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| 02 October, 2023, 02:48 PM IST | Today's Paper
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    National Pension Scheme

    National Pension Scheme (NPS), a government-sponsored pension scheme, was launched in January 2004 for government employees. It was opened to all sections in 2009. A subscriber can contribute regularly in a pension account during her working life, withdraw a part of the corpus in a lumpsum and use the remaining corpus to buy an annuity to secure a regular income after retirement.

    Top Performing NPS Schemes

    By Trailing Returns

    • Scheme Name
    • NAV
    • Trailing returns (in %)
      • 1 Year
      • 3 Year
      • 5 Year
    • Return Rating
    • Risk Rating
    * Schemes are sorted on 1 year return
    See More »

    Most Consistent NPS Schemes

    Category Average Returns

    • Category Name
    • Weighted Avg Return (in %)
      • 1 M
      • 3 M
      • 6 M
      • 1 Y
    • Quartely Category Discrete Returns
    • Yearly Category Discrete Returns
    * Categories are sorted on 1 year weighted average return
    See More »

    FAQs on NPS

    What is National Pension System (NPS)?›

    National Pension Scheme (NPS) is a government-sponsored pension scheme. It was launched in January 2004 for government employees. However, in 2009, it was opened to all sections. The scheme allows subscribers to contribute regularly in a pension account during their working life. On retirement, subscribers can withdraw a part of the corpus in a lumpsum and use the remaining corpus to buy an annuity to secure a regular income after retirement.

    Who can join NPS?›

    Any Indian citizen between 18 and 60 years can join NPS. The only condition is that the person must comply with know your customer (KYC) norms.

    Can a Non Resident Indian (NRI) join NPS?›

    Yes, an NRI can join NPS. However, the account will be closed if there is a change in the citizenship status of the NRI.

    How do I join NPS?›

    You should open an NPS account with entities known as Point of Presence (POP). Most banks, both private and public sector, are enrolled as POPs. Several financial institutions also act as POPs. The authorized branches of a POP, called point of presence service providers (POP-SPs), act as the collection points.

    How can I find POPs near me?›

    You can access them through the website of Pension Fund Regulatory and Development Authority (PFRDA). https://www.npscra.nsdl.co.in/pop-sp.php

    What are the documents needed for opening an NPS account?›

    You should fill the subscriber registration form and submit it along with proof of identity, address, and date of birth to the POP.

    What is a Permanent Retirement Account Number (PRAN)?›

    Every NPS subscriber is issued a card with 12-digit unique number called Permanent Retirement Account Number or PRAN.

    What are Tier-I and Tier-II accounts›

    NPS offers two accounts: Tier-I and Tier-II accounts. Tier-I is a mandatory account and Tier-II is voluntary. The big difference between the two is on withdrawal of money invested in them. You cannot withdraw the entire money from Tier-I account till your retirement. Even on retirement, there are restrictions on withdrawal on the Tier-I account. The subscriber is free to withdraw the entire money from the Tier-II account.

    Can I have more than one NPS account?›

    No, you cannot open multiple NPS accounts. In fact, there is no need to open a second account as NPS is portable across sectors and locations.

    What is the minimum contribution in NPS?›

    You have to contribute a minimum of Rs 6,000 every year in your Tier-I account in a financial year.

    What will happen if I don't make the minimum contribution?›

    If you do not contribute the minimum amount, your account will be frozen. You can unfreeze the account by visiting the POP and pay the minimum required amount and a penalty of Rs 100.

    Will the government also contribute to my NPS account?›

    No, the government will not contribute to your NPS account.

    Who manages the money invested in NPS?›

    The money invested in NPS is managed by PFRDA-registered Pension Fund Managers. At the moment, there are eight pension fund managers: ICICI Prudential Pension Fund, LIC Pension Fund, Kotak Mahindra Pension Fund, Reliance Capital Pension Fund, SBI Pension Fund, UTI Retirement Solutions Pension Fund, HDFC Pension Management Company, and DSP BlackRock Pension Fund Managers.

    What are the investment choices available in NPS?›

    The NPS offers two choices:
    • 1. Active Choice: This option allows the investor to decide how the money should be invested in different assets.
    • 2. Auto choice or lifecycle fund: This is the default option which invests money automatically in line with the age of the subscriber.

    What are the investment options available under Active Choice?›

    The Active Choice offers three funds or investment options: Asset Class E (invests 50 per cent in stocks); Asset Class C (invests in fixed income instruments other than government securities); Asset Class G (invests only in government securities). An investor can choose one of these funds or opt for a combination of them.

    Can I change my investment choices?›

    Yes, you can change your investment choices once in a financial year for both Tier-I and Tier-II accounts.

    Can I change my scheme and pension fund managers?›

    Yes, you can change your scheme preference and pension fund manager. You can even change your investment option (active and auto choices).

    Can I have different pension fund managers and investment option for Tier I and Tier II account?›

    Yes, you can select different pension fund managers and investment options for your NPS Tier I and Tier II accounts.

    What are the tax benefits available for NPS?›

    • 1. An employee's own contribution is eligible for a tax deduction --up to 10 per cent of the salary (basic plus DA) - under Section 80CCD(1)
    • 1. of the Income Tax Act within the overall ceiling of Rs 1.5 lakh allowed under Section 80C and Section 80CCE.
    • The employer's contribution to NPS is exempted under Section 80CCD
    • 2. Moreover, individuals can claim an additional deduction of up to Rs 50,000 under Section 80CCD (1B), which is in addition to Rs 1.5 lakh permitted under Section 80C.
    • 3. A self-employed person can also contribute 10 per cent of his gross income under Section 80CCD (1) in NPS.

    When can I withdraw money from NPS?›

    NPS is a pension product. So, you are expected to stay invested until your retirement. At 60, you must use at least 40 per cent of the corpus to buy an annuity income from a PFRDA-listed insurance company. You have the option to withdraw 40 per cent of the corpus tax-free. You can withdraw the remaining 20 per cent of the corpus (it will be taxed as per the income tax slab applicable to you) or use it to buy annuity.

    Can I defer withdrawing the lumpsum amount at 60?›

    Yes, you can defer withdrawing the lumpsum amount in NPS until you are 70 years old.

    What if I want to take the money out before I am 60?›

    If you are getting out of the scheme before you are 60 years old, you can only withdraw 20 per cent of the accumulated corpus in NPS. You must use 80 per cent of the corpus to buy an annuity.

    What happens to the money if I discontinue the scheme?›

    If you discontinue your investment, your account will be frozen. You can reactivate the account only if you make the minimum contribution required along with the penalty.

    What happens if the subscriber dies before 60 years?›

    If the subscriber dies before 60 years, the entire accumulated wealth would be paid to the nominee/legal heir of the subscriber.

    How do I withdraw the money from NPS?›

    You will have to submit the withdrawal application to the POP along with relevant documents. POP would authenticate the documents and forward them to Central Record-keeping Agency (CRA) and NSDL. CRA would register your claim and forward you the application form along with details of documents that need to be submitted. Once you complete the necessary procedure, CRA processes the application and settles the account.

    What are the documents to be submitted along with withdrawal forms?›

    You have to submit the following documents along with the withdrawal forms:
    • 1. PRAN card (original)
    • 2. Attested copy of proof of identity
    • 3. Attested copy of proof of address
    • 4. A cancelled cheque

    What is an annuity?›

    An annuity provides a regular income (it could be monthly, quarterly, annual, etc) at a specified rate for a specified period chosen by the subscriber. In NPS, a subscriber must use at least 40 per cent of the corpus to buy an annuity. It means the person can pay the money to an Annuity Service Provider (ASP) and choose an annuity option to ensure a regular income after retirement.

    Who are the Annuity Service Providers?›

    Currently, these insurance companies are empanelled by PFRDA as ASPs:
    • 1. Life Insurance Corporation of India
    • 2. SBI Life Insurance
    • 3. ICICI Prudential Life Insurance
    • 4. Bajaj Allianz Life Insurance
    • 5. Star Union Dai-ichi Life Insurance
    • 6. Reliance Life Insurance
    • 7. HDFC Standard Life Insurance

    What are the different annuity options offered by ASPs?›

    Here are some generic annuity options offered by ASPs. Remember, some ASPs may offer a slightly different or combination of these options:
    • 1. Pension (annuity) payable for life at a uniform rate to the subscriber
    • 2. Pension (annuity) payable for 5, 10, 20 years certain and thereafter as long as you are alive
    • 3. Pension (annuity) for life with return of purchase price on death of the subscriber
    • 4. Pension (annuity) payable for life increasing at a simple rate of 3 per cent
    • 5. Pension (annuity) for life with a provision of 50 per cent of the annuity payable to spouse during his/her lifetime on death of the subscriber
    • 6. Pension (annuity) for life with a provision of 100 per cent of the annuity payable to spouse during his/her lifetime on death of the subscriber
    • 7. Pension (annuity) for life with a provision of 100 per cent of the annuity payable to spouse during his/her lifetime on death of the subscriber and with return of purchase price on death of the spouse.

    How is the annuity income taxed?›

    The annuity income will be added to your income and taxed as per the income tax slab applicable to you.

    All about NPS

    Rent to mom, NPS cut income tax by Rs 86,000; know how

    How to bring down the tax outgo significantly by claiming all the deductions available to him. Use HRA exemption; NPS benefits offered by company, LTA and medical insurance to reduce income tax outgo. Sudhir Kaushik of TaxSpanner.com tells readers how they can optimise their tax by rejigging their income and investments.

    NPS and other tax-free perks can cut income tax by Rs 1 lakh

    Under Section 80CCD(2), up to 10% of basic salary put in the NPS is tax deductible. One can also ask his/her company for common tax-free perks, such as LTA, reimbursement of newspaper bills and meal coupons. Sudhir Kaushik of TaxSpanner.com tells readers how they can optimise their tax by rejigging their income and investments.

    Reduce taxable part of salary, use NPS to cut income tax outgo by Rs 1.02 lakh

    Under Section 80CCD(2), up to 10% of basic salary put in the NPS is tax deductible. There are some tax-free perks, such as a gadget allowance, meal coupons and reimbursement of expenses on books and periodicals that a salaried employee gets. Under Section 17(2), gadgets bought in the name of the company, and given to the employee for personal use, are taxed at only 10% of the value. Sudhir Kaushik of TaxSpanner.com tells readers how they can optimise their tax by rejigging their income and investments.

    How much should a 40-year old invest now in NPS to get Rs 2 lakh pension per month after retirement?

    NPS for retirement planning: NPS has emerged as one of the most popular tools for retirement planning and investment. Your returns from NPS will decide how much corpus you can accumulate. Let us say you have just turned 40. You have 20 years to accumulate a lump sum in NPS. If you want to earn a Rs 2 lakh pension per month from your NPS investment, here is how much contribution you must make now.

    How to use HRA, NPS to cut tax outgo by Rs 1.9 lakh

    Sudhir Kaushik of TaxSpanner.com tells readers how they can optimise their tax by rejigging their income and investments.

    NPS rule change: Default option available in NPS Tier II accounts for govt employees; what is it and how will it help you?

    The Pension Fund Regulatory and Development Authority (PFRDA) has introduced the default scheme option in NPS tier II accounts the government employees. Till now, the default scheme was available only to NPS Tier I account subscribers. So those government sector NPS subscribers who chose to invest in NPS tier II accounts, had to pick their pension fund managers (PFM) and percentage in which the selected PFM will invest the fund. Now, the government sector NPS subscribers can also select the the default scheme option in NPS tier II. This scheme is designed to offer flexibility and convenience to government sector

    Use your salary perks and NPS to reduce tax by 52%

    Sudhir Kaushik of TaxSpanner.com tells readers how they can optimise their tax by rejigging their income and investments.

    Opt for NPS through employer, reduce tax liability by up to Rs 40,000

    Sudhir Kaushik of TaxSpanner.com tells readers how they can optimise their tax by rejigging their income and investments.

    How to invest in NPS

    The NPS account can be opened by visiting any point of presence service provider (PoP-SP). One can also open the account online.

    Want maximum returns from NPS? Know best-performing National Pension System funds, how to choose pension fund manager

    The choice of pension fund managers has broadened. Now, there are 10 pension fund managers to choose from. NPS investors are also allowed to switch their pension fund once in a year. From this year onwards, the PFRDA has allowed investors to spread their investments across three different pension fund managers. ET Wealth identifies the best performing NPS funds to help investors decide which pension fund manager they should go with.

    NPS or retirement funds? Comparison of asset allocation, taxation, cost and liquidity

    The NPS follows an asset allocation-based approach. It offers subscribers the choice of two investing modes—active and auto. With retirement funds, investors are stuck with the same fund manager even though, theoretically, they can opt for multiple retirement funds.

    Use NPS, salary perks to reduce tax outgo to zero; here's how

    Sudhir Kaushik of Taxspanner.com tells readers how they can optimise their tax by rejigging their income and investments.

    Rejig salary structure, opt for NPS to save Rs 1.4 lakh in tax

    Sudhir Kaushik of Taxspanner.com tells readers how they can optimise their tax by rejigging their income and investments.

    Do this to reduce your tax outgo by Rs 86,000!

    Do this to reduce your tax outgo by Rs 86,000!

    Efforts on to make NPS available at all bank branches, post offices: PFRDA Chairman

    The Pension Fund Regulatory and Development Authority (PFRDA) in India is working on expanding the availability of the National Pension System (NPS) to all bank branches and post offices. Chairman Deepak Mohanty stated that efforts are being made to increase the penetration of pension schemes by making NPS products easily accessible to the public, including those in villages and small towns.

    Where to invest to get Rs 25 lakh in next 3 years?

    Our panel of experts will answer questions related to any aspect of personal finance. If you have a query, mail it to us right away.

    How HRA and NPS can cut tax outgo by Rs 1.5 lakh

    Sudhir Kaushik of Taxspanner.com tells readers how they can optimise their tax by rejigging their income and investments.

    How to register for SIP in NPS

    How to register for SIP in NPS

    EPF, NPS enrollments at four month high, ESIC declines to three-month low

    New enrollments in less lucrative jobs reached a three-month low in July, while higher-paying jobs continued to show stronger numbers. Enrollments in the Employees' State Insurance Corporation (ESIC) decreased to 1.49 million, while enrollments in the Employees’ Provident Fund Scheme (EPFO) increased by 18.8% and new subscribers to the National Pension Scheme (NPS) rose by 40%.

    How NPS investors can claim income tax benefits for their investments

    Data Sources: Mutual Funds, ETFs, and NPS data are sourced from Value Research

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