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.
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, 8,276 hits)- New Pension Scheme/System (NPS) - Offer Document (2.9 MiB, 6,779 hits)
- New Pension System (NPS) - Welcome Kit (1.2 MiB, 3,737 hits)
- NPS (New Pension Scheme) - Investment Guidelines (73.8 KiB, 5,437 hits)
- New Pension System (NPS) Contribution Instruction Slip (NCIS) (15.1 KiB, 3,865 hits)
- NPS Scheme Preference Change/Switch form (26.9 KiB, 330 hits)
- Swavalamban Yojana Declaration Form (139.7 KiB, 360 hits)
- Subscriber request form to change Point of Presence (POP) (63.3 KiB, 241 hits)
- Subscriber request form to change POP-SP (16.4 KiB, 216 hits)
- Withdrawal form for Tier II account under NPS (47.0 KiB, 271 hits)
- Request form for change in signature and/or change in photograph (12.8 KiB, 203 hits)
- Request For Change/Correction in Subscriber Master details And/Or Reissue of I-Pin/T-Pin/PRAN Card (402.9 KiB, 317 hits)
- Request for Activation of Tier-II account under New Pension System (NPS) (215.3 KiB, 303 hits)
- S1 - Subscriber Registration form to get PRAN (61.3 KiB, 320 hits)
Launch Notification:
Related posts:
i am hp govt employee. My contribution towards nps for the 2011-2012 is rs 25164. How much amount comes under income tax rebate.
@Avtar Singh
Whole amount deposited as your contribution qualifies for tax saving under section 80C.
**1.If I am contributing about 6000 year(my age 32) and how long should I contribute? I understand there will be no govt contribution.It looks government do not care for the non govt employees.but we are truly citizen of India.cannnot be benefited even by this NPS too!.2.if i am contributed about 2 lacks in total how much I will be receiving pension each month(after 60 years).3.Is there tax exemption if i withdraw it in one time?
4.Is it mandatatory for my employer to contribute same amount or I can only contribute if my employer not interested to put money on NPS ?** hope i can get some ideas from u.thankyou
@Hari
You would need to contribute every year till 60 years age.
Pension and value of investment would depend on multiple factors. Which portfolio you have chosen. Whats the ratio of equity, debt and bonds. which fund manager you have chosen etc.
Amount cannot be withdrawn fully before 60 years and some part even after that. Some part has to be used in buying an annuity scheme which will pay pension for you.
Its not mandatory for your employer to contribute. You can invest even if you are not employed or run your business.
@Pankajji
As you stated that employer contribution is not compulsory & even businessman can also invest in this scheme.
if i am employed with private organisation & i would like to invest, can i directly go and open NPS account & claim the whole amount in TAX rebate?
@Mitul
You can open NPS account yourself and contribute amount into that account. Tax benefit would be available for this contribution u/s 80C.
Maximum total exemption limit would be 1 lac u/s 80C.
@Pankajji,
Thanks for your reply.
can’t i take benefit of section 80CCD(2) which is above 80C?
NPS doesn’t fall under 80CCD(2)?
@Mitul
Total deduction available under 80C, 80CCC and 80CCD cannot exceed one lakh rupees.
@Pankajji
I read one article in TOI last week which was stated that NPS (80CCD(2)) investment is above 1 Lac limit of 80C & 80CCC.
could you get me clarify here?
Thanks.
@Mitul
I believe you are talking about this article: http://goo.gl/9qKhV
This NPS investment should be employer’s contribution. Like EPF which has employer and employee contribution, NPS too can have similar investment.
Employer contribution is not counted as taxable income for employee and thus there is no question of income tax on it.
If you employer is ready to create such salary structure and contribute in NPS in your account, you can get benefit from it.
Dear Sir,
Is it necessary that employer & employee should contribute the same amount? what will be the procedure for employer to contribute to employees nps account? Is the exmption allowed for the year 2011-12? Please revert.
@Kailas
Employer would need to sign up with a POP (point of presence) bank/post office etc to start depositing employer contribution to employee’s NPS account.
Employer’s contribution won’t be considered as employee’s income and hence there is no income tax on it.
Sir, I am a hp state govt employee. My contribution towards NPS is Rs 25000/- and +Rs 25000/-contributed by my employer.It becomes to Rs 50000/-of both share . My I take rebate on rs 50000/- in income tax return 2011-12. Your kind reply will help me.
@Avtar
You can only claim tax deduction for your contribution(Rs 25000) in NPS in income tax return.
Employer contribution won’t be added to your income and anyways there is no tax applicable on that.
I am a PSU employee, I want to know that after 60 years how I can get the pension ? and how amount will be calculated ?
@K K Gupta
At exit after 60 years, you would be required to invest minimum 40 percent of your accumulated savings (pension wealth) to purchase a life annuity from any IRDA-regulated life insurance company. You may choose to purchase an annuity for an amount greater than 40 percent. The remaining pension wealth can either be withdrawn in a lump sum on attaining the age of 60 or in a phased manner, between age 60 and 70, at the option of the subscriber.
Annuity Service Provider would be responsible for delivering a regular monthly pension to you after your exit from the NPS.
The pension amount would depend on how much savings have been accumulated in NPS account. This would depend on equity, debt and bond ratio, market performance and portfolio managers.
I am a private sector employee and PF is deducted from my salary,
Should I be eligible for NPS?
As in above few statements even state govt. employees are contributing in NPS, whereas as per my knowledge its for unorganized sector and whose PF are not deducted.
Kindly clarify
Thanks
Pranay
@Pranay
You can get your NPS account opened even if you are contributing in EPF.
NPS is replacement for EPF for new Govt employees. But for others EPF is still continuing and they can also opt for NPS.
Thanks Pankaj for prompt reply
If this year before end of march 12, I deposit in NPS, should I get benefit of 1000/- from government.
And how long I have to deposited in NPS, and what is minimum and maximum amount.
At what interest rate they return money after 60 years.
Most important, what’s your advice regarding this, should one have to go for it or not.
Thanks & regards
Pranay
@Pranay
Government will contribute Rs. 1000 to each NPS account opened in the year 2009-10 and 2010-11 only. So if you open account now, you won’t be eligible for this benefit.
You would need to deposit minimum Rs 6000 per year till 60 years of age. There is no maximum amount which can be invested.
There are no fixed return in NPS. Returns would be based on portfolio you choose and marker performance. You may choose fund manager and ratio of investment in equity, debt and government bonds.
One should definitely go for NPS account for retirement perspective. From next year, when Direct tax code comes into play, there would be few tax saving products and NPS would be one of them.
Hi Pankaj,
Thanks for sharing info. for people who don’t know about NPS. Good initiative
Please let me know, who to get the online password again, as I lost password for online account.
Thanks in advance….!!!!
@Kedar
You can try forgot password page: https://cra-nsdl.com/CRA/forgotPassword.do
sir,
i used to work in powergrid corporation of india limited (central government) from 26.09.2006 to 20.02.2009. the company had its own EPF trust. my epf account number alloted was e/dl/12882/85159. i have been working in madhya pradesh power generating company limited (state government) since02.03.2009.my present company has registered me recently with NPS but till now no PRAN has been allolted. I wish to withdraw my EPF amount from POWERGRID. how could i withdraw it? please guide
@Nishant
You would need to submit EPF withdrawal forms to Power Grid corporation. Please contact them for procedure.
Thank you Sir for your such a great help.
i want to check my balance.how is it possible to check it wid PRAN number.which site?
@Pramod
You can check NPS balance on this website: https://cra-nsdl.com/CRA/
You would need login for same, which you may have got after opening NPS account.
Hi there,
Well, I’m a 40 yr old individual, currently pursuing a course, thus not employed. I had been employed earlier outside India and not a tax payer as my income were not taxable.
I may not be working in future , thus my regular income source may be one or other pension plans that I will be investing on , thus could you please advise me on the below mentioned points
a) If I’m to invest rs 30000 PA on the post office pension schemes for the coming 20 years, how would I get the returns?
b) Will it be a monthly payment from the department or a lump sum payment of the capital with the interest?
c) given the above scenario’s What would be a better regular income payment plans for someone at my age
Regards
Sreekanth
@Sreekanth
New pension scheme (or National Pension system) does not guarantee a fixed return, but returns are dependent on performance of investment.
One may pick equity, debt or corporate bonds in required ratio for investment.
After 60 years, one may get some part back as lump-sum and rest has to be used for buying an annuity plan. This annuity plan would pay you monthly pension.
New pension scheme would be good plan for your needs.
Thankyou very much
My maid is 60 years old, independent, has no hopes from her sons. Is there any pension scheme at her age, she can pay upto 700 per month?
@Mana
We don’t have much idea about senior citizen pension plans.
Also read this page about National Old Age Pension Scheme: http://www.oldagesolutions.org/Facilities/Noaps.aspx
i m a bank of maharashtra employee nd today i hv filled the form
the deduction is 10% of my basic + DA is it necessary
nd out of portfolio options i cant choose i have to leave it vacant
@Manveer
If you have opened NPS account yourself and not through employer, then there is no need of 10% deduction mandatorily.
But if employer is also contributing 10% of basic+DA, then you would also have to get same deducted minimum.
about NPS detail knows very fine, i am state PSU employee & for our pention scheme some amount diduct from my salary, can i swich to new NPS? or opening new additional A/C ? pl. guide me so i can invest in nps as my option(equity/bond /any option.
@Vishnu
If you already have NPS account with PRAN card, you can invest yourself into NPS by picking equity/debt and bond ratio by quoting existing PRAN.
In case you don’t have, you can have one opened in bank or post office.
Dear sir,
I am Dr.H.Gowda working as a Assistant Professor at Rani Channamma University, Belagaum, Karnataka, recently i joined this post, earlier i was worked as a Lecturer in Karnataka State Govt. Pre-University college, at Hassan(Karnataka) from past 3 years, so the problem is when i was there at the time i contributed Rs.2250 per month from my salary and also govt. contributed same amount to my account. So in the present working place they were having separate CPF, they informed me it is not possible to add the NPS to CPF, so what can i do sir, can i withdraw earlier NPS or any suggestion is there please help me to take a decision.
Thank you sir
@Huche Gowda
A government employee mandatorily covered under NPS cannot exit from NPS till he resigns or retires from the service. In case of resignation, at least 80% of the pension wealth to purchase a life annuity from any IRDA – regulated life insurance company. Remaining 20% of the pension wealth may be withdrawn as a lump sum.
hi I am debojyoti, I want to know that can i increase my contribution any time in NPS account.
@Debojyoti
You can contribute to your NPS account anytime and can also increase your contribution.
iam intrest on this any can have full detail please update me
@Shivu
This post has most of the information about NPS.
Please let us know what more you want to know about NPS.
I was working with an employer (a State Government Undertaking) with CPF option. Now I have Joined GoI organization under NPS. Now how can I transfer my CPF amount from old employer to new employer.
If not possible, can I withdraw my whole amount from prev employer and invest in some scheme. Will the withdrawl amount attract I-Tax. I have served prev employer for more than 24 years.
@Ravindra
As new employer does not have CPF option you cannot transfer amount from old CPF to new employer account.
As of now transfer from EPF/CPF is not possible to NPS account.
Best would be to withdraw amount from old CPF account and invest into some good scheme with similar returns (PPF etc). There would not be any income tax on withdrawal amount as your account has been held for more than five years.
Hi,
Two Questions:
1) In case of EPF with Pvt Sector Employer (E2) was held for slightly less than 5 yrs, e.g. 4 yrs 10 months, is it possible to xfer it to Post Office PPF A/c without incurring withholding of income tax etc.
2) An even prior Pvt employer (say E1) had transferred my EPF amount to EPFO, Bangalore, but they are not able to find details for my account number given to me by E1; hence unable to xfer that from E1 to E2. What is the probability that EPFO is in error; or am I forgetting something. If I remember, E1 had given option to withdraw or xfer to EPFO, and I had probably selected EPFO.
Regards,
S. J.
@Sushik
1. Transferring EPF amount to PPF does not make it non taxable.
2. You may use this issue of transfer failure for non deduction of taxes. If employment with E1+E2 is more than five years and you initiated EPF transfer which was not done because of issues out of your control, you may not pay taxes on EPF withdrawal. But beware if income tax department send you notice, you would need to handle them by replying appropriately.
what to to in case to wrong online payment to nps contribution??
@Praveen
Can you explain in details what went wrong in online payment for NPS contribution.
i am a NPS subscriber PRAN number 110050890815 had received an email on 4th feb 2012 from communications@nsdl.com regarding non payment of the contribution. in the same mail my PRAN number was stated as 110080881599. i have done the payment of rs 12000 through SBI internet banking and i have done the payment in PRAN number 110080881599.
After the payment i realised that the PRAN number is wrong and the payment might have gone to the wrong account. kindly help me with the above matter.
@Praveen
You should contact your POP for same. Give a written letter explaining the issue.
If it does not help, you may call CRA on 1800222080 and ask for their help.
sir,I m staying in shillong state meghalaya and interested in NPS. I inquire two bank, SBI and Axis but non can give any detais about this, so pl.help me for opening the account.
@Debojyoti
This page has all bank details and their contact numbers: http://www.pankajbatra.com/india/new-pension-scheme-nps-india/
You may call them and ask about same.
Also, you may find nearest POP location from this page: https://www.npscra.nsdl.co.in/pop-sp.php by selecting State and city.
Sir,
i am 31 years old and will retire at 60. now i am working at Kerala State Electricity Board and most probably the board will be converted as a Govt owned company. I wish to join NPS tier 2 scheme.
1. Would i get the Govt contribution even after the board became company and if it is privatised in a remote future?
2. How much should i contribute to get Rs. 8000/- per month ( at todays rate) on my retire at 60 years
@Balu
If you have NPS tier 1 account, you can also get Tier 2 account opened.
1. You may not get Govt contribution when company is privatized, but employer contribution would continue.
2. NPS does not guarantee a fixed monthly pension amount. Its market linked like mutual funds and return would vary based upon your portfolio of equity, debt and bonds.
I there any provision to transfer contribution of existing PF to NPS…
@Hirak
As of now there is no such provision for transfer of amount from PF to NPS.
What happens to a private sector employee’s NPS amount in case he resigns from one company & joins another Company both of which allow NPS contributions. Is his PRAN no recreated in the new company and the old amount needs to be transferred(like in EPF)? Or can he continue using the same PRAN no & the new company contributes to that PRAN account?
@Maitreyee
NPS accounts are centrally managed by PFRDA and does not require transfer in case of job change.
You should quote existing PRAN and NPS account details to new employer so that contributions in same account can be made in future.