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National Pension System

This topic describes about the National Pension Scheme.

National Pension System (NPS) is a voluntary, defined contribution retirement savings scheme designed to enable the subscribers to make optimum decisions regarding their future through systematic savings during their working life. NPS seeks to inculcate the habit of saving for retirement amongst the citizens. It is an attempt towards finding a sustainable solution to the problem of providing adequate retirement income to every citizen of India.

Under the NPS, individual savings are pooled in to a pension fund which are invested by PFRDA regulated professional fund managers as per the approved investment guidelines in to the diversified portfolios comprising of government bonds, bills, corporate debentures and shares. These contributions would grow and accumulate over the years, depending on the returns earned on the investment made.

At the time of normal exit from NPS, the subscribers may use the accumulated pension wealth under the scheme to purchase a life annuity from a PFRDA empanelled life insurance company apart from withdrawing a part of the accumulated pension wealth as lump-sum, if they choose so.

The limit of deduction u/s 80CCD of the Income-tax Act on account of contribution by the employee to National Pension Scheme (NPS) has been increased from Rs. 1 lakh to Rs. 1.50 lakh. A deduction of Rs. 50,000/- over and above the limit of Rs. 1.50 lakh to any individual who makes contribution to NPS has been allowed.

Advantages of NPS

  • Flexible- NPS offers a range of investment options and choice of Pension Fund Manager (PFMs) for planning the growth of your investments in a reasonable manner and see your money grow. Individuals can switch over from one investment option to another or from one fund manager to another subject, of course, to certain regulatory restrictions. The returns being totally market-related.
  • Simple – Opening an account with NPS provides a Permanent Retirement Account Number (PRAN), which is a unique number and it remains with the subscriber throughout his lifetime. The scheme is structured into two tiers:
    • Tier-I account: This is the non-withdrawable permanent retirement account into which the accumulations are deposited and invested as per the option of the subscriber.
    • Tier-II account: This is a voluntary withdrawable account which is allowed only when there is an active Tier I account in the name of the subscriber. The withdrawals are permitted from this account as per the needs of the subscriber as and when claimed.
  • Portable- NPS provides seamless portability across jobs and across locations, unlike all current pension plans, including that of the EPFO. It would provide hassle-free arrangement for the individual subscribers.
  • Regulated- NPS is regulated by PFRDA, with transparent investment norms, regular monitoring and performance review of fund managers by NPS Trust.

Models under NPS

To cater to various categories of people, there are several models of NPS. They are

  1. All citizen model
  2. Government sector model
  3. Corporate model
  4. Atal Pension Yojana

All citizen model

Eligibility

A citizen of India, whether resident or non-resident, subject to the following conditions:

  • Applicant should be between 18 – 65 years of age as on the date of submission of his/her application to the Point of Presence - Service Providers (POP/ POP-SP).
  • Applicant should comply with the Know Your Customer (KYC) norms as detailed in the Subscriber Registration Form. All the documents required for KYC compliance need to be mandatorily submitted.

eNPS - Online Subscriber Registration and Contribution Facility under NPS

eNPS is an online platform for registration of subscribers and receipt of contribution under National Pension System (eNPS). Through this platform, a prospective subscriber can register for NPS; contribute to his/her Permanent Retirement Account. Further, the subscribers who already have an NPS account can make contributions through eNPS directly.

Any individual can open a pension account under NPS through eNPS using one of the following options

  1. Option 1 - Registration using Aadhaar
    • You must have an 'Aadhaar number' (with a mobile number registered with Aadhaar).
    • Your KYC in NPS will be done using Aadhaar through One Time Password (OTP) authentication. OTP for the purpose of authentication will be sent to the mobile number registered with the Aadhaar.
    • Your demographic details and photo will be fetched from Aadhaar database and populated in online form.
    • You would be required to upload your scanned signature (in *.jpeg/*.jpg format having file size between 4kb - 12kb) as part of the registration process.
    • In case, you wish to replace the photo obtained from Aadhaar, you may upload a scanned photograph.
    • You will be routed to a payment gateway for making the payment towards your NPS account from Debit/ Credit card or Internet Banking.
  2. Option 2 - Registration using PAN (KYC verification by Bank)
    • You must have a 'Permanent Account Number' (PAN).
    • Bank account with the empanelled Bank for KYC verification for subscriber registration through eNPS.
    • Your KYC verification will be done by the Bank selected by you during the registration process. Name and address provided during registration should match with bank records for KYC verification. If the detail don't match , the request is liable for rejection.In case of rejection of KYC by the selected Bank, applicant is requested to contact the Bank.
    • You need to upload your scanned photograph and signature in *.jpeg/*.jpg format having file size between 4kb - 12kb.
    • You will be routed to a payment gateway for making the payment towards your NPS account from Internet Banking.

In addition, NRI subscribers should,

  • Select the Bank Account Status i.e., Non-Repatriable account or Repatriable account.
  • Provide the NRE/NRO bank account details and upload scanned copy of passport.
  • Select the preferred address for communication i.e., Overseas Address or Permanent Address (communication at overseas address would entail extra charges.

Process to use eNPS

  • Visit eNPS and register. To open an online account, the following are required.
    • Permanent Account Number' (PAN) and a Bank account with any of the registered Point of Presence empanelled for KYC verification for subscriber registration through NPS.
    • A scanned photograph and signature in *.jpeg/*.jpg format having file size between 4kb - 12kb.
  • While registering, a Subscriber will provide his/her name & Permanent Account Number (PAN) details which will be validated online with the Income Tax Department.
  • Subscriber will then select the Bank (through which KYC verification to be done), fill up the personal details and upload photograph & signature.
  • After filling up of details, the Subscriber will make contribution through net banking from the account of the selected Bank.
  • Once payment is made, PRAN will be provided online to the Subscriber.
  • The details submitted by the subscriber will be sent through CRA system to the selected Bank for KYC verification.
  • After verification of KYC by the Bank, the PRAN will become active and operational.
  • The PRAN Kit containing a PRAN Card, IPIN/TPIN, Subscriber Master Report, Scheme Information Booklet along with a Welcome Letter will be sent to the Subscriber's registered address. The subscriber need to take a printout of the form, paste the photograph (please do not sign across the photograph) & affix signature. The subscriber should sign on the block provided for signature. The form should be sent within 90 days from the date of allotment of PRAN to CRA at the following address or else the PRAN will be ‘frozen’ temporarily.
    Central Recordkeeping Agency (eNPS)
    NSDL e-Governance Infrastructure Limited,
    1st Floor, Times Tower,
    Kamala Mills Compound, Senapati Bapat Marg,
    Lower Parel, Mumbai - 400 013
  • Subscriber can make subsequent contribution online through net banking /debit card/credit card at any time and the same will be credited in the subscriber’s PRAN account on T+2 basis.
  • Please note that registration for APY cannot be done through https://enps.nsdl.com/. For registration under APY please contact your Bank Branch.
Processing of subsequent contribution:
  • All existing subscribers (registered through both online and offline mode) can contribute in Tier I & Tier II account using ‘eNPS’. To contribute online, you need to
  • Have an active Tier I / Tier II account
  • Authenticate your PRAN using the OTP sent to your registered mobile number
  • Pay through your Debit / Credit card or use Internet Banking option.

For queries please contact : 022 - 4090 4242 or write to: eNPS@nsdl.co.in

Subscriber registration forms are available at https://npscra.nsdl.co.in/non-goverment-form.php .

The list of POP –SP (Service Provider branches) is available at https://www.npscra.nsdl.co.in/pop-sp.php.

Frequently asked questions about NPS - All citizen model.

Government model

An employee is mandatorily covered under National Pension System (NPS) if

  • S/he has joined the services of Government of India on or after 01-01-2004 (except Armed Forces) OR
  • S/he is an employee of a Central Autonomous Body who has joined on or after 01-01-2004.

To get more details, visit http://pfrda.org.in/index1.cshtml?lsid=107

Corporate model

Corporate Model is available to any of the entities as under:-

  1. Entities registered under Companies Act
  2. Entities registered under various Co-operative Acts
  3. Central Public Sector Enterprises
  4. State Public Sector Enterprises
  5. Registered Partnership firm
  6. Registered Limited Liability Partnership (LLPs)
  7. Any Body incorporated under any act of Parliament or State legislature or by order of Central / State Government
  8. Proprietorship Concern
  9. Trust/Society

The employees of the corporate entity, enrolled by the employer having Indian Citizenship between the age of 18-65 years and complying with the KYC norms, are eligible to be registered as subscribers under NPS.

For more information, visit http://pfrda.org.in/index1.cshtml?lsid=142.

Atal Pension Yojana

The scheme is applicable for all citizens of India (age group of 18-60 years) in the unorganised sector, person will be deemed to belong to the unorganised sector if that personis not in regular employment of the Central or a state government, or an autonomous body/ public sector undertaking of the Central or state government having employer assisted retirement benefit scheme, or is not covered by a social security scheme under any of the following laws:

  1. Employees' Provident Fund and Miscellaneous Provisions Act,1952
  2. The Coal Mines Provident Fund and Miscellaneous Provisions Act,1948
  3. The Seamen's Provident Fund Act, 1966
  4. The Assam Tea Plantations Provident Fund and Pension Fund Scheme Act 1955
  5. The Jammu and Kashmir Employees' Provident Fund Act, 1961

The scheme will be applicable to all persons in the unorganised sector subject to the condition that the benefit of Central Government contribution will be available only to those persons whose contribution to NPS is minimum Rs.1,000 and maximum Rs. 12,000 per annum, for both Tier I and II taken together, provided that the person makes a minimum contribution of Rs. 1000 per annum to his Tier I NPS account.

To know more, visit http://pfrda.org.in/index1.cshtml?lsid=153

Mobile app of NPS

The NPS mobile app gives subscribers details of their accounts online. The Subscriber can access latest account details as is available on the CRA web site using user ID (PRAN) and password. It also enables subscribers to maintain their latest contact details and password.

The app provides the following features

  • View current Holdings
  • Request for Transaction Statement for the year on your email ID.
  • Change contact details like Telephone, Mobile no. and email ID.
  • Change your Password / Secret Question
  • View your Account details.
  • Regenerate password using secret question.
  • View Last 5 contribution transactions carried out 8. Get notifications related to NPS.

To download the app, click here.

Source : Pension Fund Regulatory and Development Authority

Related Resources

  1. NPS Calculator
  2. Subscriber Registration Forms
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