you please help me understand the difference between organized and unorganized sectors with respect to NPS and can I make personal contribution to my Tier I account by selecting ‘unorganized’ sector? Is this the right thing to do ? Is this a restriction with SBI online or
am i doing something worng here? Please guide. Thanks!
@Hari.
1. You can open a T-II account anytime.
2. You will come under Organised sector.
3. Once you register your PRAN with OnLine SBI, select ‘Organised sector’ in dropdown box.
4. Once you are regd, you can contribute to T-II.
5. Currently you cant make T-I contn online. But you can do so through your employer or by fillingup T-I cont Form & submitting at any Bank which is a POP for NPS.
I am just copying the NAS definition for you…The National Accounts Statistics (NAS) uses the classification of `organised’ and `unorganised’ sectors in presenting national income data and what is indicated as `unorganised’ in NAS is not the same as `uninc’ or non-company forms of organisations.
“Generally, all enterprises which are either registered or come under the purview of any one of the acts like the Indian Factories Act 1948, Mines and Minerals (Regulation and Development) Act, 1957, the Company Law, the Central/State Sales Tax Acts, the Shops and Establishment Acts of the State governments, are defined as part of the organised sector. Also included are all government companies, departmental enterprises and public sector corporations.
“Similarly, forestry, irrigation works, plantations, recognised educational institutions, and hospitals which are registered as non-profit making bodies are also classified as organised sector… all unincorporated enterprises and household industries which are not regulated by any acts of the above mentioned type and which do not maintain any annual reports presenting the profit and the loss and balance sheets are classified as unorganised”
Thanks! This really helps! Your blogs and facebook pages are really of great help to many of us. Keep doing the wonderful work!
Hi.. can we open tier2 account online through online sbi. I already have tier 1 account.
@Varun
Tier 2 account cannot be opened online.
You need to visit POP office and submit form (you can Request for Activation of Tier-II account form on this page: http://www.pankajbatra.com/india/new-pension-scheme-nps-india/)
Came acrossNPS grievance redressal mechanism
The National Pension Scheme (NPS) has a redressal mechanism to handle grievances of the subscribers. At the first level, the complaints are handled through the Central Grievance Management System provided by the National Securities Depository Limited, which is the central recordkeeping agency (CRA) of the NPS. The complaints of the subscribers could be regarding the CRA itself or the point of presence (PoP), and include various issues like incorrect account details and the contribution amount not reflecting in the account. If the complaint is not resolved at this level, it is escalated to the Pension Fund Regulatory and Development Authority (PFRDA).
Registration
A complaint can be registered online at cransdl.co.inor through the CRA call centre by dialling the toll-free number 1-800-222080 and using the T-Pin (telephone PIN). It can also be submitted in form G1 to the PoP .
Process
When a complaint is registered, the system generates an alert which goes to the entity against which the grievance is raised. The respective entity then resolves the grievance and posts the resolution details in the CRA system.
Status check
An NPS subscriber can check the status of his grievance on the CRA’s website at tinyurl.com/bn5cmx5or through the call centre by mentioning the token number. A reminder can also be raised specifying the original token number issued.
Points to note
• Grievance Redressal Cell of the PFRDA entertains only those grievances that are directly received from the subscribers. It may not entertain any complaints written on behalf of the subscribers by advocates, agents or third parties unless formally authorised by the subscriber.
• It is important to keep the T-Pin and I-Pin (Internet PIN) secure to carry out NPS account-related transactions as well as lodge complaints.
Hi! Is there any significant benefit in opening NPS-Tier II account? Or one can have other saving/investment options?
There is no significant advantage of T-2 account. If you have other MF, FD etc options, you can use them as well
after three month I don’t get any response advice me what to do?
Pl follow above mentiond grievance process. Visit their website & get email ids & shoot emails.
i am a teacher in Andaman & Nicobar Island, My service period is running 7 year. How can I open Tier II account? Is any requirement for the same? How can I apply for that?
It is explianed above how to open T-2 acct. It has no relation to your no of yrs of service. you can open it anytime.
how can i open the same, how the money transfer process.
Pl fill the T-2 account opening form. You need to give a cheque for initial Cont which includes acct opening charges etc. So If you pay Rs 5000, actual units will be for amount remaing post above charges..
income from NPS Is taxable
Yes. All income is taxable but you have exemption limits…
what is the payment option in T-II is it pay through DDO or by Cheque by own
Except Cash – all modes OK. Once you link T2 to your Bank acct like SBI, you can make online contribution also. Better to visit a POP & get all your queries answered
what is maximum exemption limit tht can b availed for salaried employee?
@Ankiet
Maximum deduction available is Rs 1 lakh.
Hi, I am working with a propritoryship firm (unorganised sector) I wanted to know as to, what is the procedure for my employer to contribute to my PRAN account?
@Kailas
Your employer must sign up with NPS POP office for contribution.
Dear Pankaj. Is it possible to calculate the pension that we will get.
@Karnail
There is no fixed amount of pension.
Pension would be paid from your fund value only.
Fund value would depend on how much you contribute for how much duration, which fund manager you choose, what your investment ratio in equity/debt/govt securities and finally market conditions.
Can u Suggest some of fund managers which had been good performers from past?
@Aniket.. PL chk this NPS post. I have given all details of returns of various Fund Managers. But pl note the caveat that past performance is no gurantee for future returns. Also this year, a new set of Fund mgrs have been appointed & some old ones have dropped out.