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| 02 April, 2022, 04:47 AM IST | E-Paper
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    National Pension Scheme

    National Pension Scheme (NPS), a government-sponsored pension scheme, was launched in January 2004 for government employees. It was opened to all sections in 2009. A subscriber can contribute regularly in a pension account during her working life, withdraw a part of the corpus in a lumpsum and use the remaining corpus to buy an annuity to secure a regular income after retirement.

    Top Performing NPS Schemes

    By Trailing Returns

    • Scheme Name
    • NAV
    • Trailing returns (in %)
      • 1 Year
      • 3 Year
      • 5 Year
    • Return Rating
    • Risk Rating
    * Schemes are sorted on 1 year return
    See More »

    Most Consistent NPS Schemes

    Category Average Returns

    • Category Name
    • Weighted Avg Return (in %)
      • 1 M
      • 3 M
      • 6 M
      • 1 Y
    • Quartely Category Discrete Returns
    • Yearly Category Discrete Returns
    * Categories are sorted on 1 year weighted average return
    See More »

    FAQs on NPS

    What is National Pension System (NPS)?›

    National Pension Scheme (NPS) is a government-sponsored pension scheme. It was launched in January 2004 for government employees. However, in 2009, it was opened to all sections. The scheme allows subscribers to contribute regularly in a pension account during their working life. On retirement, subscribers can withdraw a part of the corpus in a lumpsum and use the remaining corpus to buy an annuity to secure a regular income after retirement.

    Who can join NPS?›

    Any Indian citizen between 18 and 60 years can join NPS. The only condition is that the person must comply with know your customer (KYC) norms.

    Can a Non Resident Indian (NRI) join NPS?›

    Yes, an NRI can join NPS. However, the account will be closed if there is a change in the citizenship status of the NRI.

    How do I join NPS?›

    You should open an NPS account with entities known as Point of Presence (POP). Most banks, both private and public sector, are enrolled as POPs. Several financial institutions also act as POPs. The authorized branches of a POP, called point of presence service providers (POP-SPs), act as the collection points.

    How can I find POPs near me?›

    You can access them through the website of Pension Fund Regulatory and Development Authority (PFRDA). https://www.npscra.nsdl.co.in/pop-sp.php

    What are the documents needed for opening an NPS account?›

    You should fill the subscriber registration form and submit it along with proof of identity, address, and date of birth to the POP.

    What is a Permanent Retirement Account Number (PRAN)?›

    Every NPS subscriber is issued a card with 12-digit unique number called Permanent Retirement Account Number or PRAN.

    What are Tier-I and Tier-II accounts›

    NPS offers two accounts: Tier-I and Tier-II accounts. Tier-I is a mandatory account and Tier-II is voluntary. The big difference between the two is on withdrawal of money invested in them. You cannot withdraw the entire money from Tier-I account till your retirement. Even on retirement, there are restrictions on withdrawal on the Tier-I account. The subscriber is free to withdraw the entire money from the Tier-II account.

    Can I have more than one NPS account?›

    No, you cannot open multiple NPS accounts. In fact, there is no need to open a second account as NPS is portable across sectors and locations.

    What is the minimum contribution in NPS?›

    You have to contribute a minimum of Rs 6,000 every year in your Tier-I account in a financial year.

    What will happen if I don't make the minimum contribution?›

    If you do not contribute the minimum amount, your account will be frozen. You can unfreeze the account by visiting the POP and pay the minimum required amount and a penalty of Rs 100.

    Will the government also contribute to my NPS account?›

    No, the government will not contribute to your NPS account.

    Who manages the money invested in NPS?›

    The money invested in NPS is managed by PFRDA-registered Pension Fund Managers. At the moment, there are eight pension fund managers: ICICI Prudential Pension Fund, LIC Pension Fund, Kotak Mahindra Pension Fund, Reliance Capital Pension Fund, SBI Pension Fund, UTI Retirement Solutions Pension Fund, HDFC Pension Management Company, and DSP BlackRock Pension Fund Managers.

    What are the investment choices available in NPS?›

    The NPS offers two choices:
    • 1. Active Choice: This option allows the investor to decide how the money should be invested in different assets.
    • 2. Auto choice or lifecycle fund: This is the default option which invests money automatically in line with the age of the subscriber.

    What are the investment options available under Active Choice?›

    The Active Choice offers three funds or investment options: Asset Class E (invests 50 per cent in stocks); Asset Class C (invests in fixed income instruments other than government securities); Asset Class G (invests only in government securities). An investor can choose one of these funds or opt for a combination of them.

    Can I change my investment choices?›

    Yes, you can change your investment choices once in a financial year for both Tier-I and Tier-II accounts.

    Can I change my scheme and pension fund managers?›

    Yes, you can change your scheme preference and pension fund manager. You can even change your investment option (active and auto choices).

    Can I have different pension fund managers and investment option for Tier I and Tier II account?›

    Yes, you can select different pension fund managers and investment options for your NPS Tier I and Tier II accounts.

    What are the tax benefits available for NPS?›

    • 1. An employee's own contribution is eligible for a tax deduction --up to 10 per cent of the salary (basic plus DA) - under Section 80CCD(1)
    • 1. of the Income Tax Act within the overall ceiling of Rs 1.5 lakh allowed under Section 80C and Section 80CCE.
    • The employer's contribution to NPS is exempted under Section 80CCD
    • 2. Moreover, individuals can claim an additional deduction of up to Rs 50,000 under Section 80CCD (1B), which is in addition to Rs 1.5 lakh permitted under Section 80C.
    • 3. A self-employed person can also contribute 10 per cent of his gross income under Section 80CCD (1) in NPS.

    When can I withdraw money from NPS?›

    NPS is a pension product. So, you are expected to stay invested until your retirement. At 60, you must use at least 40 per cent of the corpus to buy an annuity income from a PFRDA-listed insurance company. You have the option to withdraw 40 per cent of the corpus tax-free. You can withdraw the remaining 20 per cent of the corpus (it will be taxed as per the income tax slab applicable to you) or use it to buy annuity.

    Can I defer withdrawing the lumpsum amount at 60?›

    Yes, you can defer withdrawing the lumpsum amount in NPS until you are 70 years old.

    What if I want to take the money out before I am 60?›

    If you are getting out of the scheme before you are 60 years old, you can only withdraw 20 per cent of the accumulated corpus in NPS. You must use 80 per cent of the corpus to buy an annuity.

    What happens to the money if I discontinue the scheme?›

    If you discontinue your investment, your account will be frozen. You can reactivate the account only if you make the minimum contribution required along with the penalty.

    What happens if the subscriber dies before 60 years?›

    If the subscriber dies before 60 years, the entire accumulated wealth would be paid to the nominee/legal heir of the subscriber.

    How do I withdraw the money from NPS?›

    You will have to submit the withdrawal application to the POP along with relevant documents. POP would authenticate the documents and forward them to Central Record-keeping Agency (CRA) and NSDL. CRA would register your claim and forward you the application form along with details of documents that need to be submitted. Once you complete the necessary procedure, CRA processes the application and settles the account.

    What are the documents to be submitted along with withdrawal forms?›

    You have to submit the following documents along with the withdrawal forms:
    • 1. PRAN card (original)
    • 2. Attested copy of proof of identity
    • 3. Attested copy of proof of address
    • 4. A cancelled cheque

    What is an annuity?›

    An annuity provides a regular income (it could be monthly, quarterly, annual, etc) at a specified rate for a specified period chosen by the subscriber. In NPS, a subscriber must use at least 40 per cent of the corpus to buy an annuity. It means the person can pay the money to an Annuity Service Provider (ASP) and choose an annuity option to ensure a regular income after retirement.

    Who are the Annuity Service Providers?›

    Currently, these insurance companies are empanelled by PFRDA as ASPs:
    • 1. Life Insurance Corporation of India
    • 2. SBI Life Insurance
    • 3. ICICI Prudential Life Insurance
    • 4. Bajaj Allianz Life Insurance
    • 5. Star Union Dai-ichi Life Insurance
    • 6. Reliance Life Insurance
    • 7. HDFC Standard Life Insurance

    What are the different annuity options offered by ASPs?›

    Here are some generic annuity options offered by ASPs. Remember, some ASPs may offer a slightly different or combination of these options:
    • 1. Pension (annuity) payable for life at a uniform rate to the subscriber
    • 2. Pension (annuity) payable for 5, 10, 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 subscriber
    • 4. Pension (annuity) payable for life increasing at a simple rate of 3 per cent
    • 5. Pension (annuity) for life with a provision of 50 per cent of the annuity payable to spouse during his/her lifetime on death of the subscriber
    • 6. Pension (annuity) for life with a provision of 100 per cent of the annuity payable to spouse during his/her lifetime on death of the subscriber
    • 7. Pension (annuity) for life with a provision of 100 per cent of the annuity payable to spouse during his/her lifetime on death of the subscriber and with return of purchase price on death of the spouse.

    How is the annuity income taxed?›

    The annuity income will be added to your income and taxed as per the income tax slab applicable to you.

    All about NPS

    Tax optimiser: NPS, perks can reduce Jaiswal's tax outgo by Rs 47,000

    Sudhir Jaiswal should start by opting for the National Pension System or NPS benefit offered by his company. Under Section 80CCD(2), up to 10% of the basic salary put in the NPS is tax free.

    Tax on EPF, NPS, Superannuation fund: Here's all you need to know about it

    Employer contributions to retirement funds such as Employees Provident Fund (EPF), National Pension System (NPS), or any other superannuation fund that exceed Rs 7.5 lakh in a financial year will be taxed in the hands of the employee beginning in FY 2020-21.

    Tax optimiser: HRA, NPS and perks can help Priyanka reduce tax by 66%

    If Vijaykumar gets items (computers, furniture, AC, etc) worth Rs 60,000 in a year, her tax will reduce by around Rs 11,200. Vijaykumar has group medical cover, but her parents are not included. If she buys a medical plan for them for Rs 40,000, she can save Rs 8,300 in tax.

    Tax-saving plan must be for full year

    Financial planners, investment advisers and distributors of financial products said that the best strategy for any taxpayer to save on tax is to invest regularly, through the year, and not just during the last few months of the fiscal.

    NPS Balance: How to check NPS balance online

    The NPS's primary goal is to ensure that account holders continue to earn a regular income after retirement while also earning considerable returns on their investment. To check your NPS account balance, just follow these simple steps.

    Budget 2022 hikes tax exemption on employer’s NPS contribution for state govt staff to 14% from 10%

    Investment in National Pension System (NPS) is offers tax benefit under three different sections of the Income-tax Act, 1961.

    Tax optimiser: These WFH expenses can help Kumar cut tax by more than Rs 33,000

    Gadgets and furniture can be bought by the company and provided to the employee. The employee gets taxed for only 10% of the value of these items. If Kumar gets items (computers, furniture, AC, etc) worth Rs 1.2 lakh in a year, his tax will reduce by almost Rs 33,700.

    Tax optimiser: Kumar can reduce tax by up to Rs 1.4 lakh by paying rent to mom, tax free perks, NPS

    ET Wealth tells readers how individuals can reduce their income tax outgo by rejigging their income (Salary structure) and investments.

    EPF interest rate slashed to 8.1% for 2021-22; can you still save enough for your retirement?

    The Labour Ministry has recently proposed to slash the interest rate by 0.4% to 8.1% from 8.5% earlier for the FY 2021-22. The decrease in interest rate will be a big blow to salaried individuals. This is because calculations related to retirement corpus is dependent on EPF contributions and its interest rate.

    CAMS starts operations as NPS CRA: Check details here

    CAMS, or Computer Age Management Services, has begun operations as a Central Record Keeping Agency (CRA) to oversee the National Pension System (NPS).

    Best tax saving options: Here is a comparison of 10 investment options

    Like every year, ET Wealth has assessed 10 tax-saving instruments on 8 key parameters— returns, safety, flexibility, liquidity, costs, transparency, ease of investment and taxability of income. Read on to know which is the best and the worst way to save tax.

    These NPS investors can exit from scheme after 5 years lock-in period only

    As per the new regulation inserted in the NPS scheme, certain individuals can close their Tier-I NPS account after they have completed five years with the pension scheme from the date of opening of the account. Do note that this facility of a lower lock-in period is available for specified individuals only.

    Post EPF interest rate cut, can you fund retirement with these investments?

    The rate on the Employees' Provident Fund or EPF stands at a 43-year low after being slashed to 8.1% for 2021-22. The aspect of personal finance that will suffer the biggest hit is your retirement planning. Could you safeguard your retirement by restoring to alternative investment options? ET Wealth's Sanket Dhanorkar explains.Post EPF interest rate cut, can you fund retirement with these investments?

    Last date to save Rs 1.5 lakh taxes. Invest in best ELSS funds

    The financial year is drawing to a close. If you still haven't made your tax-saving investments, today is the day to do it. Sure, tomorrow is the last day, officially.

    Tax optimiser: Gupta should opt for NPS to save Rs 1.7 lakh in tax

    ET wealth tells readers how they can optimise their tax by rejigging their income and investments.

    How to calculate income tax liability under new tax regime for FY 2021-22

    As individuals are required to choose between the old and new tax regimes, it is important to know how to calculate the income tax liability for the financial year 2021-22 under the new tax regime. Read on to know how you can calculate the income tax liability under the new tax regime for the ongoing financial year.

    View: Old pension system is a bad idea but NPS needs refurbishing too

    The decision to revert to PAYG raises concerns of fiscal sustainability given the increase in India's elderly population in the next few decades. The ageing index (ratio of the elderly persons to children) will double in the next 15 years from 40 today, and nearly treble by 2050.

    6 smart tax moves to maximise investment returns, optimise tax before March 31

    Find out how to maximise your gains and optimise tax before the financial year ends on March 31, 2022. Our cover story looks at smart tax moves that investors and taxpayers should make in the dying days of the financial year.

    Labour market witnesses uneven recovery in January

    Payroll data from the Ministry of Statistics and Programme Implementation, released on Friday, show the net new subscriber addition under the EPFO in January at 1.52 million, or 20.6% more than the previous month's addition of 1.26 million. Net new subscribers under ESIC fell by 16.2% to 1.28 million from 1.53 million in December 2021.

    NPS, Atal Pension Yojana subscriber base rose to 507.23 lakh by Feb end; increase of 22% y-o-y

    According to a statement released by the Pension Fund Regulatory and Development Authority (PFRDA), the number of subscribers in various government-run pension schemes under the National Pension System (NPS) increased by about 22.31 percent to 5.07 crore at the end of February 2022.

    Data Sources: Mutual Funds, ETFs, and NPS data are sourced from Value Research

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