NPS-National Pention scheme
NPS (National Pension System) is a defined contribution based Pension Scheme launched by Government of India with the following objectives
- To provide old age income
- Reasonable market based returns over long run
- Extending old age security coverage to all citizens
It is based on a unique Permanent Retirement Account Number (PRAN) which is allotted to each Subscriber upon joining NPS.
The Government of India in exercise of their executive powers adopted ‘National Pension System’ (NPS) based on defined contributions in respect of all new entrants to Central Government services, excepting the Armed Forces, with effect from 1st January 2004. Most of the State Governments have since notified a similar pension system for their new entrants. NPS accumulates savings into subscribers PRA while he is working and use the accumulations at retirement to procure a pension for the rest of his life.
NPS Eligibility & Charges
NPS A citizen of India, whether resident or non-resident can join NPS, subject to the following conditions:
- User should have age between 18 – 60 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).
- User should comply with the Know Your Customer (KYC) norms as detailed in the Subscriber Registration Form.
The following applicants cannot join NPS:
- Un-discharged insolvent
- Individuals of unsound mind
- Pre-existing account holders under NPS
Charges under NPS
Standard charges under NPS (excluding Service Tax) are as mentioned below
| Intermediary | Charge Head | Charge | Frequency of deduction | Mode of deduction |
| PoP | Subscriber Registration | Rs.100 | One time | From the contribution amount / paid by you up front at the time of placing the request |
| Contribution Processing* | 0.25% | On each transaction | ||
| Non – Financial Transaction Processing | Rs.20 | |||
| CRA | PRA Opening | Rs.50 | One time | From NPS Account (by cancelling the units) on the last day of the calendar quarter |
| PRA Maintenance | Rs.190 | Per annum | ||
| Transaction Processing | Rs.4 | On each transaction | ||
| Fund Manager | Investment Management | 0.01% | Per annum | Recovered through NAV deductions |
| Custodian | Asset Servicing | 0.0075% | Per Annum |
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 NSDL system for accessing NPS details online.
- It offers choiceof Service Providers, Funds, Investment Options, Pension Fund Manages, Annuity Service Provides and Annuity Plans to Subscribers
- It offers Subscribers freedom to switchthe 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 managementthrough 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-National Pention scheme