Investment Service

NPS

Investment Service
What is National Pension System?

National Pension System (NPS) is a pension cum investment scheme launched by Government of India to provide old age security to Citizens of India. It brings an attractive long term saving avenue to effectively plan your retirement through safe and regulated market-based return. The Scheme is regulated by Pension Fund Regulatory and Development Authority (PFRDA).National Pension System Trust (NPST) established by PFRDA is the registered owner of all assets under NPS.

NPS can be broadly classified into two categories and it is further customised for different sectors as mentioned below:

  1. Government Sector:
    1. Central Government:
      The Central Government had introduced the National Pension System (NPS) with effect from January 1, 2004 (except for armed forces). All the employees of Central Autonomous Bodies who have joined on or after the above mentioned date are also mandatorily covered under Government sector of NPS.Central Government/CABs employee contributes towards pension from monthly salary along with matching contribution from the employer.
    2. State Government:
      Subsequent to Central Government, various State Governments adopted this architecture and implemented NPS with effect from different dates. A State Autonomous Body (SAB) can also adopt NPS if the concerned State Government/UT have adopted the NPS architecture and initiated implementation of the same. State Government/SABs employees also contribute towards pension from monthly salary along with matching contribution from the employer.
  2. Private Sector (Non-Government Sector):
    1. Corporates:
      NPS Corporate Sector Model is the customized version of NPS to suit various organizations and their employees to adopt NPS as an organized entity within purview of their employer-employee relationship.
    2. All Citizens of India:
      Any individual not being covered by any of the above sectors has been allowed to join NPS architecture under the All Citizens of India sector from May 01, 2009.

Opening NPS account has its own advantages as compared to other pension product available. Below are few features which make NPS different from others:

  1. Low cost product
  2. Tax breaks for Individuals, Employees and Employers
  3. Attractive market linked returns
  4. Easily portable
  5. Professionally managed by experienced Pension Funds
  6. Regulated by PFRDA, a regulator set up through an act of Parliament

Any individual citizen of India (both resident and Non-resident) in the age group of 18-70 years (as on the date of submission of NPS application) can join NPS.

Yes, an NRI can open an NPS account. Contributions made by NRI are subject to regulatory requirements as prescribed by RBI and FEMA from time to time.However, OCI (Overseas Citizens of India) and PIO (Person of Indian Origin) card holders and HUFs are not eligible for opening of NPS account.

No, opening multiple NPS accounts for an individual is not allowed under NPS. However an Individual can have one account in NPS and another account in Atal Pension Yojna.

No, NPS account can be opened only in individual capacity and cannot be opened or operated jointly or for and on behalf of HUF

Upon successful enrolment, a Permanent Retirement Account Number (PRAN) is allotted to the subscriber under NPS. Once the PRAN is generated, an email alert as well as a SMS alert is sent to the registered email ID and mobile number of the subscriber by NSDL-CRA (Central Record Keeping Agency).Subscriber contributes periodically and regularly towards NPS during the working life to create the corpus for retirement. On retirement or exit from the scheme, the Corpus is made available to the Subscriber with the mandate that some portion of the Corpus must be invested in to Annuity to provide a monthly pension post retirement or exit from the scheme.