What is NPS?
NPS stands for National Pension System. NPS is a pension scheme launched by the Government of India. The Scheme is regulated by Pension Fund Regulatory & Development Authority (PFRDA). A Citizen of India between the age group of 18–65 years can join this Scheme.NPS is an easily accessible, low-cost, tax-efficient, flexible, and portable retirement savings account. NPS is designed on Defined contribution basis wherein the subscriber contributes to his account.
How does NPS works?
Upon opening the NPS account, a unique and portable PRAN (Permanent Retirement Account Number) is created for the client. The investor starts contributing to the NPS scheme till they are working. Upon retirement, a portion of the corpus must be invested in an annuity scheme to avail of a monthly pension.
Who manages funds/investments under NPS?
Funds/investments will be managed by the designated Pension Fund Manager (PFM) as selected by the client.
The client need to select one PFM from the following at the time of NPS registration via NJ EWA:
- Birla Sunlife Pension Management Ltd
- HDFC Pension Management Company Limited
- Reliance Capital Pension Fund Limited
- Kotak Mahindra Pension Fund Limited
- ICICI Prudential Pension Funds Management Company Limited
- UTI Retirement Solutions Limited
- SBI Pension Funds Private Limited
- LIC Pension Fund Limited
As registration of PFMs is an ongoing process, this list will be updated from time to time.
There are 4 asset classes available in NPS
| Sr No | Asset Classes | Remarks |
| 1 | Equities (E) | A 'high return-high risk' fund that invests predominantly in equity market instruments |
| 2 | Corporate Bonds (C) | A 'medium return-medium risk' fund that invests predominantly in fixed income bearing instruments |
| 3 | Government Securities (G) | A 'low return-low risk' fund that invests purely in Government Securities |
| 4 | Alternative Investment Schemes (A) | In this asset class, investments are being made in other financial instruments. like CMBS (Commercial mortgage-backed securities), MBS, REITS, AIFs, Invlts, etc. (this option is available only for Tier - I) |
Which payment modes/banks are available for investment in NPS?
The payment mode available in NPS is only "Net Banking". Please find the below banks which are available for investment through net banking in NPS:
- Axis Bank
- ICICI Bank
- Karur Vysya Bank
- SBI
- HDFC Bank
What are the investment choices available in NPS?
NPS offers investors two investment choices to invest: Active choice & Auto choice
1. Active Choice
Under active choice, subscribers can select asset allocation across these asset classes (E, C, G, and A):
2. Auto Choice
Under this option, the investment will be made in a life–cycle fund. The proportion of funds invested across the three asset classes (E, C & G) will be determined by a pre-defined portfolio (which would change as per the account holder's age. The investment in equities (E) will decrease and in corporate bonds (C) & govt. securities (G) will increase with the age of the account holder. The following life-cycle funds are available under this choice:
(I) LC75 – Aggressive Life Cycle Fund:
In this fund, the exposure in Equity investments starts at 75% till age 35 and gradually reduces as per the subscriber's age.
(II) LC50 – Moderate Life Cycle Fund:
In this fund, the exposure in Equity Investments starts at 50% till age 35 and gradually reduces as per the age of the account holder.
(III) LC 25 – Conservative Life Cycle Fund:
In this fund, the exposure in equity investments starts at 25% till age 35 and gradually reduces as per the age of the account holder.
Eligibility :
Individuals clients can do investments in NPS between the ages of 18 – 65 years.
Minimum amount criteria :
| For All citizens model | Tier - I | Tier - II |
| Minimum contribution at the time of account opening | Rs. 1000 /- | Rs. 1500 /- |
| Minimum amount per contribution | Rs. 500 /- | Rs. 250 /- |
| Minimum total contribution per year | Rs. 1000 /- | *NIL |
| Minimum frequency of contribution | 1 per year | *NIL |
* In Tier – II minimum balance should be 2000/- at the end of the financial year.
Can a client invest in NPS if he/she has already invested in any provident fund?
Yes. Investment in NPS is an independent contribution to any Provident Fund. So a client can invest in NPS also if his/ her existing investment is available in another Provident Fund.
When will the client receive a PRAN card hard copy of the NPS account?
Once the NPS registration process is completed by the client and payment confirmation is received to NJ, the PRAN number will be generated and the same will be activated within T+1 working day. (T days is the date of receipt of payment confirmation to NJ).
A hard copy of the PRAN Card will be dispatched to the investor's residential address within 15-20 working days after PRAN activation is done.
What are the minimum annual contribution requirements in NPS?
Minimum total contribution per year for Tier I is 1000 /-. Please refer to below link to know the minimum investment / annual contribution criteria in NPS.
What are the tax benefits under NPS?
Investors can contact his/her respective financial advisor or tax advisor for taxation-related assistance. Partners may also contact the NJ sales team for such information
