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National Pension System (NPS) is a voluntary retirement savings scheme to enable the subscribers to contribute for their future through systematic savings during their working life.

National Pension System

National Pension System (NPS):

National Pension System (NPS) is a voluntary retirement savings scheme to enable the subscribers to contribute for their future through systematic savings during their working life. NPS inculcates the habit of saving for retirement amongst the citizens to find out a sustainable solution to the problem of providing adequate retirement income to every citizen of India.

Under NPS, individual savings are pooled in to a pension fund which are invested by PFRDA regulated professional fund managers as per the approved investment guidelines in to the diversified portfolios comprising of Government Bonds, Bills, Corporate Debentures and Shares. These contributions would grow and accumulate over the years, depending on the returns earned on the investment made.

National Pension System (NPS), Regulated by PFRDA, is an important milestone in the development of a sustainable and efficient voluntary defined contribution pension system in India. It has the following broad objectives:

  • Provide old age income

  • Reasonable market based returns over the long term

  • Extending old age security coverage to all citizens

 

Who can subscribe in NPS?

Any citizen in the age group of 18-70 years (as on the date of submission of his / her application to the POP-SP) can join NPS except for the government subscribers who are mandatorily covered under NPS.

 

Benefits:

  • Flexible- NPS offers various options of Asset Class & Pension Funds Managers (PFM) for the growth of the investments as per planned manner. Subscribers can monitor and switch over from one investment option to another or from one fund manager to another.

  • Simple- NPS provides a Permanent Retirement Account Number (PRAN), 12-digit unique number. NPS offers two tiers:

    • Tier-I account: This is mandatory permanent retirement account. Withdrawals are allowed with certain conditions. Subscriber contributes regular and funds got invested as per the portfolio/fund manager.

    • Tier-II account: This is a voluntary withdrawable account. To open Tier-II account, subscriber must have a Tier-I account. Withdrawals are permitted from this account as per the needs of the subscriber as and when required.

  • Portable- NPS provides portability across jobs and across locations. Subscriber can change employer/location/service provider without making an impact on corpus build.

  • Well Regulated- NPS is regulated by PFRDA, with transparent investment norms, regular monitoring and performance review of fund managers by NPS Trust. The account maintenance costs under NPS are the lowest as compared to similar pension products across the globe. While saving for a long-term goal such as retirement, the cost matters a lot as the charges can shave off a significant amount from the corpus over 35-40 years of investment period.

  • Ease of Access: Subscriber can manage NPS account online through web portal or mobile app.

 

Tax Benefits:

  • Voluntary contribution-

Subscriber is allowed deduction for contribution in his NPS account subject to maximum investment of Rs. 50,000/- under sec. 80CCD 1(B). This is over and above the limit of Rs. 1.50 lacs provided under Sec 80 CCE.

  • Salaried Individuals-

Individuals who are employed and contributing to NPS would enjoy tax benefits on their own contributions as well as their employer’s contribution as under:-

  1. Employee’s contribution- Eligible for tax deduction up to 10% of Salary (Basic + DA) under Section 80 CCD(1) within the overall ceiling of Rs. 1.50 lacs under Sec 80 CCE.

  2. Employer’s contribution- The employee is eligible for tax deduction up to 10% of Salary (Basic + DA) contributed by employer under Sec 80 CCD(2) over and above the limit of Rs. 1.50 lacs provided under Sec 80 CCE.

  • Tax benefit for self-employed-

Eligible for tax deduction up to 20 % of gross income under Sec 80 CCD (1) with in the overall ceiling of Rs. 1.50 lacs under Sec 80 CCE.

 

Tax benefits would be applicable as per the Income Tax Act, 1961 as amended from time to time.

Please click here to view FAQs under Ombudsman.

Corporate Model - NPS

NPS Corporate Model is a platform for employer to extend the old age social security benefits to their employer and family. This is in an additional avenue for pension being made available to organized sector as it can be introduced along with other retirement benefit schemes. The Portability gives an added advantage to NPS in Corporate Sector, where the employment change is frequent. There are no charges for corporate registration.

Corporate Model provides a flexibility for employer & employee contributions as mentioned below-

  • Equal or unequal contribution from Employer and Employee

  • Contribution either from Employer or from Employee

 

Tax benefits for employer:

Employers can claim tax benefits for the amount contributed towards pension of employees.

Contributions made by the employer (upto 10% of Basic + DA) is allowed as a business expense under Section 36 (1) iv (a) of Income Tax Act 1961

 

Tax benefits for employee:

  • Employer’s contribution – Eligible for tax deduction upto 10% of Salary (Basic + DA) contributed by employer under sec 80 CCD (2) which shall be excluded from the limit of Rs. 1.50 lac provided under Sec. 80 CCE.

  • Employee’s contribution – Eligible for tax deduction upto 10% of Salary (Basic + DA) under sec 80 CCD (1) within the overall ceiling of Rs. 1.50 Lac under Sec. 80 CCE.

  • Additional tax deduction is available on investment upto Rs. 50000/- under section 80CCD (1B), over r and above Rs 1.50 lac ceiling.

 

Entities/organizations eligible for NPS corporate model:

  • Entities registered under Companies Act,

  • Entities registered under various Co-operative Acts,

  • Central Public Sector Enterprises

  • State Public Sector Enterprises

  • Registered Partnership firm

  • Registered Limited Liability Partnership (LLPs)

  • Anybody incorporated under any act of Parliament or State legislature or by order of Central / State Govt

  • Proprietorship concern

  • Society/Trust

 

Corporate Registration Process:

The Corporate desirous of extending NPS to their employees would need to tie up with POP under NPS through MoU. The corporate would submit the CHO–1 form to the POP. Post necessary due diligence on the status of the corporate, POP would submit the duly certified form to CRA. CRA would register the corporate in the CRA system and allot Entity Registration Number which would be reflected in each Subscriber Registration Form (CSRF).

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Registration using PAN (KYC verification by Bank)

  • You must have a 'Permanent Account Number' (PAN)

  • Bank account details with the YES Bank Ltd. for KYC verification for subscriber registration through eNPS

  • Your KYC verification will be done by the YES Bank

  • Name and address provided during registration should match with YES Bank records for KYC verification. If the details don't match, the request is liable for rejection. In case of rejection of KYC, the applicant is requested to identify the mismatch information and do reKYC

  • You need to fill up all the mandatory details online

  • You need to upload scanned copy of PAN and Cancelled Cheque in *.jpeg/ *.jpg/ *.png format having file size between 4KB - 2MB

  • You need to upload your scanned Photograph and Signature in *.jpeg/ *.jpg/ *.png format having file size between 4KB - 5MB

  • You will be routed to a payment gateway for making the payment towards your NPS account from Internet Banking

  • Subscriber have an option to eSign or Print and Courier the registration form to CRA

  • Contributions are credited in PRANs on T+2 basis (subject to receipt of clear funds from Payment Gateway Service Provider)


 

Process for eSign / Print and Courier

  • You have an option to eSign registration form

  • In case you are unable to eSign, take a printout of the form, paste your Photograph (please do not sign across the photograph) & affix signature

  • You should sign on the block provided for signature

  • The photograph should not be stapled or clipped to the form

  • The form should be sent within 30 days from the date of allotment of PRAN to CRA at the following address or else the PRAN will be 'frozen' temporarily

Central Recordkeeping Agency (eNPS)

NSDL e-Governance Infrastructure Limited,

1st Floor, Times Tower,

Kamala Mills Compound, Senapati Bapat Marg,

Lower Parel, Mumbai - 400 013

 

Processing of Subsequent Contribution:

All existing Subscribers can contribute in Tier I & Tier II account using 'eNPS'. To contribute online, you need to

  • Have an active Tier I / Tier II account

  • Authenticate your PRAN using the OTP sent to your registered mobile number

  • Pay through Internet banking / Debit / Credit card / UPI

  • POP Service Charges will be applicable on the contribution amount @ 0.10% (subject to minimum of ₹ 10 and maximum of ₹ 10,000 per transaction).

  • Contributions are credited in PRANs on T+2 basis (subject to receipt of clear funds from Payment Gateway Service Provider)

Charges

Applicable fees and charges levied on NPS Subscribers:

Intermediary

Charge head

Service Charges*

POP

Initial subscriber registration

Rs. 200

Any subsequent transactions

Financial: 0.25% of contribution, Min. Rs. 20 Max. Rs. 25000

Non-Financial Rs. 20

Persistency

> 6 months & Rs 1000 contribution

Rs. 50 per annum

Contribution through eNPS

0.10% of contribution, Min. Rs.10 Max. Rs.10000

CRA

PRA Opening charges

CRA

CRA charges for account opening if the subscriber opts for Physical PRAN card (in Rs.)

NSDL (NCRA)

40.00

Kfintech (KCRA)

39.36

Note: The reduction in charges will be on the current charge structure and excludes applicable taxes.

Annual PRA Maintenance cost per account

NCRA: Rs. 95

KCRA: Rs. 57.63

Charge per transaction

NCRA: Rs. 3.75

KCRA: Rs. 3.36

Trustee Bank

-

NIL

Custodian

Asset Servicing charges

0.0032% p.a for Electronic segment & Physical segment

PF charges

Investment Management Fee

0.01% p.a.

NPS Trust

Reimbursement of Expenses

0.005% p.a

FAQ

Q. What is National Pension System?

National Pension System (NPS) is a defined contribution pension. NPS is voluntary for subscription by an individual to make contributions to his/her Individual Pension Account during the working life for creating a pension corpus from which regular income will be generated after retirement / working age. NPS is mandatory for the Central Government recruits w.e.f. 1st Jan 2004 (except armed forces) which replaced the earlier defined benefit pension and has been subsequently adopted by almost all State Governments for their employees.

 

Q. What is NPS Corporate Model?

PFRDA has launched a separate model to provide NPS to the employees of corporate entities, Central Public Sector Enterprises and Public Sector Undertakings. This model is known as “NPS - Corporate Sector Model”.

 

Q. What are the benefits to the employer in this model?

The Corporate can save on their expenses incurred on formation of trust, management of Contributions – Charges + Investment Growth = Accumulated Pension Wealth (Individual contribution as well as Employers contribution) funds and recordkeeping etc.

  • Corporate can act as a facilitator to extend benefits of NPS to its employees.

  • Corporate may select the PFM for its employees (which the employees can change after a year) or leave the option to employees for selecting PFMs for themselves.

  • Platform to co-contribute for employees’ pension.

 

Q. Who all are eligible to join NPS?

  • Any Indian Citizen (resident or non-resident) and Overseas Citizen of India (OCI)

  • Aged between 18-70 years

  • Compliant to Know Your Customer (KYC) norms.

Hindu Undivided Families (HUFs) and Persons of Indian Origin (PIOs) are not eligible for subscribing to NPS. NPS is an Individual Pension Account and cannot be opened on behalf of a third person. The applicant should be legally competent to execute a contract as per the Indian Contract Act.

 

Q. I have subscribed to EPF / PPF / Superannuation Fund / Provident Fund. Am I eligible to join NPS?

Yes. NPS can be voluntarily subscribed along with any other pension scheme(s). However, an individual cannot have multiple NPS accounts.

 

Q. What are the benefits?

  • Cheapest investment product with better growth options through long term market-linked returns.

  • Provides choice of various funds with a flexible investment pattern.

  • Individual Retirement Account for record keeping at individual level ensures portability across geographies and employment.

  • Employee’s as well as Employer’s contribution towards the NPS account of employee is eligible for tax exemption as per the Income Tax Act, 1961 as amended from time to time.

  • Offers Tier II account which is a voluntary savings facility with anytime liquidity/withdrawal option.

  • Efficient grievance management through CRA Website, Call Center, Email or Postal Mail.

  • Routine/quarterly disclosure of the funds helps subscriber to achieve better fund management.

  • Auto Choice option for those who do not have the required knowledge to manage their investment.

  • An option to remain invested even after retirement (deferred withdrawal option is available)

 

Q. What are the features of the retirement account provided under NPS?

The following are the most prominent features of the retirement account under NPS:

  • Every individual subscriber is issued a Permanent Retirement Account Number (PRAN) card and has a 12-digit unique number. In case of the card being lost or stolen, the same can be reprinted with additional charges.

  • Under NPS account, two types of accounts – Tier I & II are provided. Tier I account is mandatory and the subscriber has option to opt for Tier II account opening and operation. The following are the salient features of the Tier-I and Tier-II accounts:

  • Tier-I account: This is a restricted and conditional withdrawable retirement account which can be withdrawn only upon meeting the exit conditions prescribed under NPS.

  • Tier-II account: This is a voluntary savings facility available as an add-on to any Tier-1 account holder. Subscribers will be free to withdraw their savings from this account whenever they wish.

Tier I

Tier II

Individual Pension Account

Optional Account – Require an active Tier-I

Withdrawal as per rules/regulations only

Unrestricted withdrawals

Min. Contribution Rs. 500

Min. Contribution to open Rs. 1000

Min. Contribution per year Rs. 1000

Min. Contribution Rs. 250

Tax benefits are available

No tax benefits on contribution/gains

Any Citizen aged between 18-70 is eligible

NRIs/OCIs are not eligible

Choose any Pension Fund / Investment Pattern

Choose any Pension Fund/ Investment Pattern*

*Subscriber can select different Pension Fund and Investment Option for his/her NPS Tier I and Tier II accounts

 

Q. What happens to the investments if contribution is discontinued or minimum contribution is not met?

A subscriber has to contribute a minimum annual contribution of Rs.1000/- for his/her Tier I account in a financial year and if not contributed the account will be frozen.

In order to reactivate the account, the customer has to pay the minimum contribution of Rs. 500/- . For unfreezing an account, the subscriber has to approach the Point of Presence (PoP) and pay the required amount, or he/she can make contribution through online eNPS platform.

The corpus of the subscriber shall remain invested in the chosen scheme, even if there are no contributions from the subscriber; however, the applicable charges shall be recovered, wherever applicable.

 

Q. Can I appoint nominees for the NPS Tier I Account?

Yes, you need to appoint a nominee at the time of opening of a NPS account in the prescribed section of the opening form. You can appoint up to 3 nominees for your NPS Tier I account. In such a case you are required to specify the percentage of your saving that you wish to allocate to each nominee. The share percentage across all nominees should collectively aggregate to 100%.

 

Q. I have not made any nomination at the time of registration. Can I nominate subsequently? What is the process?

If you have not made the nomination to your NPS account at the time of registration, you can do the same after the allotment of PRAN. You will have to visit your POP and place Service Request to update nominations details.

 

Q. Can I change the Nominees for my NPS Accounts?

Yes. You can change the nominees in your NPS Tier I account at any time after you have received your PRAN.

 

Q. In what way is the NPS Portable?

The following are the portability features associated with NPS

  • NPS account can be operated from anywhere in the country irrespective of individual employment and location/geography.

  • Subscribers can shift from Corporate (employer) to another Corporate (employer), from one sector to another like Private to Government or vice versa or All Citizen Model to Corporate Model and vice versa. Hence a subscriber can move to Central Government, State Government etc with the same Account. Also, subscriber can shift within sector like from one POP to another POP and from one POP-SP to another POP-SP. Likewise, an employee who leaves the employment to become a self-employed can continue with his/her individual contributions. If he/she enters re-employment, he/she may continue to contribute and his/her employer may also contribute and so on.

  • The subscriber can contribute to NPS from any of the POP/ POP-SP despite not being registered with them and from anywhere in India.

 

Q. Can I have more than one NPS account?

No, multiple NPS accounts are not allowed for an individual.

 

Q. What is POP and POP-SP? What is its role?

Points of Presence (POP.) is the interface between the Corporate / subscribers and the NPS architecture. POP-Service Providers (POP-SPs) are the designated branches of registered POPs to perform the functions relating to registration of subscribers, undertaking Know Your Customer (KYC) verification, receiving contributions and instructions from Corporates and transmission of the same to the designated NPS intermediaries.

 

Q. Who will be responsible for uploading the data & contribution?

POP/ POP-SP with whom corporate initiate registration of the Corporate and registration of the employees, uploading the data& contribution.

 

Q. Is it possible for corporate to change POP at any stage?

Yes, the corporate can change the POP.

 

Q. What benefits would family of employee get when the employee covered under NPS expire during the service?

In such an unfortunate event, the nominee will receive 100% of the accumulated NPS pension wealth in lump sum.

 

Q. Who can select the Investment option? Employee or Employer?

There is flexibility to select scheme and Pension Fund either at corporate level or Subscriber Level. Corporate may opt for Pension Fund and investment choice or leave the option to employees. The subscribers will have the option to change the PF and Investment Choice made by the corporate on behalf of them, after completion of a year.

 

Q. What are the choices I need to exercise while opening an NPS account?

Choice

Function

Refer

Point of Presence

Service Provider

PFRDA

CRA

Record-keeper

PFRDA

Pension Fund

Fund Manager

PFRDA

Investment Choice - Asset allocation pattern

  1. Active Choice

    1. Equity (E) – Maximum 75%

    2. Corporate Bonds (C) – Upto 100%

    3. Government Securities (G) - Upto 100%

    4. Alternate Assets (A) – Maximum 5%

  2. Auto Choice

    1. Conservative Life Cycle Fund (LC25)

    2. Moderate Life Cycle Fund (LC25) - Default

    3. Aggressive Life Cycle Fund (LC75)

PFRDA

 

Q.How often can I change the choices I have made?

Subscribers can subsequently request to change the choices exercised as under:

Choice

Frequency

Mode / Method

Point of Presence

No restrictions, any time

Physical Application to target/new PoP

CRA

Twice in a year

Physical Application to target/new CRA

Pension Fund

Once in a Financial Year

Online – Login to your account

Offline – Physical Application to PoP

Investment Choice

Twice in a Financial Year

Online – Login to your account

Offline – Physical Application to PoP

 

Q.How are the funds contributed by the subscribers managed under NPS?

The funds contributed by the Subscribers are invested by the PFRDA registered Pension Fund (PFs) as per the investment guidelines of PFRDA. At present there are 7 Pension Funds (PFs) who manage the subscriber funds at the option of the subscriber.

At present, Subscriber has option to select any one of the following eight pension funds:

  • ICICI Prudential Pension Fund

  • LIC Pension Fund Ltd

  • Kotak Mahindra Pension Fund

  • SBI Pension Fund Pvt. Ltd.

  • UTI Retirement Solutions Pension Fund

  • HDFC Pension Management Company Ltd

  • Birla Sunlife Pension Management Ltd.

However, this list may undergo changes if new pension fund managers are registered by PFRDA or existing players are de-registered by PFRDA.

 

Q. What are the different Fund Management Schemes available to the subscriber?

The NPS offers two approaches to invest subscriber’s money:

  • Active choice: The subscriber would decide the percentages in which the contributed funds are to be invested in various asset classes (Asset class E, Asset Class C, Asset Class G and asset Class A).

  • Auto choice: Subscriber has the choice of three lifecycle funds i.e. Aggressive Life Cycle Fund (LC75), Moderate Life Cycle Fund (LC50 - default choice) and Conservative Life Cycle Funds (LC25). Under lifecycle funds, the contributed funds are allocated across asset classes automatically based on the age of the subscriber.

 

Q. How do I access my NPS account?

Subscriber can access their Pension Account through

  1. Physical mode – by visiting his/her service provider (PoP)

  2. Online - using login credentials provided by CRA in the Account Opening Kit

    1. Web-based login

    2. Mobile Application

  3. Telephone - using the T-Pin received in the Account Opening Kit.

  4. Toll Free numbers - NSDL 1800 222 080 and Karvy 1800 208 1516

 

Q. If the employer has made a choice of a Pension Fund and Investment Choice, then can the underlying employee choose any other Pension Fund?

Once the employer has made choice of Pension Fund and Investment Choice, it will be applicable to every new employee joining the organization. However, the employee can change the pension fund and Investment Choice after a year.

 

Q. When an employee leaves the job, what would happen to PRAN a/c?

Employee can shift the corpus to new employer with same PRAN a/c if the new employer is already a registered entity under NPS. But if not, then employee can continue the PRAN a/c under All Citizen Model.

 

Q. In case if any employee resigns or leaves the organization, can the employer contribution be forfeited?

The employer contributions cannot be forfeited under NPS.

 

Q. Whether employees have facility of Loan/advances under NPS? Whether lien can be marked on NPS account?

There is no such provision under NPS.

 

Q. What are the benefits offered under NPS and when they can be withdrawn?

NPS is a long-term retirement savings scheme which builds up the pension wealth through effective investments of the subscriber contributions over the term of the subscriber’s continuation in the scheme. The greater the value of the contributions made, the greater the investments achieved, the longer the term over which the fund accumulates and the lower the charges deducted, the larger would be the eventual benefit of the accumulated pension wealth likely to be. The subscriber can exit from NPS and withdraw the accumulated pension wealth in the following manner and no other exits or withdrawals are permitted:

Retirement / Superannuation age of corporate subscriber (employee) is decided by the Corporate (employer).

For subscribers joining between 18-60 years

  • Upon attainment of superannuation: At least 40% of the accumulated pension wealth of the subscriber needs to be utilized for purchase of an annuity providing for the monthly pension of the subscriber and the balance (60%) is paid as a lump sum payment to the subscriber. If the total corpus is not exceeding Rs. 5 lacs, then the subscriber has the option to withdraw the whole corpus in lumpsum

  • Upon Death (irrespective of cause): The entire accumulated pension wealth (100%) would be paid to the nominee / legal heir of the subscriber and there would not be any purchase of annuity/monthly pension. The nominee, if so wishes, has the option to purchase annuity.

  • Exit from NPS before attainment of superannuation (irrespective of cause): An Subscriber under Corporate Model is allowed to exit from NPS voluntarily, only after completion of minimum 10 years in NPS. In case the subscriber voluntarily exits before superannuation, at least 80% of the accumulated pension wealth of the subscriber needs to be utilized for purchasing an annuity for providing pension to the subscriber and the balance (20%) can be withdrawn in lump sum. If the total corpus is not exceeding Rs. 2.5 lacs, the subscriber has the option to withdraw the whole corpus in lumpsum.

For subscribers joining between 60-70 years

The exit conditions for subscribers who joined NPS beyond the age of 60 years in the NPS-Private Sector will be as under:

  • Normal exit: The subscriber exiting after completion of 3 years from the date of joining NPS. In the normal exit, the subscriber will be required to annuitize at least 40% of the corpus for purchase of annuity and the remaining corpus can be withdrawn in lump sum. In case the accumulated corpus at the time of exit is equal or less than Rs. 5 lacs, the subscriber will have the option to withdraw the entire corpus in lump sum.

  • Premature Exit: Any exit before completion of 3 years will be treated as premature exit. In such case, the subscriber will be required to annuitize at least 80% of the corpus for purchase of annuity and the remaining corpus can be withdrawn in lump sum. In case the accumulated corpus at the time of exit is equal or less than Rs. 2.5 lacs, the subscriber will have the option to withdraw the entire corpus in lump sum.

  • Exit due to the death of the subscriber: The entire corpus shall be payable to the nominee of the subscriber.

The subscribers would be able to purchase the annuities directly from the empaneled Annuity Service Providers as per their choice of annuity that is available with the ASPs.

 

Q. Can I withdraw amounts from my NPS account before maturity/superannuation?

Yes. A subscriber on completion of 3 years in NPS is permitted to partially withdraw from his/her account subject to a maximum of 25% of the contributions made by the subscriber for the specified purposes. Partial withdrawal from NPS is permitted upto a maximum of 3 (three) times during the entire tenure.

 

Q. What are the specific reasons or conditions for partial withdrawals?

Partial withdrawals from your NPS account are allowed for dealing with contingency situations and

following are the reasons/conditions for which partial withdrawal is allowed:

  • Higher education of his/her children

  • Marriage of his/her children

  • Purchase or construction of residential house or flat

  • Treatment of specified illnesses

  • Disability of more than 75%

  • Skill development/re-skilling or any other self-development activities

  • Establishment of own venture or any start-ups

 

Q. What are the income tax implications on withdrawals/exit from NPS?

  • Partial Withdrawals from NPS are tax exempted.

  • Amount utilized for purchase of annuity (minimum 40% mandatory) on maturity/exit is not treated as income.

  • Goods and Service Tax is not applicable on annuity purchase by NPS subscriber.

  • 60% of the total corpus received as lumpsum by subscriber on exit/maturity is not treated as income.

 

Q. Who are the Annuity Service Providers under NPS and their names?

Indian Life Insurance companies who are licensed by Insurance Regulatory and Development Authority (IRDA) are empaneled by PFRDA to act as Annuity Service Providers to provide annuity services to the subscribers of NPS. Currently, the following are the ASPs are empaneled by PFRDA. For details of empaneled ASPs, please refer the ‘Exit from NPS’ section in the website.

Presently the following (12) ASPs are empaneled with PFRDA for providing pension:

  • SBI Life Insurance Co. Ltd

  • Life Insurance Corporation of India

  • Star Union Dai-ichi Life Insurance Co. Ltd

  • ICICI Prudential Life Insurance Co. Ltd

  • HDFC Life Insurance Co Ltd.

  • IndiaFirst Life Insurance Co Ltd

  • Edelweiss Tokio Life Insurance Co. Ltd

  • Bajaj Allianz Life Insurance Co Ltd.

  • Canara HSBC Oriental bank of Commerce Life Insurance co Ltd.

  • Kotak Mahindra Life Insurance Co Ltd.

  • Tata AIA Life Insurance Company Limited

  • Max Life Insurance Company Limited

 

Q. What is an annuity and what are the different types of annuities providing for monthly pension available to the subscribers of NPS?

An annuity is a financial instrument which provides for a guaranteed payment on monthly/quarterly/annual basis for the chosen period for a given purchase price or pension wealth. In simple terms it is a financial instrument which offers monthly/quarterly/annual pension at a guaranteed rate for the period you choose. Currently, only the registered life insurers offer the annuities in the Indian Market. Annuity Service Providers provide the following type of annuities to the subscribers of NPS and subject to the conditions like stipulated minimum corpus, age at entry etc:

  1. Pension (Annuity) payable for life at a uniform rate to the annuitant only.

  2. Pension (Annuity) payable for 5, 10, 15 or 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 annuitant (Policyholder).

  4. Pension (Annuity) payable for life increasing at a simple rate of 3% p.a.

  5. Pension (Annuity) for life with a provision of 50% of the annuity payable to spouse during his/her lifetime on death of the annuitant.

  6. Pension (Annuity) for life with a provision of 100% of the annuity payable to spouse during his/her lifetime on death of the annuitant.

  7. Pension (Annuity) for life with a provision of 100% of the annuity payable to spouse during his/her lifetime on death of the annuitant and the return of the purchase price to the nominee.

Subscriber can opt for any of the above annuity variant at the time of exit.

 

Q. Where can I submit my withdrawal request and what are the documents required to be submitted?

The withdrawal request seeking exit from NPS in the permissible manner can be submitted to the employer / Point of Presence associated with the Corporate.

 

Q. How the annuity OR monthly pension is paid

Monthly pension /Annuity will be paid through direct bank transfer to the specified subscribers’ bank account only.

  • Tax rules under NPS

Tier-I account – Tax benefits on Contributions

  • NPS Contributions are eligible for tax deduction u/s 80 CCD (1) of Income Tax Act upto 10% of

basic + DA or upto 20% of Gross Income for self-employed within the overall ceiling of Rs. 1.50

Lacs under Sec. 80 CCE.

  • An additional deduction upto Rs. 50,000/- is available u/s 80CCD 1(B) of Income Tax Act.

  • In case the subscriber receives contributions from the employer also, tax deduction under section

80 CCD (2) of Income Tax Act may be claimed by the subscriber in addition to the tax benefits

available under Sec. 80 CCE.

Tier-I account – Tax implications on Withdrawals / Exit:

  • Maximum 60% of the total corpus received as lumpsum at the time of exit is not treated as income u/s 10 (12A) of Income Tax Act

  • Amount utilized for purchase of annuity plan from ASP on exit (minimum 40% mandatory upto 100% of corpus) is not treated as income u/s 80CCD (5) of Income Tax Act

  • Goods and Service Tax (currently 1.8%) is not applicable on annuity plan purchased through NPS on exit.

  • Amount received from partial withdrawal are tax exempt u/s 10 (12B) of Income Tax Act.

Tier-II account:

  • No tax benefits are available on contributions made in an NPS Tier-II account.

  • No tax rebates/special treatment for the gains arising out of investment in NPS Tier-II. The assesse shall be liable for taxation as per the marginal tax rate applicable to him/her.

 

Q. Whom should I approach if I have a complaint /grievance?

For resolving subscriber grievances, the Authority has notified the PFRDA (Redressal of Subscriber Grievance) Regulations, 2015 and an online platform ‘Central Grievance Management System (CGMS)’ has been hosted for subscriber to lodge grievance online by logging to his/her NPS account.

A complaint/grievance has to be resolved by the intermediary concerned as early as possible

within a maximum period of 30 days of the receipt of the complaint. If a subscriber is not satisfied with the resolution provided, he/she can escalate his grievance to the next higher level for resolution and the escalation matrix is as under:

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yes pay wallet

Digital Wallet with free Virtual card and UPI which can be used to send/receive money, mobile/DTH recharge, pay bills and much more

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