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National Pension System

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National Pension System

The National Pension System (NPS) is a 'defined contribution based pension scheme' launched by Govt. Of India and regulated by Pension Fund Regulatory Authority of India (PFRDA). NPS seeks to inculcate the habit of saving for retirement amongst all citizens. We are also registered under PFRDA to act as a POP for NPS. Presently Bank has designated 1069 Branches to carry out NPS activity.

 

Flexible

 

NPS offers the following flexibilities in investment:

 

a. Active Choice

Subscriber has the option to actively decide how the pension wealth is to be invested across the three Asset Classes; Equity, Corporate Debt Instruments and Government Securities. Contribution in Asset  Class Equity is restricted to 50% of total contribution.

 

b. Auto Choice  

The ratio of Fund invested across the three asset classes will change as per the age of subscriber. This is opted for those who neither have the required knowledge nor the time to manage their investment.

 

c. Pension Fund Managers

 

A variety of fund managers are available and the investor  can choose from among them:

  • Kotak Mahindra Pension Fund Ltd.
  • LIC Pension Fund Ltd.
  • Reliance Capital Pension Fund Ltd.
  • SBI Pension Funds Pvt. Ltd
  • UTI Retirement Solutions Ltd
  • ICICI Prudential Pension Fund Management Co. Ltd.
  • HDFC Pension Management Co. Ltd

d. Annuity Service Providers :Annuity Services are financial services which offer a monthly/quarterly/annual pension at a guaranteed rate for the period chosen for a given value.

  • Life Insurance Corporation of India
  • SBI Life Insurance Co. Ltd.
  • ICICI Prudential Life Insurance Co. Ltd.
  • HDFC Standard Life Insurance Co Ltd
  • Bajaj Allianz Life Insurance Co. Ltd.
  • Reliance Life Insurance Co. Ltd.
  • Star Union Dai-ichi Life Insurance Co. Ltd.

Simple

 

When you apply for a NPS,  you will be provided  with a unique Permanent Retirement Account Number (PRAN)  and all the investments for NPS have to be done quoting the PRAN number.  The scheme is structured into two tiers:

Tier-I account

This is the non-withdrawable permanent retirement account into which the accumulations are deposited and invested as per the option of the subscriber.

  • Minimum contribution at the time of account opening -Rs.500/-
  • Minimum amount per contribution - Rs. 500/-
  • Minimum Account Balance at the end of FY - Rs. 6000/-
  • Minimum number of contributions in a year - 1

Tier-II account

This is a voluntary withdrawable account which is allowed only when there is an active Tier I account in the name of the subscriber.  The withdrawals are permitted from this account as per the needs of the subscriber as and when claimed.

  • Minimum contribution at the time of account opening -Rs.1000/
  • Minimum amount per contribution - Rs. 250/-
  • Minimum Account Balance at the end of FY-Rs. 2000/-
  • Minimum number of contributions in a year - 1

Portable

 

NPS provides seamless portability across jobs and across locations, unlike all current pension plans, including that of the EPFO.  It would provide hassle-free arrangement for the individual subscribers.

 

Regulated

 

NPS is regulated by PFRDA, with transparent investment norms, regular monitoring and performance review of fund managers by NPS Trust

 

 

Tax benefits*

 

For Salaried

  • Employee's own contribution - Up to 10% of Salary (Basic + DA) is deductable from the total income under Section 80 CCD(1) within the overall ceiling of Rs. 1.5 lacs under Sec 80 CCE.
  • (b) Employer's contribution –Up to 10% of Salary (Basic + DA) of the employee is deductible from the his/her total income under Sec 80 CCC(2) over and above the limit of Rs. 1.5 lacs provided under Sec 80 CCE.
  • An additional tax deduction on investment up to Rs. 50,000 in NPS has been introduced under sub-section 80CCD (1B). This is over and above the limit of deduction mentioned under sec 80 CCE. This is an exclusive tax deduction available only for investment in NPS for all citizens of India and not available for any other investment.

For Self-employed

  • Eligible for tax deduction up to 10 % of gross income under Sec 80 CCD (1) within the overall ceiling of Rs. 1.5 lacs under Sec 80 CCE.

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

 

All Citizens Model

  • Available to all citizens of India including NRI's within the age group of 18-60.

  • Submit the Subscriber registration form with KYC documents (as mentioned in the Form) and the NPS Contribution Instruction Slip (NCIS) with minimum contribution amount to any of our authorized branch.

NPS-Corporate Sector Model 

  • Provides NPS benefits to the employees of corporate entities.
  • Corporate would need to sign MOU with any of our authorized branches, submit Corporate Registration Form. After Corporate Registration, the employees will come under NPS within the purview of employer-employee relationship. 
  • The subscribers can submit Subscriber Registration Form. No initial contribution is to be submitted by subscribers under the Corporate plan along with the application.

Exit from NPS upon attaining the age of Normal superannuation (for govt. employees only) or upon attaining the age of 60 years (for all subscribers other than govt. employees)

At least 40% of the accumulated pension wealth of the subscriber needs to be mandatorily utilized for purchase of an annuity providing for the monthly pension of the subscriber and the balance is paid as a lump sum payment to the subscriber.

 

Exit from NPS before attaining the age of Normal superannuation (for govt. employees only) or before attaining the age of 60 years (for all subscribers other than govt. employees)

At least 80% 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 is paid as a lump sum payment to the subscriber.

 

Upon Death

The entire accumulated pension wealth (100%) would be paid to the nominee / legal heir of the subscriber.

How to Subscribe for NPS

 

Submit the Subscriber registration Form with KYC documents (as mentioned in the Form) and the NPS Contribution Instruction Slip (NCIS) and minimum contribution amount to any of our designated branches.

 

To find the list of designated branches where you can submit the NPS applications, please click here.

 

Application Form and Contribution Slip can be downloaded by clicking the links below.

 

Title File
NCIS-Contribution Form Download
List of designated branches for National Pension System Download
Registration of Subscriber-UOS-S1 Download
Subscriber Registration Form - NRI (SRF_NRI) Download
Form for Registration of Corporates (CHO-1) Download

 

NPS

Frequently Asked Questions

1. What is NPS?


Government of India introduced NPS for Central Government Employees joining services w.e.f 1st Jan 2004. On 1st May 2009, on voluntary basis NPS was made available for all citizens of India. NPS aims at creating enough corpus, to enable subscriber for purchasing Annuity post retirement. NPS account can be operated from anywhere in the country irrespective of employment and geography.

 

2. Who can subscribe NPS?

 

NPS – Unorganised Sector (UOS) - Any citizen in the age group of 18-60 years (as on the date of submission of his / her application to the POP-SP (Designated branch) can join NPS except for the government subscribers who are mandatorily covered under NPS.

NPS – Corporate Sector - Any eligible corporate entity may enroll their employees under NPS through POPs as per the existing model available for All Citizens of India. POP-SP will undertake entire data upload as per All Citizen's model.
Contributions from employer and employee can be made either of the following ways:

  • Equal contributions by employer and employee.
  • Unequal contribution by the employer and the employee.
  • Contribution from either the employer or the employee.

3. What is PRAN?


PRAN is the Permanent Retirement Account Number, a 12 digit unique number issued to every individual subscriber under NPS. PRAN card is a document with PRAN, subscriber's name, father's name, photograph and signature. In case lost/stolen, Provision of reprint of PRAN card is there on chargeable basis.

 

4. What are the two types of account available under NPS?


 Tier-I account: Subscriber shall contribute his savings for retirement into Tier-I non-withdrawable account. Subscriber will make first contribution at the time of applying for registration with POP-SP (Designated Branch). The subscriber has option to contribute anytime during the year as per his convenience.q

 

Minimum Contribution at the time of account opening

Rs. 500

Minimum amount per contribution

Rs. 500

Minimum total contribution in the year

Rs. 6000

Minimum no. of contributions

1 per year 

 

 

 

 

 

 

 

Tier-II account: Voluntary savings facility. Subscriber will be free to withdraw his savings from this account whenever he wishes. An active Tier I account will be a pre requisite for opening of a Tier II.q

  • No Account Opening & Account Maintenance Charges by CRA.
  • Only transactions are charged by CRA & POPs
  • No limit on withdrawals from Tier II account
  • Investment Patterns same as Tier I

 

Minimum Contribution at the time of account opening

Rs. 1000

Minimum amount per contribution

Rs. 250

Minimum amount balance at the end of financial year

Rs. 2000

Minimum no. of contributions

1 per year 

 


5. Who can open a Tier II account?

 

Any subscriber who has an active Tier I account can activate his / her TIER II account through his / her associated POP-SP (Designated Branch). A subscriber can also open Tier I and Tier II together by filling up a composite application form.

 

6. What are the different modes of paying contribution?


The subscriber can contribute through the following modes:

  • Cash
  • Local cheque (post dated cheques acceptable)
  • Demand draft

7. What happens if subscriber's contribution is less than Rs. 6000/- in a financial year? What happens if a subscriber stops subscription in a year?


The subscriber will have to bear a default penalty of Rs. 100 per year of default and the account would become dormant. In order to reactivate the account, the subscriber would have to pay the minimum contributions along with the penalty, due for the period of dormancy. The dormant account shall be closed if the account value falls to zero.

 

8. What is the procedure for registration of subscriber?

 

Any Individual who wants to get registered as a subscriber in NPS would submit the duly filled form (Composite application form for subscriber registration) with other supporting KYC documents to POP-SP(Designated Branch).

For only Tier II account, an individual with an active Tier I account needs to approach the POP-SP and submit a copy of the PRAN Card along with Tier II activation form (UOS-S10).

A subscriber is required to make the first contribution at the time of applying for registration. (Minimum contribution Rs.500 for Tier I and Rs.1000 for Tier II) with duly filled NCIS (NPS Contribution Instruction Slip).

POP-SP (Designated Branch) has to validate the form and provide a Receipt no.(as acknowledgement) to the Subscriber.

 

9. What is PRAN Kit?

 

A PRAN Kit contains PRAN card, subscriber master list and an information booklet is sent to the subscriber's registered address. The T-Pin and I-Pin are sent separately to the registered address. The Subscriber Master List shows all the information as provided by the subscriber in his / her application and accordingly captured in CRA system. A subscriber may verify the correctness of the information submitted for registration by looking at the Subscriber Master List.

 

10. What is the use of T-PIN?

 

Subscribers can call at CRA's toll free number 1800- 222- 080 using the T-PIN (Telephonic Personal identification Number).

 

11. How can a customer check status of PRAN application?

 

Customer can check the status by accessing CRA website: https://cra-nsdl.com/CRA/ by using the 17 digit receipt number provided by POP-SP or the acknowledgement number allotted by CRA-FC at the time of submission of application forms by POP (Operations Dept). Once the PRAN is generated, an email alert as well as a SMS alert will be sent to the registered email ID and mobile number of the subscriber.

 

12. How to get the money out of the NPS scheme?

 

On attaining the Age of 60 years and up to 70 years of age – The customer has to invest minimum 40% of the accumulated savings (pension wealth) to purchase a life annuity from an Annuity Service Provider (an IRDA - regulated life insurance company appointed by PFRDA). The customer can choose to purchase an annuity for an amount greater than 40%.

The remaining pension wealth can either be withdrawn in a lump sum on attaining the age of 60 or in a phased manner, between age 60 and 70, at the option of the subscriber.

Death due to any cause - In such an unfortunate event, option will be available to the nominee to receive 100% of the NPS pension wealth in lump sum. However, if the nominee wishes to continue with the NPS, he/she shall have to subscribe to NPS individually after following due KYC procedure.

 

13. How can a subscriber exit from NPS before the age of 60?

 

In case of exit before 60 years, a subscriber is required to invest at least 80% of the pension wealth to purchase a life annuity from a Annuity Service Provider (an IRDA - regulated life insurance company appointed by PFRDA). Remaining 20% of the pension wealth may be withdrawn as a lump sum.

 

14. What are the different types of annuity provided by Annuity Service Providers?

  • Pension (Annuity) payable for life at a uniform rate to the annuitant only.
  • Pension (Annuity) payable for 5, 10, 15 or 20 years certain and thereafter as long as you is alive.
  • Pension (Annuity) for life with return of purchase price on death of the annuitant Policyholder). Pension (Annuity) payable for life increasing at a simple rate of 3% p.a.
  • Pension (Annuity) for life with a provision of 50% of the annuity payable to spouse during his/her lifetime on death of the annuitant.
  • Pension (Annuity) for life with a provision of 100% of the annuity payable to spouse during his/her lifetime on death of the annuitant.

15. Can a NRI open a NPS account?

 

Yes, an NRI can open a NPS account provided he has a valid correspondence address and a bank account in India.
 

16. What are the various entities in the NPS architecture?

  • NPS Trust - The NPS trust has been constituted for taking care of the assets and funds held under NPS in the interest of the beneficiaries (subscribers).
  • Pension Fund Regulatory and Development Authority (PFRDA) – Regulator of NPS.
  • Central Record-keeping Agency (CRA) – Lies with NSDL for record keeping functions.
  • CRA FC – CRA Facilitation Center is the entity appointed by NSDL to provide services to the POPs and POP-SPs.
  • Pension Funds (PFs)/Pension Fund Managers- Seven Pension Fund Managers manage the fund. (HDFC Pension Management Company, ICICI Prudential Pension Funds Management Company, Kotak Mahindra Pension Fund, LIC Pension Fund, Reliance Capital Pension Fund, SBI Pension Fund, UTI Retirement Solutions)
  • Annuity Service Provider (ASP) - Responsible for delivering a regular monthly pension to the subscriber after he/she exit from the NPS. (LIC,SBI LIFE INSURANCE,ICICI PRUDENTIAL LIFE INSURANCE,BAJAJ ALLIANZ LIFE INSURANCE,STAR UNION Dai-ichi LIFE INSURANCE,RELIANCE LIFE INSURANCE)
  • Trust & Trustee Bank (TB) - AXIS BANK as Trustee Bank w.e.f July 1 2013. Earlier it was Bank of India.
  • Points of Presence (PoP) - POPs are different financial Institutions who act as the first point of interaction of the NPS subscriber with the NPS architecture.
  • Point of Presence Service Provider (PoP SP) –PoP SPs are the authorized branches of the PoP.

17. What is meant by scheme preference?


Scheme Preference is the Pension fund schemes option chosen by the subscriber for investing the pension contribution amount.

The NPS offers two approaches to invest.

1. Active choice - There are Individual Funds (E, C and G Asset classes). In active choice, the Subscriber has to select a Pension Fund Manger and has to mention the ratio of funds to be invested among E, C & G.
• Asset Class E - Investments in predominantly equity market instruments. (Permitted to invest only upto 50%)
• Asset Class C - Investments in fixed income instruments other than Government securities.
• Asset Class G - Investments in Government securities.

2. Auto choice - There is a Lifecycle Fund and the subscriber has to select a Pension Fund Manager and his / her funds will be invested as per the Life cycle fund matrix on the basis of the age of the subscriber.

For both Tier I and Tier II, the subscriber has been given the flexibility to choose one out of the available Pension Fund Managers(PFMs) and also the percentage in which the selected PFM will invest the funds.

 

18. What are the income tax benefits and how to avail tax benefit?


Currently NPS has ‘Exempt-Exempt-Taxation' (EET) where

  • Investment up to 1.5 Lakh in Tier I account is exempted
  • Withdrawal is subject to tax
  • There is no exemption on Investments made under Tier II account.

The print out of the Statement of Transaction (SOT) could be used as a document for claiming Tax benefit.
 

19. Can a subscriber get loan under NPS?

No, at present, a subscriber cannot avail a loan against his / her NPS holdings.

List of designated branches

To get the list of designated branches empanneled for NPS, please click here.