One Stop Website for all your Queries on Investment.

Home   >   Investment FAQ   >   National Pension Scheme

What is the National Pension System (NPS)?

NPS is a voluntary contribution of funds for a sustained period of time (till the age of 60 years) to enable you to draw pension after you attains 60 years of age. The scheme has been introduced by the Government of India and is monitered by the Pension Fund Regulatory and Development Authority.

Who can subscribe / is covered by the NPS?

A. Employees who have joined Central Government service on or after January 01, 2004 who are eligible to a pension from the Consolidated Fund of India.,
B. Any Indian citizen between the age of 18 and 60 years.

Can an NRI open an NPS account?

Yes, an NRI can open an NPS account. Contributions made by NRI are subject to regulatory requirements as prescribed by RBI and FEMA from time to time. If the subscriber's citizenship status changes, his/her NPS account would be closed.

If I have invested in any other Provident Fund, can I still invest in NPS?

Yes. Investment in NPS is independent of your contribution to any Provident Fund.

I have invested in pension funds of of non-government / private entities. Can I still invest in NPS?

Yes. Investment in NPS is independent of your subscription to any other pension fund.

I have invested in pension funds of of non-government / private entities. Can I still invest in NPS?

Yes. Investment in NPS is independent of your subscription to any other pension fund.

How and where can I open a NPS account?

NPS is distributed through authorized entities called Points of Presence (POP’s) and almost all the banks (both private and public sector) are enrolled to act as Point of Presence (POP) under NPS apart from several other financial institutions. To invest in NPS, you will be required to open a NPS account through the Point of Presence (POP) and who will assist the subscriber in opening the account including the filling up of necessary forms, providing the information about NPS and any other relevant information in this regard.

Who is a POP/POP-SP and what is their role?

Points of Presence (POPs) are the first points of interaction of the NPS subscriber with the NPS architecture. The authorized branches of a POP, called Point of Presence Service Providers (POPSPs), will act as collection points and extend a number of customer services to NPS subscribers including requests for withdrawal from NPS.

How can we find location/address of POP-SP nearest to the place where I live for opening a NPS account?

POP-SP location can be accessed through website of PFRDA. This can also be accessed through below mentioned link of CRA’s website:
https://www.npscra.nsdl.co.in/pop-sp.php

What is CRA?

CRA stands for "Central Record Keeping Agency". It is managed by NSDL and its main function is record keeping, administration and customer service for all subscribers of the NPS.

How will I know about the status of my PRAN application form?

Subscriber 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-SP. 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.

What are the documents that need to be submitted for opening a NPS account?

The following documents need to be submitted to the POP for opening of a NPS account: a. Completely filled in subscriber registration form b. Proof of Identity c. Proof of Address d. Age/date of birth proof.

What is Permanent Retirement Account Number?

Every individual subscriber is issued a Permanent Retirement Account Number (PRAN) card which is a 12-digit unique number.

What if my PRAN card is lost or stolen?

In case of the PRAN card being lost or stolen, the same can be reprinted with additional charges.

Do I get any receipt on submission of my application?

Yes, an email confirmation to registered email ID would be sent on successful acceptance of your application with the acknowledgement number generated by POP.

How do I come to know about the PRAN?

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. For security reason, only the last four digits are mentioned in the alert. Subscribers can know the PRAN on receipt of the PRAN Kit or they can also approach POP for the PRAN.

What are the different accounts that can be opened under NPS?

Under NPS account, two sub-accounts – Tier I & II are provided. Tier I account is mandatory and the subscriber has option to opt for Tier II account opening and operation.

What are Tier-I and Tier-II accounts?

The following are the salient features of these sub-accounts: Tier-I account: This is a non-withdrawable retirement account which can be withdrawn only upon meeting the exit conditions prescribed under NPS. Tier-II account: This is a voluntary savings facility available as an add-on to any Tier-1 account holder. Subscribers will be free to withdraw their savings from this account whenever they wish.

Will the government also contribute anything to my NPS account?

No. The Government will not be making any contribution to your NPS account. The Government of India may however, make contributions to the accounts of NPS account holders who opt for Swavalamban scheme subject to conditions stated in Swavalamban scheme

In what way is the NPS Portable?

The following are the portability features associated with NPS:
1. NPS account can be operated from anywhere in the country irrespective of individual employment and location/geography.
2. Subscribers can shift from one sector to another like Private to Government or vice versa or Private to Corporate and vice versa.
Hence a private citizen can move to Central Government, State Government etc with the same Account. Also subscriber can shift within sector like from one POP to another POP and from one POP-SP to another POP-SP. Likewise an employee who leaves the employment to become a self-employed can continue with his individual contributions. If he enters re-employment he may continue to contribute and his employer may also contribute and so on. The subscriber can contribute to NPS from any of the POP/ POP-SP despite not being registered with them and from anywhere in India.

Can I have more than one NPS account?

No, multiple NPS accounts for a single individual are not allowed and there is no necessity also as the NPS is fully portable across sectors and locations.

What is the minimum and maximum age for opening an account?

The scheme is open to people between age 18 to 60 years.

Are there any minimum annual contribution requirements under NPS?

The following table provides the complete information on the minimum contribution requirements:
For All citizens model
Tier I
Tier II
Minimum Contribution at the time of account opening Rs. 500 Rs. 1000
Minimum amount per contribution Rs. 500 Rs. 250
Minimum total contribution in the year Rs. 6000 Rs. 2000
Minimum frequency of contributions 1 per year 1 per year

What is the maximum amount of contribution in a year?

No, there is no upper limit on maximum amount of contribution per year.

How can I reactivate / unfreeze the account if frozen due to minimum contribution requirements?

If the minimum contribution amount is not contributed in a year, the account will be frozen. In order to unfreeze the account, the customer has to pay the total of minimum contributions for the period of freeze, the minimum contribution for the year in which the account is reactivated and a penalty of Rs.100/-. In order to unfreeze an account the subscriber has to approach the Point of Presence (POP) and pay the required amounts.

How are the funds contributed by the subscribers managed under NPS?

The funds contributed by the Subscribers are invested by the PFRDA registered Pension Fund Managers (PFM’s) as per the investment guidelines provided by PFRDA. The investment guidelines are framed in such a manner that there is minimal impact on the subscribers contributions even if there is a market downturn by a judicious mix of investment instruments like Government securities, corporate bonds and equities.

What are the names of PFM's registered with PFRDA for managing the subscriber's contribution?

At present there are 8 Pension Fund Managers (PFM’s) who manage the subscriber funds at the option of the subscriber. They are:
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
DSP BlackRock Pension Fund Managers

What are the different Fund Management Schemes available to the subscriber?

The NPS offers two approaches to invest subscriber’s money:
Active choice – Individual Funds (Asset Class E, Asset Class C, and Asset Class G).
Auto choice - Lifecycle Fund- This is the default option under NPS and wherein the management of investment of funds is done automatically based on the age profile of the subscriber.

What is Active choice option?

Here the individual have the option to actively decide as to how NPS pension wealth is to be invested in the following three options:

Asset Class "E" - Investments in equity market instruments.
Asset Class "C" - Investments in fixed income instruments other than Government Securities.
Asset Class "G" - Investments in Government Securities.

You can choose to invest your entire pension wealth in Asset Class "C" or "G" and upto a maximum of 50% in Asset Class "E".

What is Auto Choice - Life Cycle Fund?

Under this option, a pre-defined portfolio will determine the fraction of funds invested across three asst classes. At the lowest age of entry (18 years), the Auto Choice will entail investment of 50% of pension wealth in "E" Class, 30% in "C" Class and 20% in "G" Class. This ratio of investment will remain fixed for all contributions until the participant reaches the age of 36. From age 36 onwards, the weight in "E" and "C" Asset Class will decrease annually and the weight in "G" Class will increase annually till it reaches 10% in "E", 10% in "C" and 80% in "G" Class at age 55.

On which date the reallocation among asset classes will take place under Auto Choice option?

The reallocation among the asset classes will take place on the date of birth of the subscriber.

Can I select both investment choices when investing in NPS?

No. You have to select either Active Choice or Auto Choice as your investment option when making investments under NPS.

Are the returns on my investment guaranteed?

No. The return on investment will be market-linked.

What is the transaction cost to be borne by the subscriber?

Intermediary
Charge Head
Service Charges
Method of Deduction
CRA
PRA Opening Charges
Rs. 50/-
Through cancellation of units at the end of each quarter.
Annual PRA Maintenancecost per account
Rs. 190/-
Charge per transaction
Rs. 4/-
Initial subscriber registration
Rs. 100/-
POP
Maximum Permissble charge for each subscriber
Initial contribution upload
0.25% of the initial contribution amount from subscriber subject to a minimum of Rs. 20/- and a maximum of Rs. 25,000/-
To be collected upfront
Any subsequent transaction involving contribution upload
0.25% of the amount subscribed by the NPS subscriber subject to a minimum of Rs. 20/- and a maximum of Rs. 25,000/-
Any other transaction not involving a contribution from subscriber
Rs. 20/-

Can I switch from one investment scheme to another and/or Pension Fund Manager?

"Yes, NPS offers to its subscribers the option to change the scheme preference. Subscriber has option to realign his investment in asset class E, C and G based on age and future income requirement. Also, the subscriber has option to change the PFM and the investment option (active /auto choice)."

Is there any default Pension Fund Manager (PFM) Option provided under NPS?

Yes, there is a default PFM provision under NPS and SBI Pension Funds Private Limited acts as the default Pension Fund Manager.

Can I have a different Pension Fund Manager and Investment Option for my Tier I and Tier II account?

Yes. You may select different PFMs and Investment Options for your NPS Tier I and Tier II accounts.

Can I appoint nominees for the NPS Tier I and Tier II Account?

Yes, you need to appoint a nominee at the time of opening of a NPS account in the prescribed section of the opening form. You can appoint up to 3 nominees for your NPS Tier I and NPS Tier II account. In such a case you are required to specify the percentage of your saving that you wish to allocate to each nominee. The share percentage across all nominees should collectively aggregate to 100%.

I have not made any nomination at the time of registration. Can I nominate subsequently? What is the process?

If you have not made the nomination to your NPS account at the time of registration, you can do the same after the allotment of PRAN. You will have to visit your PoP and place Service Request to update nominations details.

Can I change the Nominees for my NPS Accounts?

Yes. You can change the nominees in your NPS Tier I account at any time after you have received your PRAN.

Are there any charges for making a nomination?

If you are making the nomination at the time of registering for PRAN, no charges will be levied to you. However, a subsequent request for nomination updation would be considered as a service request and you will be charged an amount which is presently Rs. 20/- plus applicable service tax for each request.

What income tax reliefs are available to the individuals contributing to NPS?

Individual Subscriber (salaried as well as self employed) can avail of the tax benefits as mentioned below:

For Salaried individual-
Eligible for tax deduction of up to 10% of Salary (Basic + Dearness Allowance) under section 80CCD (1) of Income Tax Act, 1961 within Rs.1.5Lacs limit under section 80CCE.

For Self employed-
Eligible for tax deduction of up to 10% of Gross Income under section 80CCD (1) of Income Tax Act, 1961 within Rs.1.5Lacs limit under section 80CCE As per the Finance Bill 2015, additional investment of Rs.50,000 will be eligible for tax deduction under section 80CCD (1B) of Income Tax Act, 1961. This benefit will be effective AY 2016 – 17.

What are the applicable provisions for withdrawal of the accumulated pension wealth once I attain 60 years of age?

At least 40% 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.

What will happen to my savings if I decide to retire or does not want to continue in the NPS before age 60?

In such an eventuality, 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.

In the event of the death of subscriber before attaining the age of 60 years, what will be the benefit that is payable and who will get the benefits ?

In the unfortunate event of death of the subscriber, the entire accumulated pension wealth (100%) would be paid to the nominee / legal heir of the subscriber and there would not be any purchase of annuity/monthly pension.

How to withdraw the benefits available under NPS?

The subscriber wishing to exit from NPS has to submit a withdrawal application form to the concerned POP along with the documents specified for withdrawal of the benefits and the POP in turn would authenticate the documents and forwards them to CRA M/s NSDL. CRA in turn would register your claim and forward you the necessary application form along with the procedure to be followed and documents that need to be submitted. Once the documents are received, CRA processes the application and settles the account.

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

Following documents are required to be submitted along with the withdrawal forms in order to settle the claims:

1. PRAN card in original
2. Attested copy of Proof of Identity (e. g. Passport, Aadhar Card, PAN Card, Valid Driving License, Voter ID Card etc.)
3. Attested copy of Proof of Address (e. g. Passport, Aadhar Card, Valid Driving License, Voter ID Card etc.)
4. Cancelled cheque (containing Subscriber Name, Bank Account Number and IFS Code) or Bank Certificate Containing Name, Bank Account Number and IFSC code, for direct credit or electronic transfer.

Can a NPS subscriber defer his lump sum withdrawable amount (up to 60%) under NPS at the time of exit on 60 years?

Yes, one can defer the withdrawal of the eligible lump sum amount payable under NPS till the age of 70 years.

What will happen to my withdrawal if my PRAN is in frozen or inactive state at the time of withdrawal?

The withdrawal will be processed like a normal withdrawal but in addition deduct the penalty that is applicable for unfreezing of such an account without seeking to reactivate the account by the subscriber or payment of amounts necessary to activate the account. In essence, the CRA will unfreeze the account by charging the penalty applicable and process the withdrawal claim.

What are the Annuity Service Providers under NPS and what are their names?

Indian Life Insurance companies which are licensed by Insurance Regulatory and Development Authority (IRDA) are empanelled by PFRDA to act as Annuity Service Provider’s to provide annuity services to the subscribers of NPS. Currently, the following are the ASPs empanelled by PFRDA:

1. Life Insurance Corporation of India
2. SBI Life Insurance Co. Ltd.
3. ICICI Prudential Life Insurance Co. Ltd.
4. Bajaj Allianz Life Insurance Co. Ltd.
5. Star Union Dai-ichi Life Insurance Co. Ltd.
6. Reliance Life Insurance Co. Ltd.
7. HDFC Standard Life Insurance Co. Ltd

Note: The ASP empanelment process is an ongoing process and the list of ASPs may grow in future.

What are the factors that determine the annuity income when you buy an annuity?

The Size of your pension wealth/corpus determines your monthly annuity/pension that you receive. Bigger the accumulated pension wealth or corpus used for purchase of annuity, the bigger would be the monthly pension that is received. Besides that, amount of annuity may vary according to the type of annuity variant selected by the subscriber.

What is the default annuity scheme and default ASP under NPS?

The following default annuity service provider along with the annuity scheme is available to all the subscribers under National Pensions System:

1. Default Annuity Service Provider – Life Insurance Corporation of India (LIC)
2. Default Annuity Scheme - Annuity for life with a provision of 100% of the annuity payable to spouse during his/her life on death of annuitant’ and under this option, payment of monthly annuity would cease once the annuitant and the spouse die or after death of the annuitant if the spouse pre-deceases the annuitant, without any return of purchase price.

Can I use more than 40% of my accumulated pension wealth to purchase the annuity at the time of exit from NPS upon attaining the age of 60 years?

Yes, a subscriber at the time of attaining the age of 60 years can purchase annuity up to 100% of his accumulated pension wealth.

Can a NPS subscriber defer his annuity purchase under NPS at the time of exit on 60 years?

Yes, one can defer the mandatory purchase of annuity for a maximum period of 3 years, at the time of exit from NPS.

How the annuity OR monthly pension is paid?

Monthly pension /Annuity will be paid through direct bank transfer to the specified subscribers account only through Annuity Service Providers.

To whom and how shall I report any grievance on the services provided?

The subscriber can raise grievance through any of the modes mentioned below:

Call Centre/Interactive Voice Response System (IVR) :
The Subscriber can contact the CRA call center at toll free telephone number 1-800-222080 and register the grievance by using T-PIN.
Dedicated Call center executives.

Physical forms direct to CRA:
The Subscriber may submit the grievance in a prescribed format to the POP – SP who would forward it to CRA Central Grievance Management System (CGMS).
Subscriber can directly send form to CRA.

Web based interface:
The Subscriber may register the grievance at the website www.npscra.nsdl.co.in with the use of the I-pin allotted at the time of opening a Permanent Retirement Account.