1. What is National Pension System?
National Pension System (NPS) is a pension cum investment scheme launched by Government of India to provide old age security to Citizens of India. It brings an attractive long term saving avenue to effectively plan your retirement through safe and regulated market-based return. The Scheme is regulated by Pension Fund Regulatory and Development Authority (PFRDA). National Pension System Trust (NPST) established by PFRDA is the registered owner of all assets under NPS.
NPS can be broadly classified into two categories and it is further customised for different sectors as mentioned below:
Opening NPS account has its own advantages as compared to other pension product available. Below are few features which make NPS different from others:
Any individual citizen of India (both resident and Non-resident) in the age group of 18-65 years (as on the date of submission of NPS application) can join NPS.
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.However, OCI (Overseas Citizens of India) and PIO (Person of Indian Origin) card holders and HUFs are not eligible for opening of NPS account.
No, opening multiple NPS accounts for an individual is not allowed under NPS. However an Individual can have one account in NPS and another account in Atal Pension Yojna.
No, NPS account can be opened only in individual capacity and cannot be opened or operated jointly or for and on behalf of HUF
8. How NPS works?
Upon successful enrolment, a Permanent Retirement Account Number (PRAN) is allotted to the subscriber under NPS. Once the PRAN is generated, an email alert as well as a SMS alert is sent to the registered email ID and mobile number of the subscriber by NSDL-CRA (Central Record Keeping Agency).Subscriber contributes periodically and regularly towards NPS during the working life to create the corpus for retirement. On retirement or exit from the scheme, the Corpus is made available to the Subscriber with the mandate that some portion of the Corpus must be invested in to Annuity to provide a monthly pension post retirement or exit from the scheme.
The benefits of NPS are
Pension Funds are responsible for investing contributions, accumulating them and managing pension corpus through various schemes under National Pension System in accordance with the provisions of the PFRDA Act.
NPS offers you two approaches to invest in your account:
In Active choice, Subscriber selects the allocation percentage in assets classes,however, in Auto choice, funds are automatically allocated amongst asset classes in a pre-defined matrix, based on the age of the subscriber. After selection of pension fund manager, Subscriber also has to exercise the choice of investment.
Unlike traditional investment products, NPS offers you with the flexibility to design your own portfolio. Depending on your risk appetite, you can design your portfolio by allocating Funds amongst available four asset classes. This is called Active Choice. Following are the four asset classes are available under Active choice:
At times designing your portfolio can be a little delicate and time consuming. NPS gives you the flexibility to opt for a dynamic and automatic allocation of your portfolio in case you do not want to exercise an Active choice. This option is called the Auto choice.
In Auto choice, your money will be invested in asset classes – E, C and G – in defined proportions based on your age. As individual’s age increases, exposure to Equity and Corporate Debt is gradually reduced and that in Government Securities is increased. Depending upon the risk appetite of subscriber, there are three different options available within Auto Choice-Aggressive, Moderate and Conservative.
Following are the assets classes are available for investment for investment under NPS:
If you are a conservative investor, you can choose to invest your entire pension wealth in C or G asset class. However, if you want to have exposure to equity, you can allocate maximum 50% of your money to asset class ‘E’ or up to 5% in Alternative Investment Funds.
Scheme preference change is the option given to the Non-Government subscriber to design / redesign their own portfolio. It comprises change of Pension Fund Manager (PFMs), switching between Active choice and Auto choice and in case of Active choice to decide percentage of allocation in different asset classes.
A subscriber of Non-Government sector can change their Scheme Preference through their associated POP-SP. It can also be done online through their log-in credentials of CRA.
In NPS, there are multiple PFMs, Investment Options (Auto or Active) and four Asset Classes – Equity, Debt, Government Securities and Alternate Investment Funds. Subscriber has been given the flexibility to choose any one out of available Pension Fund Managers (PFMs) and investment options separately for Tier I and Tier II account.
Selection of Pension Fund Manager is mandatory while filling up the registration form. All the PFMs under NPS are registered and regulated by PFRDA. They are mandated to invest Subscriber’s contribution as per prescribed guidelines and regulations by PFRDA.
You can find the performance of respective PFMs on NPS Trust website at http://www.npstrust.org.in/return-of-nps-scheme. Returns of different schemes under NPS may help you while selecting the PFM. In NPS, you are allowed to change PFM once in a financial year.
NPS provides you two types of accounts: Tier I and Tier II. Tier I is mandatory retirement account, whereas Tier II is a voluntary saving Account associated with your PRAN. Tier II offers greater flexibility in terms of withdrawal, unlike Tier I account, you can withdraw from your Tier II account at any point of time.
Below are few significant benefits of Tier II NPS Account:
Any subscriber who has an active Tier I account can activate a Tier II account
The contribution remitted in Subscriber’s account is passed on to the PFMs as selected by the Subscriber at the time of registration (or changed subsequently). The PFMs invest the money and declare Net Asset Value (NAV) at the end of each business day. Accordingly, based on the NAV, units are credited in the Subscriber’s account. The present value of the investment is arrived at by multiplying the units held with the NAV.
The return under NPS is market driven. Hence, there is no guaranteed/defined amount of return. The returns generated through investments are accumulated for the pension corpus and is not distributed by way of dividend or bonus.
Net Asset Value is also known as NAV. This is the price of one unit of a fund. NAV is calculated at the end of every working day. It is calculated by adding up the value of all the securities and cash in the fund’s portfolio (its assets), subtracting the fund’s liabilities, and dividing that number by the number of units that the fund has issued.
The NAV increases (or decreases) when the value of the fund’s holdings increase (or decrease). NAV of schemes of different PFMs may differ. Even the different schemes under the same PFM will have different NAV.
No, there is no need to re-open NPS account when you change your Job or location. Portability is one of the key features of NPS, it can be operated from anywhere in the country irrespective of individual employment and location/geography.This implies that you can shift your PRAN from one sector to another, e.g. Central Government to Corporate sector, State Government to Central Government etc. and vice versa.Further, if you are relocated because of any reason, you can also change POP-SP within the same POP or you can change to POP of your choice available to the location.
Tax Benefit available to Individual:
Any individual who is Subscriber of NPS can claim tax deduction up to 10% of gross income under Sec 80 CCD (1) with in the overall ceiling of Rs. 1.5 lac under Sec 80 CCE.
Exclusive Tax Benefit to all NPS Subscribers u/s 80CCD (1B)
An additional deduction for investment up to Rs. 50,000 in NPS (Tier I account) is available exclusively to NPS subscribers under subsection 80CCD (1B). This is over and above the deduction of Rs. 1.5 lakh available under section 80C of Income Tax Act. 1961.
Tax Benefits under the Corporate Sector:
How to make the Investment to avail the Tax Benefit:
If you are an existing Subscriber, you can approach any POP-SP or alternatively you can visit eNPS website (https://enps.nsdl.com) for making additional contribution in your Tier I account.
Please note: Tax benefits are applicable for investments in Tier I account only.
The Subscriber can submit the Transaction Statement as an investment proof. Alternatively, Subscriber from “All Citizens of India” can also download the receipt of voluntary contribution made in Tier I account for the required financial year from NPS account log-in. It can be downloaded from the sub menu “Statement of Voluntary Contribution under National Pension System (NPS)” available under main menu “View” in NPS account log-in.
Apart from tax benefits available under 80CCD, below are the other tax benefits available under NPS:
There is no tax benefit on investment towards Tier II NPS Account.
Opening an NPS account is very easy, it can be opened through Online or by visiting to your nearest Point Of Presence.
Subscriber Registration Form (CSRF) is available at “Form” section in sector wise information available on this website.
PFRDA has appointed entities known as Points of Presence (POPs) to extend customer interface for all citizens of India, who wish to open NPS account. POP is the first point of interaction between the subscriber and the NPS architecture. Point of Presence (POP) shall perform the functions relating to registration of subscribers, undertaking Know Your Customer (KYC) verification, receiving contributions and instructions from subscribers and transmission of the same to designated NPS intermediaries. The authorized branches of POP for NPS services are called POP-SP (Points of Presence-Service Provider).
To find the nearest POP-SP, you may visit “Find your nearest POP-SP”under “Important Links” section available on Home page of this website.
CRA-FC is Facilitation Centre appointed by NSDL-CRA to facilitate Nodal Offices to submit applications for allotment of PRAN. Following services is being offered by the CRA-FC:
To find the nearest CRA-FC, you may visit “Find your nearest CRA-FC”under “Important Links” section available on Home page of this website. However as a Subscriber under All Citizens of India sector, you are not required to interact with CRA –FC. Your single point of contact would be the respective 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. NSDL-CRA also intimates the Subscriber about the dispatch details once the PRAN kit for the Subscriber is dispatched.
Subscriber can check the status of his/ her PRAN application by 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.
You may check the status of you PRAN application through below tabs given under “Important Links” section available on Home page of this website
Time required in Subscriber Registration depends on the mode of registration opted.
To reset the T-PIN, please refer Question no. 6 of “Service Request” section of FAQs.
After registration of the Subscriber, a PRAN card is dispatched to the Subscriber which has Subscriber’s name, Father’s name, Photograph and Signature/thumb impression and Subscriber’s date of birth. This card proves the completeness of information in the CRA system.
A PRAN Kit containing PRAN card, Subscriber details (referred as Subscriber Master List) and an information booklet is sent to the Subscriber’s registered address. The Subscriber Master List includes all the information as provided by the Subscriber in the application and captured in CRA system.
Besides, ePRAN card is also available under subscriber’s NPS login.
For log-in to your account, you may visit to the “Login” section available on home page of this website.
I-PIN is a password to access your NPS account/mobile App. Through your NPS account log-in, you can view details of NPS account and initiate the various service requests.
To reset the I-PIN, please refer Question no. 5 of “Service Request” section of FAQs.
T PIN can be used to access your NPS account through the toll free helpline (1-800-222080). The Bilingual ‘Interactive Voice Response’ (IVR) service helps you to access your account details and avail various services including request for Transaction Statement to your registered email ID. You can also speak to Customer Care Executive for any specific query. You can reset the T PIN through the option available in IVR.
To reset the T-PIN, please refer Question no. 6 of “Service Request” section of FAQs.
Activation of Tier II account is very easy, it can be done through online at eNPS website (https://enps.nsdl.com) or through your associated POP-SP. For more details, please refer “How to activate the Tier II account” section under “Knowledge Centre” available on this website.
To contribute in Tier I and Tier II account, the Subscriber needs to deposit the contribution amount along with duly filled NCIS (NPS Contribution Instruction Slip) to any POP-SP or alternatively can visit eNPS website to make contribution in NPS. Following are the three ways to contribute in NPS:
A Subscriber is required to make initial contribution (minimum of Rs. 500 for Tier I and a minimum of Rs. 1000 for Tier II) at the time of registration.
Subsequently, a Subscriber can make contribution subject to the following conditions:
Over and above the mandated limit of a minimum of one contribution in Tier I, a Subscriber may decide on the frequency of the contributions across the year as per his / her convenience.
Units will be credited to the subscriber’s account on the day contribution is invested by the PFM (Pension Fund Manager). It takes T+2 days to get unit credited in subscriber account, wherein T being the date of fund receipt at Trustee bank. This activity is called settlement in CRA system wherein, contribution is transferred from POP to PFM for investment in predefined scheme of subscriber and accordingly, the PFM declares NAV of the day and Units are allotted to the subscriber.
We can understand this with an example as follow:
POP who as an interface for the subscriber in NPS, collects NPS contribution from subscriber and uploads the contribution details in the CRA system and at the same time deposits the contribution to Trustee Bank (Bank designated for collection of NPS contribution from NPS intermediaries such as POP). The Trustee Bank, on receipt of contribution, uploads the contribution receipt details on CRA system. On receipt of these two information (contribution details from POP and contribution receipt information from Trustee Bank), the settlement process is initiated in the CRA system.
Yes. To contribute in NPS, only Permanent Retirement Account Number is required. Once PRAN is allotted to a Subscriber, contribution can be made irrespective of whether PRAN card is received or not.
A Subscriber can request for change / correction in personal details, nomination details, bank details, reissue of I-PIN/T-PIN/PRAN Card to the POP-SP. A Subscriber can also update his / her photograph and signature by submitting written request to the POP-SP.
Subscriber needs to submit the following forms for change request:
Subscribers can also update certain details through online or NPS Mobile APP. Please refer question no. 8 and 9 of this section for the same.
Apart from submission of S3 form to associated POP-SP, Subscriber can also change Scheme preference through their NPS account log-in. You can follow the simple steps as given below to change the scheme preference online:
Subscribers can also update certain details through online or NPS Mobile APP. Please refer question no. 8 and 9 of this section for the same.
Subscriber is allowed to register up to three nominees in NPS. Yes, minor can be a nominee. In such case, Subscriber will be required to provide guardian’s details and date of birth of the minor.
In case of loss or damage of PRAN card, the Subscriber needs to submit a duly filled S2 form to the respective POP-SP. After verifying the form, the POP/POPSP will enter and authorize the request in the CRA system. Subsequently, the request is processed by CRA and a fresh PRAN Card is printed and sent to Subscriber’s registered address.
Alternatively, Subscriber can download ePRAN through their NPS account login.
Subscriber can generate password by doing few steps even without log-in to your account.
Subscriber should select any one of the following options:
To reset the T-PIN, Subscriber can call the CRA toll free number 1800-222-080 to access IVR (Interactive Voice Response) system. After selecting the appropriate option, system will prompt the Subscriber to reset T-PIN by providing the existing T-PIN and the required new T-PIN. In case Subscriber has forgotten T-PIN, upon successful verification of the personal details, the Subscriber will be transferred to a helpline executive to enable him/her to change the T-PIN.
The Annual NPS Account Statement (as of March 31st of every year) is sent to the registered address of Subscriber. However, access to your Transaction statement is not only limited to this. A Subscriber can also get the transaction statement:
Yes, certain services related to NPS can be availed online. These are as follows:
To have a NPS mobile App is the most convenient way to get the services/information related to NPS. You can invest and manage your NPS account on the go. You can download the App “NPS by NSDL eGov” from “App Store” ( ios users) and “Google play” (android users).
Following are the services you can get through NPS Mobile App:
NSDL-CRA has built a multi layered Grievance redressal mechanism which is easily accessible, simple, quick, responsive and effective.
You have the option of registering grievance/complaint through the following alternatives:
Web based interface:
A Subscriber can register the grievance against any entity under NPS through log-in to the account. Alternatively, they can visit at “Log Your Grievance / Enquiry” section under “Subscriber’s Corner” of this website to log the grievance/query. Through this platform, Subscriber can register grievance/query even without having the PRAN Details. On successful registration, a token number will be displayed on the screen for future reference.
Call Centre/Interactive Voice Response System (IVR):
Subscriber can contact the NSDL-CRA call centre at toll free telephone number and register the grievance. Subscriber has to authenticate themselves through the use of T-pin allotted to raise the grievance. On successful registration of grievance, a token number will be allotted by the Customer Care representative for any future reference.
Subscriber can also submit the grievance in a prescribed format to the POP – SP. Subscriber has to mention the PRAN as the means of authentication on the form. Upon submission of form to the POP-SP, Subscriber will get an acknowledgement receipt. The token number would be emailed to you by NSDL-CRA (if the email id is mentioned), otherwise the same will be emailed to the concerned POP-SP. Subscriber can get the token number from the POP-SP against the acknowledgement receipt.
Getting access to the information related to NPS is very easy and convenient. You may get in touch with any of the below mode available:
Whenever a Subscriber raises a grievance, a system generated alert goes to the entity against which the grievance is raised. The respective entity then resolves the grievance and post resolution details in CRA system.
When a Subscriber registers a grievance at the CRA website, a unique token number is assigned to each and every grievance. Subscriber can use that token no. to know about the status of the grievances either through the Call Center or through the CRA website. Please visit “Log Your Grievance / Enquiry” section under “Subscriber’s Corner” to check the status of the grievance lodged.
Escalation Matrix for Grievance redressal – Only for NPS, related to queries/complaints is given at the “Contact Us” section of this website. However, Subscriber has to follow the process given in Question no. 1 of this section to get grievance registered. For details of Grievance Redressal Policy for Central Recordkeeping Agency under National Pension System, please visit “Grievance Redressal Policy” located at “Log Your Grievance / Enquiry” section under “Subscriber’s Corner” of this website.
Subscriber can approach, Ombudsman appointed by PFRDA if he / she is not satisfied with the resolution of grievance. The details of Ombudsman appointed are available on PFRDA website (www.pfrda.org.in).
At present, Shri Vinod Kumar Pande has been appointed as the Stipendiary Ombudsman in terms of PFRDA (Redressal of Subscriber Grievance) Regulations, 2015.
C/o Pension Fund Regulatory and Development Authority,
Plot No-14/A, Chhatrapati ShivaJi Bhawan,
Qutab Instititional Area,
An exit is defined as closure of individual pension account of the subscriber under National Pension System.
As per PFRDA (Exits & Withdrawals under NPS) Regulations 2015, in following conditions Subscriber can exit from NPS:
Subscriber can decide to remain invested in NPS (Up to 70 years) or can exit from NPS.Following options are available to NPS Subscribers:
You can find the withdrawal form of respective sector from “Form” section available on this website. Based on the different types of Withdrawal request, following forms are made available:
For any superannuating subscriber/subscriber attaining 60 years of age, CRA generates a Claim ID six months prior to the date of superannuation or 60 years of age. CRA intimates the generation of Claim ID to the subscriber vides e-mails, letters, SMS.
In case of Superannuation, CRA generates a Claim ID six months prior to the date of superannuation or 60 years of age. Claim ID is intimated to the subscriber vides e-mails, letters, SMS. Intimation of claim ID enable Subscriber six months before to make any changes (like DOB, address etc.) in his/her NPS account before initiating withdrawal request. Withdrawal request cannot be raised without generation of Claim ID.
In case of Pre-mature Exit, the Subscriber needs to contact the POP for generation of Claim ID for Withdrawal of NPS funds. Generation of Claim ID is not required if Withdrawal request is initiated by POP.
Generation of Claim ID is not required to process death online Withdrawal request. POP can directly raise the Withdrawal request for death cases.
Subscriber can initiate Online Withdrawal request through their NPS account log-in. Such request needs to be verified and authorized by the associated POP. In case Subscriber is not able to initiate online Withdrawal request, he or she needs to submit the physical Withdrawal form along with the required documents to the POP. Based on Subscriber’s request, POP will initiate the online Withdrawal request on behalf of the Subscriber.
For details of steps to be followed, you may go through the “Self running Demo” of “withdrawal process for Non-Government Subscriber” available in “Knowledge Centre” section under “Subscriber Corner” on this website.
Following documents are required to be submitted alongwith the duly filled Withdrawal form for Superannuation & Pre-mature Exit:
After submitting required documents, POP will authorize the Withdrawal request.
Yes, a subscriber can claim withdrawal in following cases:
In case of Superannuation- A Subscriber can claim 100% Withdrawal if the total accumulated corpus is less than or equal to Rs. 2 Lakh at the time of Superannuation/attaining age of 60 years.
In case of Pre-mature Exit- If total accumulated corpus is less thanor equal to Rs. 1 Lakh, the Subscriber can avail the option of complete Withdrawal. However, you can exit from NPS only after completion of 10 years.
Yes, NPS Subscriber can withdraw certain amount out of his own contribution. It is considered as partial withdrawal under NPS, for Conditions of partial Withdrawal, please refer question no. 10.
Following are the conditions of Conditional Withdrawal:
Partial withdrawal request can be initiated online by Subscriber. Alternatively, Subscriber can submit physical partial withdrawal form (601-PW) along with documents to POP, based on which POP can initiate online request.. However, POP is required to ‘Authorize’ the Withdrawal request in CRA system.
Following documents are required to be submitted from the nominee/claimant along with the completely filled Withdrawal forms:
After obtaining required documents, POP needs to capture the online Withdrawal request. Once authorized by the checker ID, POP will send the Withdrawal form & supporting documents with covering letter to CRA for storage purpose.
Such Withdrawal request will be processed as per below mentioned scenario:
The Withdrawal proceeds are credited in Subscriber/Claimant bank account (as per the bank details provided at the time of initiating online Withdrawal request) through electronic mode only.
Subscriber can check Withdrawal status as per below mentioned option:
In the context of NPS, Annuity refers to the monthly sum received by the Subscriber from the Annuity Service Provider (ASP). A percentage of the pension wealth as decided by the Subscribers (minimum 40% & 80% in case of Superannuation & Pre-mature Exit respectively) is utilized for purchase of Annuity from the empanelled Annuity Service Providers.
Annuity Service Providers (ASPs) are responsible for providing a regular monthly pension to the Subscriber after exit from the NPS. These ASPs are basically Insurance Regulatory and Development Authority (IRDA) regulated Insurance companies which are empanelled by PFRDA to provide Annuity services to the NPS Subscribers. For more details about ASPs, please visit “Annuity Service Provider” section on this website (link given at home page under “Important Links”).
In case of pre-mature exit, pension starts immediately, if Subscriber fulfils the Age and Corpus criteria for purchasing Annuity (depending upon choice of ASP and Annuity scheme of the respective Annuity Service Provider).
Following schemes are available with ASPs under NPS:
The pension amount can be calculated based on indicative annuity rates (subject to change from time to time) provided by ASPs. However, the actual annuity amount will depend on the prevailing rates at the time of purchase of annuity. You may visit “Annuity Service Provider (ASP)” page on our website to get the tentative pension amount. Alternatively, you may also visit the respective ASP’s website to the tentative pension amount.
Once an Annuity is purchased, the option of cancellation or reinvestment with another Annuity Service Provider or in other Annuity scheme shall not be allowed unless the same is within the time limit specified (free look period as provided in terms of the Annuity contract or specifically provided by the IRDA) by the Annuity Service Provider.
Facility of phased Withdrawal is available for NPS Subscribers. Subscriber can opt for withdrawal of lump-sum amount in a phased manner (up to 10 instalments) over the period from 60 years (or any other retirement age as prescribed by the employer) to 70 years. However, Subscriber has to buy Annuity prior to Phased Withdrawal.
No, Subscriber can’t exercise the option of deferment (lump-sum and Annuity) after obtaining the continuation option.
Yes, Subscriber can continue Tier-2 account till the time Tier-1 account is active.
Your Tier II account will also close once you request for closure of Tier I account. Units under Tier II account will be redeemed and amount will be transferred to your given bank account.
26. What are the Tax implications for withdrawal executed from Tier-1 account?
For queries related to tax benefits under NPS, please refer questions on “Tax Benefit under NPS” of this FAQs section.