Free Intraday Tips | NPS | National Pension System | Pension | Retirement | Investments | Savings | Pension Scheme | Wealth Management | Porfolio | Buy NPS | NPS FAQ | NPS TAX Benefits| TAX

MENU

About NPS

About NPS

National Pension System (NPS) is a pension scheme initiated by Government of India and is regulated by Pension Fund Regulatory and Development Authority (PFRDA). The prime objective of the scheme is to provide social security to all citizens of India with an attractive long-term savings avenue to plan for retirement through safe and reasonable market based returns.






Next

Who can subscribe to NPS?

  • A Citizen of India including NRI between age group of 18 and 65 years
  • He / she should be KYC complaint

*OCI and PIO are not eligible to join NPS





Previous

How NPS works?

Upon joining the scheme, unique Permanent Retirement Account Number (PRAN) is allotted to the subscriber. Subscriber contributes towards NPS periodically to accumulate corpus for retirement during his / her working life. On retirement or exit from the scheme, corpus is made available to him / her with a mandate to invest some portion in annuity post retirement to get monthly pension.




Next

Types of NPS accounts

Each subscriber who joins the NPS is allotted a unique Permanent Retirement Account Number (PRAN). There are two types of accounts available to subscribers.

Tier I Account Tier II Account
It is also known as Pension Account where subscribers contribute his / her savings for retirement. It is known as Investment Account and optional to the subscribers.
This account has limited withdrawal options. Subscribers are free to withdraw their savings as per their requirement without any exit load.
All Investments for availing of Tax Benefits is done only in NPS Tier I A/c An active Tier I account is a pre requisite for opening of a Tier II

For more details on managing investment under NPS, please visit www.hdfcpension.com
Previous

Fund options under NPS

NPS offers below funds options for investment to its Employees:

Fund option Max Investment limit Risk / Return
Equity (E) 75% high return – high risk
Corporate Debt (C) 100% medium return – medium risk
Government Securities (G) 100% low return – low risk
Alternate Investment Fund (A) 5% low return – high risk

For more details on managing investment under NPS, please visit www.hdfcpension.com
Next

NPS Architecture and Intermediaries:

NPS has un-bundled architecture where different activities are performed by different entities (intermediaries) as shown below:

Activity Who manages it
Sourcing of Customers It is managed by financial institutions registered with PFRDA. They are called Point of Presence (POP)
Back office Operations Activities like NPS account opening, system support, call centre support, customer grievance redressal support etc are managed by separate entity and is known as Central Recordkeeping Agency
Fund Management Fund houses having strong patronage and track record of providing superior market based returns have registered with PFRDA and are known as Pension Fund Managers (PFM). HDFC Pension is one of the eight Fund Managers appointed by PFRDA




Previous
Activity Who manages it
Providing Pension It’s taken care of by Life Insurance companies. They are called Annuity Service Providers (ASP) – HDFC Life is one the Five Annuity service providers appointed by PFRDA for NPS subscribers

For more details on charges levied by each Intermediary, please visit www.hdfcpension.com








Next

Why is NPS a better Investment and Tax Saving Proposition?

  • Simple and Easy to understand: NPS scheme remains same irrespective of the Service Provider. All applicant has to do is to open an account with any one POPs and get a Permanent Retirement Account Number(PRAN)
  • Low Cost: Compared to similar market linked Pension schemes, NPS is the lowest cost pension scheme. Administrative charges and fund management fee are also lowest.
Previous
  • Portability: NPS account is fully portable across different jobs and locations. NPS account number remains the same throughout irrespective of change of job or location of the Subscriber
  • Online accessibility: Upon joining Subscriber receives CRA enabled online system access details (login ID and Password) to access his / her investment details online
  • Flexible Contribution mechanism: Subscribers can chose to make Lumpsum adhoc contribution or set up ECS in his / her NPS account. He can choose to make increase / decrease contribution amount along with change in frequency as per his / her choice.
  • Prudently Regulated: Transparent investment norms, regular monitoring and performance review of funds by NPS Trust




Next

Tax Benefits under Investment in NPS:

1. Tax benefit within 80 C limit:
Salaried Individual Self Employed Individual
Employee’s Contribution:
Investment up to 10% of Salary (Basic + Dearness Allowance) is deductible from taxable income u/s 80CCD (1) of Income Tax Act, 1961 subject to 1.5 lakhs limit of section 80C.
Investment up to 20% of Gross Annual Income is deductible from taxable income u/s 80CCD (1) of Income Tax Act, 1961 subject to 1.5 lakhs limit of section 80C.
2. Tax benefit over and above 80C limit:
Salaried Individual Self Employed Individual
Investment up to Rs.50,000 is deductible from taxable income u/s 80CCD (1B) of Income Tax Act, 1961 Investment up to Rs.50,000 is deductible from taxable income u/s 80CCD (1B) of Income Tax Act, 1961
Employer’s Contribution:
Investment up to 10%* of Salary (Basic + Dearness Allowance) is deductible from taxable income u/s 80CCD (2) of Income Tax Act, 1961.
*There is no cap in terms of Absolute Value

For more details on managing investment under NPS, please visit www.hdfcpension.com

Previous

NPS Solutions

Start Investing in NPS

As an initiative to promote NPS for the employees working with Corporates, PFRDA has launched the NPS Corporate Sector Model in December 2011. It facilitates employees working with various organizations to on-board NPS within the purview of their employer – employee relationship.

Unlike EPF where Employer and Employee make equal contribution towards employee’s EPF account, NPS offers flexibility as mentioned below
Equal contribution from Corporate and Employee
Un – equal contribution from Corporate and Employee
Contribution either from Corporate or from Employee

Value Proposition for Corporate

1. No Cost burden

  • Corporate can join NPS free of cost
  • No cost of setup or maintenance of Self Administered Pension Fund
  • No need to form a Trust
  • Simple procedure to add or remove employees at any point of time

2. No account related obligation

  • Corporate acts merely as facilitator
  • The Account maintenance responsibility / obligation remains with the employees only

3.Flexibilities to Corpoates

  • NPS can be rolle out for all on voluntary basis / for select group of employees
  • Corporate can select a Pension Fund Manager, Asset Allocation and Investment option on behalf of employees
  • Corporate can fix the percentage / frequency of contribution

Value Proposition for Employees

1. For senior management

  • Offers platform to save tax beyond the 80CCE (1.5L) limit
  • Cost effective investment option

2. For middle and junior management

  • Offers platform for triple tax benefits
  • Cost effective investment option

Tax benefits and Treatment under Corporate NPS

Tax benefits for Employees

Under NPS corporate model employee can deposit contribution directly or she can route the contribution through the employer she is working with. Both the contributions are eligible for tax deduction as shown below

Type of Contribution Tax Benefit Tax Treatment
Contribution deposited by Employee
  • Investment up to 10% of Salary (Basic + Dearness Allowance) is deductible from taxable income u/s 80CCD (1) of Income Tax Act, 1961 subject to 1.5 lakhs limit of section 80C
  • Additionally, investment up to Rs.50,000 is deductible from taxable income u/s 80CCD (1B) of Income Tax Act, 1961
  • Up to 40% of Corpus withdrawn in lump sum is exempt from tax
  • Balance amount invested in Annuity is also fully exempt from tax
  • Pension received out of investment in Annuity is treated as income and will be taxed appropriately
Contribution routed through the Employer

Tax benefit u/s 80CCD (1B) and 80CCD (2) are over and above 1.5 lakhs limit u/s 80C.

Tax benefit for Employer

Corporate can avail of tax benefit u/s 36 (i) (IV) of Income Tax Act, 1961, on the contribution deposited by it.

How 80CCD (1B) and 80CCD (2) work?

Corporate needs to re-structure the salary of the employee as shown below:

Head Particulars Without NPS With NPS
Salary Basic (40% of Gross) 4,000,000 4,000,000
HRA (50% of Basic) 2,000,000 2,000,000
Flexi / Professional Allowance 3,327,600 2,927,600
Corporate Contribution – EPF 480,000 480,000
Corporate Contribution – Gratuity 192,400 192,400
Corporate Contribution - NPS (10% of Basic) 0 400,000
Gross Salary 10,000,000 10,000,000
 
Deductions 80CCE 1,50,000 1,50,000
Corporate Contribution – PF 480,000 480,000
Corporate Contribution – Gratuity 192,400 192,400
Corporate Contribution - NPS (80CCD (2)) 0 400,000
Individual Contribution to NPS (80CCD (1B)) 0 50,000
Gross Deductions 822,400 1,272,400,
 
Taxable Salary 9,177,600 8,727,600
Change in Taxable Salary 450,000
Tax Saved @ 30% 135,000

How NPS Corporate model works?

In order to offer NPS to its employee corporate needs to register itself through a Service provider by submitting Corporate Registration Form and KYC documents as prescribed by the regulator. Service provider sends these documents to CRA which creates a Corporate Registration Number called CHO / CBO number.

Upon receiving the CHO / CBO number, Corporate can implement NPS in the system. Service provider helps create awareness about NPS to all the employees and organize NPS helpdesks where employees can deposit individual NPS registration form and KYC documents for NPS account opening.

Once the NPS account of employee is opened, Corporate can start deducting the contribution from monthly salary of the employee and sends the same to Service provider for further processing.

NPS Accounts

Under NPS, Subscriber gets the option to open two accounts known as Tier I account and Tier II account. A Tier I account is mandatory to open in order to join NPS. Tier II account is optional and can be opened at any point of time – at the time of opening Tier I account or later.

Difference between Tier I and Tier II accounts are as mentioned below

Tier I NPS Account Tier II NPS Account
It is also known as Pension account It is known as investment account
Withdrawal from this account is permitted after 10 years of account opening or attaining the age 60 years whichever comes early Withdrawal from this account can be done at any point of time as per Subscriber’s need
Minimum annual contribution required for this account is Rs. 1000 NA

Investment of Funds under NPS

Subscriber gets the choice of 4 funds under NPS – Equity (E), Corporate Bonds (C), Government Securities (G) and Alternate Investment Funds (A) in active choice. These are also known as E, C, G and A respectively.

Subscriber gets the freedom to decide her own asset mix restricting the exposure to Equity to 75% of Contribution amount. It is called Active Choice Investment option. Subscriber also gets an option of Life Cycle Fund is also known as Auto Choice. Under this mode, investment across three funds is done as per the age of the employee as shown in below chart

LC 75 – Aggressive Life Cycle Fund
AgeAsset Class EAsset Class CAsset Class G
Up to 35 years751015
36 years711118
37 years671221
38 years631324
39 years591427
40 years551530
41 years511633
42 years471736
43 years431839
44 years391942
45 years352045
46 years322048
47 years292051
48 years262054
49 years232057
50 years202060
51 years191863
52 years181666
53 years171469
54 years161272
55 years & above151075
LC 50 – Moderate Life Cycle Fund
AgeAsset Class EAsset Class CAsset Class G
Up to 35 years503020
36 years482923
37 years462826
38 years442729
39 years422632
40 years402535
41 years382438
42 years362341
43 years342244
44 years322147
45 years302050
46 years281953
47 years261856
48 years241759
49 years221662
50 years201565
51 years181468
52 years161371
53 years141274
54 years121177
55 years & above101080
LC 25 – Conservative Life Cycle Fund
AgeAsset Class EAsset Class CAsset Class G
Up to 35 years254530
36 years244333
37 years234136
38 years223939
39 years213742
40 years203545
41 years193348
42 years183151
43 years172954
44 years162757
45 years152560
46 years142363
47 years132166
48 years121969
49 years111772
50 years101575
51 years91378
52 years81181
53 years7984
54 years6787
55 years & above5590

The re-alignment of portfolio under Auto Choice is system driven and is exercised on the date of birth of the Subscriber.
Following flexibilities are given to Subscribers:

  • Subscriber can have different Investment Choice (Auto / Active) for Tier I and Tier II account
  • Subscriber can change the Asset Mix and Investment Choice once in a Financial year for both Tier I and Tier II account

Exit from the Scheme

Subscriber can exit from the Scheme after 10 years of account opening or on attainment of the age 60 years whichever is early. The payout will be defined as per the exit age of the Subscriber.

Exit before the age 60 years Exit at the age 60 years
  • Up to 20% of Corpus can be withdrawn in lump sum
  • Balance amount needs to be invested in Annuity
  • Up to 60% of Corpus can be withdrawn in lump sum
  • Balance amount needs to be invested in Annuity
If the Corpus is less than or equal to Rs.1 lakh, there is no need to invest into Annuity. Entire amount can be withdrawn in lump sum If the Corpus is less than or equal to Rs.2 lakhs, there is no need to invest into Annuity. Entire amount can be withdrawn in lump sum

Subscriber exiting from NPS at the age of 60 gets following flexibilities

  • Subscriber can defer the decision to invest in Annuity for 3 years.
  • Subscriber can defer the decision of lump sum withdrawal for 10 years.
  • Lump sum amount due for withdrawal at the age 60 can be withdrawn in 10 installments as per the choice of the Subscriber.
  • If Subscriber does not want to exit at the age of 60 years, she can keep on contributing towards NPS till the age 70 years.

Death Benefit

In case of death of the Subscriber the entire Corpus is given to the nominee / legal heir. In case Subscriber has not opted for any nominee, the legal heir can claim the amount.

Partial Withdrawal from the Scheme

In the entire life span, 3 partial withdrawals are allowed from Tier I account before attainment of at 60 years as shown below

  • First partial withdrawal allowed after 3 years of NPS account opening
  • 2nd & 3rd partial withdrawal can be opted at anytime after the 1st partial withdrawal is done

25% of the Contribution amount will be allowed for specific purposes like Child marriage, Higher education, Treatment of Critical illnesses, buying home etc.

Investment in Annuity

As discussed above, on exit from NPS or retirement some portion of Corpus has to be invested into Annuity scheme to provide monthly pension then after. Entities registered with PFRDA to provide annuity service are

  • HDFC Standard Life Insurance Company Limited
  • ICICI Prudential Life Insurance Company Limited
  • Star Union Dai-ichi Life Insurance Company Limited
  • Life Insurance Corporation of India
  • SBI Life Insurance Company Limited

Annuity schemes available for NPS subscribers are as mentioned below

Sr. No Name of Annuity Scheme Description
1 Annuity for life Annuity / monthly pension are paid during the life time of Annuitant. On death, the payment of annuity ceases
2 Annuity is guaranteed for 5, 10, 15 or 20 years and for life thereafter Annuity / monthly pension are paid during the life time of Annuitant
3 Annuity for life increasing at simple rate of 3% per annum Annuity / monthly pension are paid during the life time of Annuitant. On death, the payment of annuity ceases
4 Annuity for life with return of purchase price on death Annuity / monthly pension are paid during the life time of Annuitant. On death, purchase price is returned to the Nominee
5 Annuity for life with the provision for 50% of the annuity to the spouse of the annuitant for life on death of the annuitant Annuity / monthly pension are paid during the life time of Annuitant. On death of the Annuitant, 50% of original monthly pension is paid during the life span of Spouse of the Annuitant. On death of the Spouse, the payment of annuity ceases
6 Annuity for life with the provision for 100% of the annuity to the spouse of the annuitant for life on death of the annuitant Annuity / monthly pension are paid during the life time of Annuitant. On death of the Annuitant, monthly pension is paid during the life span of Spouse of the Annuitant. On death of the Spouse, the payment of annuity ceases
7 Annuity for life with the provision for 100% of the annuity to the spouse of the annuitant for life on death of the annuitant, with return of purchase price on death of the last survivor Annuity / monthly pension are paid during the life time of Annuitant. On death of the Annuitant, monthly pension is paid during the life span of Spouse of the Annuitant. On death of the Spouse, purchase price is returned to the Nominee

Salient Features and Benefits of NPS

NPS offers wide range of benefits to individuals, making it a unique investment opportunity. Some of the salient features of NPS are

  • Portable Account – the NPS account (PRAN) remains the same irrespective of change of employment or geography
  • Online platform – On joining NPS, each Subscriber gets log in ID and Password of CRA system for accessing NPS details online
  • It offers choice of Service Providers, Funds, Investment Options, Pension Fund Manages, Annuity Service Provides and Annuity Plans to Subscribers
  • It offers Subscribers freedom to switch the Service Provider, Fund, Investment Option and Pension Fund Manager
  • Flexible contribution mechanism – Amount and frequency of contribution can be changed as per the Subscriber requirement
  • Prudently regulated - NPS is regulated by PFRDA, with transparent investment norms and regular monitoring and performance review of fund managers by NPS Trust
  • Efficient grievance management through CRA / PFRDA Website, Call Center, Email or Postal Mail
  • Transparent investment norms – Investment Portfolio under each asset class can be viewed on respective Pension Fund Manager’s website.
  • Extremely Low Cost of operations – with 0.01% as Fund Management Charge, NPS is one of the World’s least cost investment options

NPS Key stakeholders

NPS has a unbundled architecture where each function is performed by different entities as mentioned below

  • Point of Presence – Points of Presence (POPs) are the first points of interaction of the NPS subscriber with the NPS architecture. The authorized branches of a POP, called Point of Presence Service Providers (POP-SPs), will act as collection points and extend a number of customer services to NPS subscribers
  • Central Recordkeeping Agency – The recordkeeping, administration and customer service functions for all subscribers of the NPS are being handled by NSDL e-Governance Infrastructure Limited, which is acting as the Central Record-keeper for the NPS
  • Pension Fund Managers – The Pension Funds (PFs) appointed by PFRDA would manage your retirement savings under the NPS
  • Annuity Service Providers – ASPs would be responsible for delivering a regular monthly pension to you after your exit from the NPS
  • Trustee Bank – The Trustee Bank appointed under NPS shall facilitate fund transfers across various entities of the NPS system viz. PFMs, ASPs, Subscribers, etc. Axis Bank has been appointed as the Trustee Bank
  • NPS Trust – The NPS trust has been set up and constituted for taking care of the assets and funds under the NPS in the interest of the beneficiaries (subscribers)
  • PFRDA – An autonomous body set up by the Government of India to develop and regulate the pension market in India

Save your Income Tax with National Pension System (NPS)

Tax Benefits and Treatment

Tax benefits under Tier I and Tier II Account are as per below table

NPS Account Tax Benefit Tax Treatment
Tier I Salaried Individual
  • Investment up to 10% of Salary (Basic + Dearness Allowance) is deductible from taxable income u/s 80CCD (1) of Income Tax Act, 1961 subject to 1.5 lakhs limit of section 80C
  • Additionally, investment up to Rs.50,000 is deductible from taxable income u/s 80CCD (1B) of Income Tax Act, 1961

Self Employed Professionals
  • Investment up to 20% of Gross Annual Income is deductible from taxable income u/s 80CCD (1) of Income Tax Act, 1961 subject to 1.5 lakhs limit of section 80C
  • Additionally, investment up to Rs.50,000 is deductible from taxable income u/s 80CCD (1B) of Income Tax Act, 1961
  • Up to 40% of Corpus withdrawn in lump sum is exempt from tax
  • Balance amount invested in Annuity is also fully exempt from tax
  • Pension received out of investment in Annuity is treated as income and will be taxed appropriately
Tier II There is no tax benefit on investment towards Tier II NPS Account Indexation benefit can be claimed

NPS Eligibility

NPS has a unbundled architecture where each function is performed by different entities as mentioned below

NPS A citizen of India, whether resident or non-resident can join NPS, subject to the following conditions:

1.User should have age between 18 – 65 years as on the date of submission of his/her application to the Point of Presence (POP) / Point of Presence–Service Provider -Authorized branches of POP for NPS (POP-SP).

2.User should comply with the Know Your Customer (KYC) norms as detailed in the Subscriber Registration Form.

The following applicants cannot join NPS:

1. Un-discharged insolvent

2. Individuals of unsound mind

3. Pre-existing account holders under NPS

Charges under NPS

Charges under NPS are defined by the regulator as per below chart. These charges are exclusive of Service Tax.

Intermediary Charge Head Charge Frequency of deduction Mode of deduction
PoP Subscriber Registration Charge Rs.200 One time at the time of registration Deducted from the initial contribution amount deposited by Subscriber
Contribution processing charge 0.25% of the Contribution amount subject to minimum Rs.20 and maximum Rs.25,000 On each transaction Deducted from the amount deposited by the Subscriber
Non – Financial Transaction Processing Charge Rs 20 for each active retail customer On each transaction Collected from Subscriber separately
Persistency incentive(with effect from 1 nov 2017) Rs.50 for each active retail customer Charged from 2nd year of account opening Collected from Subscriber separately
CRA (NSDL) PRAN Generation charge Rs.40 One time Collected by cancelling units on a quarterly basis
Account Maintenance charge Rs.95 Annual
Financial transaction processing charge Rs.3.75 On each transaction
Pension Fund Manager Asset Management Charge 0.01% Annual Adjusted before NAV publication
Custodian Asset Servicing Charge 0.0032% Annual
NPS Trust Trust Management Charge 0.005% (no Service Tax applicable) Annual

FAQs on NPS

Retail NPS

What is NPS?

National Pension System (NPS) is an investment cum pension scheme initiated by Government of India to provide old age security and pension of all citizen of India. The NPS was rolled out for all citizens of India on May 01, 2009. The Scheme is regulated by Pension Fund Regulatory and Development Authority (PFRDA).

Who can subscribe to NPS?

A citizen of India, whether resident or non – resident can join the NPS subject to following conditions

  • Subscriber should be between 18 – 65 years of age as on the date of submission of her application
  • Subscriber should comply with the prescribed Know Your Customer (KYC) norms as detailed in the Subscriber Registration Form for NPS

Can HUF, OCI and PIO join NPS?

No, HUF, OCI and POI are not allowed to join NPS

How the Scheme works?

The scheme is based on unique Permanent Retirement Account Number (PRAN) which is allotted to each Subscriber upon joining. Subscriber contributes towards NPS (directly or through the Employer she is working with) during her working life. On retirement or exit from the scheme, the Corpus is made available to her 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

NPS Accounts

What are different types of NPS Account?

Under NPS, Subscriber gets the option to open two accounts. A Tier I account is mandatory to open in order to join NPS. Difference between Tier I and Tier II accounts are as mentioned below

Tier I NPS Account Tier II NPS Account
It is also known as Pension account It is known as investment account
Withdrawal from this account is permitted after 10 years of account opening or attaining the age 60 years whichever comes early Withdrawal from this account can be done at any point of time as per Subscriber’s need
Minimum annual contribution required for this account is Rs. 1000 NA

Can a Subscriber open more than one NPS account?

No. In the entire life span Subscriber will be allowed to open only one NPS Account. The NPS Account number which is also called PRAN is fully portable across job and geography.

Is it mandatory to open Tier II NPS Account at the time of opening Tier I NPS Account?

No. Tier II NPS Account is optional to the Subscriber. Subscriber can open Tier – II NPS Account later on as well

Can a Subscriber open only Tier II NPS Account?

No. Active Tier – I NPS Account is a must criterion for opening Tier – II NPS Account. Subscriber cannot apply for only Tier – II NPS Account

Investment of Funds under NPS

How many funds are there in NPS?

NPS offers 4 funds to Subscribers

Equities (E)

Corporate Bonds (C)

Government Securities (G)

Alternate Investments (A)

NPS restricts investment towards Equities Fund to 50% of contribution amount for both Tier I and Tier II NPS Accounts. However, Subscriber can invest up to 100% in Corporate Bonds or Government Securities Fund.

How the investment happens across three funds?

There are two investment options available under NPS

  • Active Choice: under this option, Subscriber gets the flexibility to choose her own asset allocation across Equity, Corporate Bonds and Government Securities. Investment in Equity is restricted to 50% of Contribution amount. However, in Corporate Bonds and Government Securities Subscriber can invest 100% of Contribution amount
  • Auto Choice: under this option investment across Equity, Corporate Bonds and Government Securities is done as per the age of the Subscriber as per below chart
  • LC 75 – Aggressive Life Cycle Fund
AgeAsset Class EAsset Class CAsset Class G
Up to 35 years751015
36 years711118
37 years671221
38 years631324
39 years591427
40 years551530
41 years511633
42 years471736
43 years431839
44 years391942
45 years352045
46 years322048
47 years292051
48 years262054
49 years232057
50 years202060
51 years191863
52 years181666
53 years171469
54 years161272
55 years & above151075
LC 50 – Moderate Life Cycle Fund
AgeAsset Class EAsset Class CAsset Class G
Up to 35 years503020
36 years482923
37 years462826
38 years442729
39 years422632
40 years402535
41 years382438
42 years362341
43 years342244
44 years322147
45 years302050
46 years281953
47 years261856
48 years241759
49 years221662
50 years201565
51 years181468
52 years161371
53 years141274
54 years121177
55 years & above101080
LC 25 – Conservative Life Cycle Fund
AgeAsset Class EAsset Class CAsset Class G
Up to 35 years254530
36 years244333
37 years234136
38 years223939
39 years213742
40 years203545
41 years193348
42 years183151
43 years172954
44 years162757
45 years152560
46 years142363
47 years132166
48 years121969
49 years111772
50 years101575
51 years91378
52 years81181
53 years7984
54 years6787
55 years & above5590

How the above fund allocation chart works under Auto Choice Investment option?

The first allocation is made as per the age of the Subscriber at the time of joining the Scheme as shown in the chart. For example, if the entry age of Subscriber is 42 years, her allocation towards E, C and G would be 36%, 23% and 41% respectively. On the next date of birth of the Subscriber, the portfolio will be re-aligned as per the next level chart i.e for the age 43. The re-alignment of portfolio is system driven

Is there any guaranteed returns provided under NPS?

NPS returns are market linked. Depending on the returns generated under Equity, Corporate Bonds and Government Securities funds, the Corpus will be created.

Can a Subscriber change the fund allocation pattern under Active Choice?

Yes. Subscriber can switch the asset allocation pattern under Active Choice twice in a financial year.

Can a Subscriber switch between Active Choice and Auto Choice?

Yes. Subscriber gets this flexibility. This can be done twice in a financial year.

If a Subscriber is under Active Choice and have changed the fund allocation in a particular year and wants to switch from Active Choice to Auto Choice, can this be allowed?

yes, it is possible once in a financial year

Joining NPS

What is the process of joining NPS?

subscriber needs to send duly filled NPS Application Form along with KYC documents (self attested copy of PAN card and Address Proof) and filled NCIS form to below address for account opening. Upon joining, Permanent Retirement Account Number (PRAN) is allotted to Subscriber. Further PRAN Card, IPIN and TPIN are sent to Subscriber address by CRA

Priyanka Jaisinghani, HDFC Pension Management Company Limited, 14th floor, Lodha Excelus, Apollo Mills Compound, N M Joshi Marg, Mahalaxmi, Mumbai – 400 011.

Does Subscriber need to deposit any minimum amount at the time of submission of NPS application form?

Yes. For account opening, a minimum contribution is required as shown below:

For Tier I account opening: Rs. 500
For Tier II account opening: Rs. 1,000
If Subscriber is opening Tier I and Tier II account simultaneously, minimum Rs.1,500 needs to be deposited as initial contribution.
However in order to avail of tax benefit u/s 80CCD (1B) you can deposit Rs. 50K at once in Tier I Account.

Contribution towards NPS accounts

What process Subscriber needs to follow to make contribution to NPS Account?

Subscriber can contribute towards NPS through any of the POPs by Cheuqe / Demand Draft.

Is there any restriction on frequency of contribution?

There is no restriction in terms of frequency of contribution. Subscriber has the option to make the contribution in any mode – monthly, quarterly, half yearly or yearly. Also, Subscriber can make ad – hoc contribution as well.

Can Subscriber increase or decrease the contribution amount in subsequent years?

Yes, NPS offers this flexibility. Subscribers are allowed to alter the contribution amount as per the suitability.

Does Subscriber get any alert on credit of contribution amount to his / her NPS accounts?

Yes, once the contribution is credited to Subscriber’s NPS account, an email alert as well as a SMS alert is sent to the registered email ID and mobile number of the Subscriber

Account Maintenance

Can a Subscriber change / modify data in the NPS system after joining NPS?

Yes. Subscriber needs to submit the request along with the Service Charge of Rs. 20 plus Service Tax to the POP for initiating the modification.

From where the forms for service requests can be obtained?

The same can also be obtained from CRA website: The link is https://npscra.nsdl.co.in/non-goverment-form.php

Can a Subscriber request for a duplicate PRAN Card?

Yes. In case of loss or damage of PRAN Card, the Subscriber needs to submit a duly filled S2 form to the POP for issuance of duplicate PRAN Card. Rs.50 plus applicable Service Tax will be deducted by CRA for issuing duplicate PRAN

Does Subscriber get any physical statement for NPS account?

Yes. An annual statement containing details of the unit holdings is issued by CRA to Subscriber’s registered address within 3 months of the end of every financial year

How does Subscriber get its Statement of Transaction (SOT) on ad-hoc basis?

Subscriber can get POP branch to obtain the account statement. Subscriber can also view / print the SOTs by logging into CRA website https://cra-nsdl.com/CRA/ using the I-PIN

Non fulfillment of required contribution criteria

What happens if the minimum annual contribution of Rs.1,000 is not invested in Tier - I NPS Account?

In case the Subscriber fails to contribute minimum Rs.1000 in Tier - I NPS Account, the PRAN is frozen. Once the PRAN is frozen, Subscriber is not allowed to do any transaction (financial / non – financial) in both - Tier - I and Tier - II NPS Accounts.

Does Tier - II NPS Account of the Subscriber also get frozen if Tier - I NPS Account is frozen?

Yes, if Tier I account of an Subscriber is frozen because of non fulfillment of criteria, Tier II account is automatically get frozen.

What is the process of unfreezing the PRAN?

Subscriber can unfreeze the NPS Account by paying Rs.500 as minimum contribution amount and Rs.100 as penalty. POP charges to be added to

Tax benefits and treatment under NPS

What are the tax benefits available to Subscribers for contribution under corporate model?

Subscriber gets the following tax benefits on contributions

NPS Account Tax Benefit Tax Treatment
on withdrawal
Tier I Salaried Individual
  • Investment up to 10% of Salary (Basic + Dearness Allowance) is deductible from taxable income u/s 80CCD (1) of Income Tax Act, 1961 subject to 1.5 lakhs limit of section 80C
  • Additionally, investment up to Rs.50,000 is deductible from taxable income u/s 80CCD (1B) of Income Tax Act, 1961

Self Employed Professionals
  • Investment up to 20% of Gross Annual Income is deductible from taxable income u/s 80CCD (1) of Income Tax Act, 1961 subject to 1.5 lakhs limit of section 80C
  • Additionally, investment up to Rs.50,000 is deductible from taxable income u/s 80CCD (1B) of Income Tax Act, 1961
  • Up to 40% of Corpus withdrawn in lump sum is exempt from tax
  • Balance amount invested in Annuity is also fully exempt from tax
  • Pension received out of investment in Annuity is treated as income and will be taxed appropriately
Tier II There is no tax benefit on investment towards Tier II NPS Account Indexation benefit can be claimed

Partial withdrawal from NPS Account

Is partial withdrawal allowed from Tier I NPS Account?

Yes. Subscriber can withdraw up to 25% of contributed amount towards Tier - I NPS Account after 10 years. Additionally, Subscriber is allowed to withdraw from Tier I NPS account twice after a gap of 5 years after first withdrawal.

What are the conditions of partial withdrawal?

Withdrawal from Tier - I NPS account would be permitted for specific purposes like Child’s marriage, higher education, treatment of critical illnesses etc.

What process Subscriber needs to follow for withdrawal from Tier - II NPS Account?

In order to withdraw from Tier - II NPS Account, the Subscriber needs to submit a duly filled UOS-S12 form to the associated POP branch

Exit from NPS

When can a Subscriber exit from NPS?

Subscriber can exit from NPS after 10 years of account opening or attaining 60 years of age whichever is early.

How the payout happens if an Subscriber exists from NPS?

Primary objective of Tier – I NPS Account is to create a Corpus which can be used at the time of retirement to buy pension for the Subscriber / Nominee. Hence, there is a restriction imposed on lump sum amount accessible to Subscriber on exit as mentioned below

Exit before the age 60 years Exit at Retirement age defined by the Corporate
  • Up to 20% of Corpus can be withdrawn in lump sum
  • Balance amount needs to be invested in Annuity
  • Up to 60% of Corpus can be withdrawn in lump sum
  • Balance amount needs to be invested in Annuity
If the Corpus is less than or equal to Rs.1 lakh, there is no need to invest into Annuity. Entire amount can be withdrawn in lump sum If the Corpus is less than or equal to Rs.2 lakhs, there is no need to invest into Annuity. Entire amount can be withdrawn in lump sum

Is it mandatory to withdraw the amount immediately at the time of exit from NPS?

In case of exit from NPS on retirement age defined by the Corporate, Subscriber can defer the withdrawal option till 10 years depending on the market condition. Subscriber can withdraw this amount either in lump sum or take the same in 10 installments before attaining the age 70 years.

However, in case of pre – mature exit from NPS (before attaining the age of 60 years), Subscriber does not have option to defer the option.

What happens to the funds if Subscriber opts to defer the withdrawal (on attainment of 60 years of age defined by the Corporate)

The fund would continue to remain invested. The Pension Fund Manager, Scheme Preference and Asset Allocation Pattern will remain the same as these were at the time of vesting

Investment in Annuity

In case the Subscriber opted for withdrawal from Tier – I NPS Account before the age 60, at what age annuity will start?

In case of pre-mature withdrawal, Subscriber needs to invest in Annuity immediately. Depending on the Annuity Plan he / she has invested in, annuity would start.

Can a Subscriber change the annuity service provider?

No, this option is not available.

Can a Subscriber use 100% of accumulated wealth to buy annuity plan?

Yes. Subscriber can use 100% of accumulated wealth to buy annuity plan

In case of death of Subscriber, what happens to the annuity plan bought by her?

It will depend on the kind of annuity plan opted for the Subscriber. For an example, if the annuity plan is joint life annuity plan, on death of Subscriber, the spouse will get the annuity till he / she is alive

Death Proceedings

In case of death of the Subscriber, who can claim the corpus in Tier I and Tier II NPS Accounts of diseased?

In case of death of the Subscriber, option will be available to the nominee to receive 100% of the NPS pension wealth in lump sum. In case, nominee is not there legal heir to the Subscriber can claim the corpus.

What is the process of claiming the corpus after death of the Subscriber?

The beneficiary needs to submit the request to POP

Charges under NPS

What are the charges under NPS and how these charges are levied?

There are various intermediaries involved under NPS. The charge for these intermediaries is regulated by PFRDA. Below are the details of charges under NPS (exclusive of Service Tax)

Intermediary Charge Head Charge Frequency of deduction Mode of deduction
PoP Subscriber Registration Charge Rs.125 One time at the time of registration Deducted from the initial contribution amount deposited by Subscriber
Contribution processing charge 0.25% of the Contribution amount subject to minimum Rs.20 and maximum Rs.25,000 On each transaction Deducted from the amount deposited by the Subscriber
Non – Financial Transaction Processing Charge Rs.20 On each transaction Collected from Subscriber separately
CRA (NSDL) NPS Account opening charge Rs.40 One time Collected by cancelling units on a quarterly basis
Account Maintenance charge Rs.95 Annual
Financial transaction processing charge Rs.3.75 On each transaction
Pension Fund Manager Asset Management Charge 0.01% Annual Adjusted before NAV publication
Custodian Asset Servicing Charge 0.0032% Annual
NPS Trust Trust Management Charge 0.01% (no Service Tax applicable) Annual

*subject to minimum Rs.20 and maximum Rs.25000 per PRAN per Transaction
**Service Tax is not applicable on Trust Management Charge.

Does Subscriber need to pay POP charges over and above the contribution amount?

No, the POP charges would be deducted from the Contribution amount.

What is meant by Non – Financial Transaction?

Transactions like change of address, contact details etc are called non – financial transactions.

How is the Non – Financial Transaction Charge recovered by POP?

Subscriber needs to pay Rs.20 + Service Tax by Cheque at the time of submitting request for process any Non – Financial transaction









DISCLAIMER: INVESTMENT INTO EQUITY, DEBT OR BONDS IS SUBJECT TO MARKET RISK. PLEASE READ ALL SCHEME RELATAED DOCUMENTS CAREFULLY BEFORE INVESTING. INFORMATION RECEIVED VIA THIS WEB SITE SHOULD NOT BE RELIED UPON FOR PERSONAL, MEDICAL, LEGAL OR FINANCIAL DECISIONS AND YOU SHOULD CONSULT AN APPROPRIATE PROFESSIONAL FOR SPECIFIC ADVICE TAILORED TO YOUR SITUATION. INVESTMENTGURUINDIA.COM OR BD INFO MEDIA PVT LTD MAKES NO REPRESENTATIONS ABOUT THE SUITABILITY, RELIABILITY, TIMELINESS, AND ACCURACY OF THE INFORMATION, SOFTWARE, PRODUCTS, SERVICES AND RELATED GRAPHICS CONTAINED ON THIS WEB SITE FOR ANY PURPOSE. Read Complete Disclaimer