NATIONAL PENSION SYSTEM
National Pension System (NPS) is a defined contribution pension system introduced by the Government of India as a part of Pension Sector reforms, with an objective to provide social security to all citizens of India.
| Transaction Slab(in Rs.) | Revised Service Charges (in Rs.) using channels IMPS/UPI |
| Eligibility | All Citizens of India |
| Age | Individuals aged between 18-60 years |
| Already covered under any pension scheme | Eligible to subscribe |
| Two Tier Structure | Tier I – Pension account (Tax benefit available under this a/c) Mandatory Account Tier II – Investment account (Anytime withdrawable corpus without any tax benefit - Optional Account |
| Minimum Contribution during A/C opening | Tier I – Rs.500 Tier II – Rs.1,000 |
| Minimum total contribution in a year | Tier I – Rs.1,000 (Min. amount per contribution Rs.500) Tier II – N.A. (Min. amount per contribution Rs.250) |
| Part Withdrawals under Tier I | (i) A partial withdrawal of accumulated pension wealth, not exceeding 25% of the employee contributions, after a lock in period of 10 years. (ii) Allowed to withdraw only a maximum of three (3) times with a gap of 5 years during the entire tenure. |
| Exit Option under Tier I | 1. On attaining age of 60 years: a. 60% of the corpus can be commuted/withdrawn in lump sum anytime up to the age of 70 yrs b. Minimum of 40% of the corpus needs to be invested in a ‘Annuity Scheme’ 2. Before 60 years of age: a. 20% of the corpus can be withdrawn in lump sum b. 80% of the corpus will be invested in a ‘Annuity Scheme’ |
Tax Benefit
I. Exclusive Tax Benefit u/s 80CCD (1B) Exclusive tax benefit available to NPS subscribers on investments up to Rs.50,000 u/s 80CCD (1B) of Income Tax Act, 1961
II. Tax Benefit u/s 80CCD (1)
• For 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
• For Self Employed Professionals - Investment up to 10% 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
Some of other key benefits of NPS:
• Investment choice – NPS offers choice of Investment Options, Pension Fund Managers, Annuity Service Providers and Annuity Plans to Subscribers.
• Switching facility – NPS offers choice of switching the Service Provider, Investment Option and Pension Fund Manager.
• Superior returns compared to other pension products – Market linked returns
• Low Cost – One of the World’s least cost investment options with 0.01% as Fund Management Charge.
• Portability of NPS Account – NPS account remains the same irrespective of change of geography or employment.
• Flexible contributions – Amount and frequency of contributions can be altered by subscriber.
• Continuation in NPS scheme post retirement – Provision to defer withdrawal and to make contributions in the NPS account upto the age of 70 years.
• Well regulated - NPS is regulated by Pension Fund Regulatory and Development Authority (PFRDA).
• Online access to NPS account – Online access to NPS account at NSDL.