New Pension Scheme – NPS

New Pension Scheme is government of India initiative to extend pension benefits to citizens of India, at large. Any individual whether employed with private sector, self employed or professional can now avail of pension benefits and plan his/her retirement period well by enrolling in the New Pension Scheme (NPS).

One can regularly invest in this scheme and get a part in lump-sum on retirement and a fixed monthly income for the lifetime. NPS is based on a unique Individual Permanent Retirement Account Number (PRAN) created for individual subscribers. This number will remain the same for the subscriber’s lifetime irrespective of where he/she operates the NPS account from across the nation.

Currently, there are two plans under the NPS:

Tier 1 : Non withdrawal and tax deferred pension account (for all individuals)
Tier 2 : Withdrawal supported savings account without any tax advantages (for all individuals subjected to minimum deposits per year in Tier-1 account)

The subscriber also has to control on how his/her contributions(savings) are being managed by selecting a professional fund manager(PFM) from a pool of PFMs. Investor can either opt for Active Choice or Auto Choice. Under the Active mode, the subscriber can decide on proportion of investment to be made across different debt, equity and government securities. On the other hand, in the auto choice mode, the division across investments will be made by the authority based on subscriber age with equity allocation reducing as age increases.

There are 3 classes of investment to opt for in NPS, this is what they mean:

Class G : Investment would be in Government securities like Govt of India bonds and stage govt bonds.
Class C : Investment would be in fixed income securities other than govt securities
Class E : Investment would be primarily in equity market instruments. It would invest in Index funds that replicate the portfolio of either BSE Sensex or NSE Nifty 50 index.

However, the maximum exposure that can be taken in equity is up to 50%. With that the NPS subscriber can also select from the following seven pension fund managers (PFMs).

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

Contribution details under the NPS are as below:
Tier 1:
Minimum # of contributions : 4
Minimum contribution : Rs 2000/- pa
Minium contribution : Rs 500 per contribution
(The amounts mentioned here have been further revised downwards by PFRDA)

Tier 2:
Minimum contribution of Rs 1000 at the time of account opening
Minimum balance of Rs 2000 at the end of a financial year

Here is the list of documents that you need to open the NPS account:

  • 2 copies of identity proof
  • 2 copies of address proof
  • Proof for Date of Birth
  • Self declaration indicating that the applicant is not a pre-existing member of NPS
  • Colored Passport size photograph
  • For Tier 2 account, in addition to the above docs, you need to submit bank details and a cancelled cheque.
  • Exclusive benefits of NPS:

    • Provides tax benefits under section 80C of income tax laws.
    • Govt provided pension plan directly regulated by PFRDA.
    • Portable plan, nation wide access to NPS over a period of time.
    • Investment in NPS is highly safe and it contains very less amount of risk.
    • NPS provides higher returns compared to other relative investment options
    • Cost effective mode of retirement planning – cost structure is very efficient compared to that of the charges levied by mutual funds or other investment options.

    In case of death due to any cause, the nominee will have the option to withdraw the proceeds in lump sum. Also, if the vesting age is less than 60 years, then 20% of the amount accumulated can be withdrawn and the balance 80% will have to be used to purchase annuity. On the other hand if the vesting age is 60 years or more but less than 70 years, then 60% of the amount can be withdrawn either as lump sum or in a phased manner between age 60 & 70. Balance 40% will have to be used to purchase annuity. If you are looking for safe returns at normal rate of growth towards pension, this scheme is for you! If you have more questions on your mind, feel free to visit this FAQ site of PFRDA.

    { 97 comments… read them below or add one }

    chhotu ram rao July 15, 2014 at 10:27 am

    Can i shift my nps acount into state govt job

    Reply

    Mohan July 16, 2014 at 9:27 pm

    Yes you can! please check with your employer.

    Reply

    shivani sharma February 9, 2014 at 12:09 pm

    sir i am a govt. employee. but want to leave my job after 3yrs… my question is know about nps… how can i withdraw my deducted amount under nps scheme…. pleas tell me the procedure of withdraw my deducted amount

    Reply

    R.C Paul December 15, 2013 at 12:12 pm

    Whether retirement gratuity is available to the NPS Account holders?

    Reply

    p.jhammat July 4, 2013 at 7:05 pm

    are govt.employee enrolled in new pension scmeme entitled for retirement gratuity/ death gratuity? if yes what is the criteria for calculation.

    Reply

    Shailaja June 25, 2013 at 3:10 pm

    How can I claim NPS amount I have credited in case I resigned my present job

    Reply

    L.K.chandrakar December 16, 2013 at 10:02 am

    Dear mam,
    you can transfer your account to the new employer, if you are going for a new job, but if you are not going or any job than you can withdraw your amount by form no. 120-GP which should be send through your employer to NDSL. The details of NSDL is available in their site.

    Reply

    sarah June 24, 2013 at 11:31 am

    Hi

    I am 35 year old nri and holding indian citizenship. I have a 2 year old disabled child. I would like to join in NPS(new pension scheme) if my child gets pension after me. Is it the same rules apply as govt employees who r having disabled kids? and is my child should be indian citizen too, to get be benefit?

    Thank you for your response. I am searching for answer all over the net but no luck :(

    Reply

    Ramesh K Mandawat January 6, 2013 at 1:15 pm

    Sir, I have resigned from my sbi assitant service after doing job of 22 month .now i am doing iii grade govt tEACHER IN RAJ STATE GOVT .I want to take myn cpf back .please tell me the processure . i have been issued my pran no also .is it possible to use this pran no into my state govt job ?if not than what i have to do .

    Reply

    Dhananjaya D H July 4, 2013 at 6:10 pm

    Respected Sir,
    I have resigned from state govt. service after doing 3 years,now i am doing job in Central Govt.I want to take my NPS amount to back or transfer, I doesn’t have pran no in the state govt service, at my present job i have issued pran no.
    I asked in the Past Organization, they replied you are eligible for only Employees Share & you are not eligible for employers share, So Please Guide or give me valuable advice.
    Thanking you

    Reply

    Mamta January 1, 2013 at 11:12 pm

    Respected Sir, i am a state government teacher and have sbi pran account,my question to you is if due to any reason i have to quit my job after like 3 years of service then ,will i be able to withdraw the amount form my pran.

    Reply

    Vishal Jawajala August 31, 2012 at 12:47 pm

    Hi Sir,
    I am a govt servant and i am enrolled in NPS scheme , my question is that why the tire 1 account is non withdrawal account ,we belong to a middle class family where education is the must factor to earn good job or business if my children want to study and take higher qualification they need money for fees / donation for the same i have to take loan or borrow money from others, where as i already have a good amount in my savings . So whether it is right for the Common man.

    Reply

    M S Baig August 29, 2012 at 1:05 am

    Dear Sir, i am currently working in a Central PSU where NPS scheme is in place. Here 10% of salary is being contributed (9% from employer side and 1% from employee side) towards the fund by each employee. I just want to know if i resign from service and Join any private job, can i continue the same pension policy by contributing the amount regularly or is there any other option as per rules of nps.

    Reply

    Latha August 10, 2012 at 1:28 pm

    Iam a Govt. Servent. I Ask one question please answer me. Death of in service what is benifits of nps

    Reply

    umesh nagtode July 19, 2012 at 2:45 pm

    I have completed 9yrs 8 months If I am leaving this services will I get any pension benfit

    Reply

    Niren Joshi July 18, 2012 at 3:01 pm

    I want to just know that my age is 28 years and if i am investing 1,000/ p.m. in NPS for the age of 60 years. and my vesting age is also 60 year at the time what is the monthly pension’s amount which can i get.

    Reply

    Anishkumar August 28, 2012 at 3:39 pm

    I am enrolled in service at the age of 31. If iam investing 1500/- per month and the same amount by govt contribution,then what will be the maturity amount and monthly pension which i will get at the age of 60 years

    Reply

    Rajinder Anand July 7, 2012 at 5:41 pm

    My daughter is employed in private firm and wants to open NPS account. Pls guide me where she should open this account (Name of instituition) and with options beneficial to her. Will the pension granted after stipulated period include Dearness allownace from time to time granted to Central Government emloyees? How much pesnion will she get if she contributed Rs. 2,500 per month for 25 years?

    Reply

    Umesh Ragatsinge July 5, 2012 at 1:17 pm

    For 20 years i will paid 3000/- pm then how much i will get after Retirement pension

    Reply

    kishor Kumar September 22, 2012 at 4:16 pm

    Hi, i am 31 year old,if i paid 3000 p.m then how much i will get after Retirement.

    Reply

    Satishkumar PS May 15, 2013 at 11:33 am

    Hi, I am 34 year old, if i pay 2500 pa then how much i will get after retirement

    Reply

    Parag Sharma July 3, 2012 at 8:43 pm

    Hi, i am 32 year old,if i paid 1000 p.m then how much i will get after Retirement.

    Reply

    Krishnamurthy May 27, 2012 at 3:47 pm

    What about NPS account of a govt employee if he quit his job?

    Reply

    Sanjib Kumar Sinha July 15, 2012 at 1:36 am

    Hi,I m Sanjib kumar Sinha,I had worked in NF Railway from January,2006 to April 2010 and I also contributed in NPS tier -I but i had not received my PRAN No then.So can you suggest me how can i get my contribution.I have resigned on personal ground.

    Reply

    Dhananjaya D H July 4, 2013 at 6:24 pm

    Respected Sir,
    I am Dhananjaya D H , I Had worked in SJIC ( state govt) from November2006 to Feb 2009 and I also contributed in NPS Tier-1 but i had not received my pran no. then i joined in esic ( central govt) please suggest me how can i get my contribution.

    Reply

    rakesh January 24, 2013 at 8:13 pm

    what about NPS account of govt. employee if quit his job

    Reply

    R.P.Singh May 7, 2012 at 6:32 pm

    My age is 54 years i want to open an a/c in nps i can save Rs.2000/- per month for six years pl. tell me how much pention i can take after 60 years of my age.

    Reply

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