NPS (New Pension Scheme) :An Insight

There are three different models of NPS based on how your contributions are being made to NPS:

·         All Citizen Model

If you are salaried person and your employer doesn’t contributes to NPS on your behalf or you are Self employed person.

·         Government Sector Model

If you are a Central Government or State Government employee and your employer contributes to NPS on your behalf.

·         Corporate Model

If you are employee under following and your employer contributes to NPS on your behalf:

·         Entities registered under companies act.

·         Central Public Sector Enterprises.

·         State Public Sector Enterprises.

·         Registered Partnership firm.

·         Registered LLP

·         Any body incorporated under any act of parliament or state legislature or by order of Central/State Government.

·         Proprietorship Concern

·         Trust/Society.

All Citizen Model

How to enroll?

To enroll, applicant needs to submit the subscriber registration form to the POS-SP (Point of Presence – Service Providers) for knowing the list of POS-SP Click here.

Also account can be opened through eNPS platform (www.npstrust.org.in), account can be opened either through PAN and Bank KYC verification or through adhaar based eKYC verification.

Minimum Contribution

TIER I		TIER II
At the Time of Opening	Rs 500	At the Time of Opening	Rs 1000
Subsequent year	Rs 1000	Subsequent year	Rs 250
Minimum No of Contribution during the year	1	Minimum No of Contribution during the year	No minimum requirement
Maximum No of Contribution during the year	No such limit	Maximum No of Contribution during the year	No such limit

Further for investment in Tier II an there is requirement of an active Tier I account.

Investment Choice

Funds are managed by following managers:

·         ICICI Prudential Pension fund Management.

·         Kotak Mahindra Pension Fund Ltd

·         LIC Pension fund Ltd

·         Reliance Capital Pension Fund Ltd

·         SBI Pension Fund Ltd

·         UTI Retirement Solution Ltd

·         Pension fund to be incorporated by Birla Sunlife Insurance Co Ltd.

You can choose any of the fund managers to manage your fund. Now suppose your selected fund is not giving adequate return, you can switch to the other fund manager.

You can also choose the pattern of your investment, there are three categories:

Category E where investment are predominantly on Equity shares.

Category C where investment is in fixed income instruments other than Government Securities.

Category G where investment is made in Government Securities

Category A where Investment are made in alternative schemes like CMBS, MBS etc.

There is also an Auto choice – Lifecycle fund under which fund is appropriated among different categories according to the age of investors.

Withdrawal of funds:

Tier II:

There are no restrictions on the withdrawal from Tier II fund. But please note that contribution to Tier II fund is also not eligible for Tax deductions under Sec 80 C and 80 CCD (1B).

Tier I:

·         Upon attainment of the age of 60 years :

At least 40 % of the accumulated pension wealth of the subscriber needs to be utilized for purchase of annuity providing for monthly pension to the subscriber and balance is paid as lump sum payment to the subscriber. In case the total accumulated corpus is less than Rs 2 Lacs, the subscriber may opt for 100% lumpsum withdrawal.

However the subscriber has the option to defer the lump sum withdrawal till the age of 70 years.

·         At any time before attaining the age of 60 :

The subscriber may exit from NPS before attaining the age of 60, only if he has completed 10 years in NPS.

At least 80 % of the accumulated pension wealth will be utilized for the purchase of annuity for monthly pension, and balance is paid as lump sum, again if the total accumulated corpus is less than Rs 1 Lac, the subscriber may opt for 100% lumpsum withdrawal.

C)  Death of the Subscriber:

       In such an event 100 % amount will be given to the nominee.

Government Sector Model

Contribution:

Contribution is made by your employer @ 10% of Basic Pay + Dearness Allowance. All contribution is made in Tier I

Investment Choice:

Funds are managed by following managers:

·         LIC Pension fund Ltd

·         SBI Pension Fund Ltd

·         UTI Retirement Solution Ltd

Here pattern of investment is fixed.

Withdrawal of funds:

Tier II:

There are no restrictions on the withdrawal from Tier II fund. But please note that contribution to Tier II fund is also not eligible for Tax deductions under Sec 80 C and 80 CCD (1B).

Tier I:

·         Upon attainment of the age of 60 years :

At least 40 % of the accumulated pension wealth of the subscriber needs to be utilized for purchase of annuity providing for monthly pension to the subscriber and balance is paid as lump sum payment to the subscriber. In case the total accumulated corpus is less than Rs 2 Lacs, the subscriber may opt for 100% lumpsum withdrawal.

However the subscriber has the option to defer the lump sum withdrawal till the age of 70 years.

·         At any time before attaining the age of 60 :

The subscriber may exit from NPS before attaining the age of 60, only if he has completed 10 years in NPS.

At least 80 % of the accumulated pension wealth will be utilized for the purchase of annuity for monthly pension, and balance is paid as lump sum, again if the total accumulated corpus is less than Rs 1 Lac, the subscriber may opt for 100% lumpsum withdrawal.

C)  Death of the Subscriber:

       In such an event 100 % amount will be given to the nominee.

Corporate Model

Contribution:

Contribution is made by your employer @ 10% of Basic Pay + Dearness Allowance. All contribution is made in Tier I

Investment Choice

Funds are managed by following managers:

·         ICICI Prudential Pension fund Management.

·         Kotak Mahindra Pension Fund Ltd

·         LIC Pension fund Ltd

·         Reliance Capital Pension Fund Ltd

·         SBI Pension Fund Ltd

·         UTI Retirement Solution Ltd

·         Pension fund to be incorporated by Birla Sunlife Insurance Co Ltd.

You can choose any of the fund managers to manage your fund. Now suppose your selected fund is not giving adequate return, you can switch to the other fund manager.

You can also choose the pattern of your investment, there are three categories:

Category E where investment are predominantly on Equity shares.

Category C where investment is in fixed income instruments other than Government Securities.

Category G where investment is made in Government Securities

Category A where Investment are made in alternative schemes like CMBS, MBS etc.

There is also an Auto choice – Lifecycle fund under which fund is appropriated among different categories according to the age of investors.

Withdrawal of funds:

Tier II:

There are no restrictions on the withdrawal from Tier II fund. But please note that contribution to Tier II fund is also not eligible for Tax deductions under Sec 80 C and 80 CCD (1B).

Tier I:

·         Upon attainment of the age of 60 years :

At least 40 % of the accumulated pension wealth of the subscriber needs to be utilized for purchase of annuity providing for monthly pension to the subscriber and balance is paid as lump sum payment to the subscriber. In case the total accumulated corpus is less than Rs 2 Lacs, the subscriber may opt for 100% lumpsum withdrawal.

However the subscriber has the option to defer the lump sum withdrawal till the age of 70 years.

·         At any time before attaining the age of 60 :

The subscriber may exit from NPS before attaining the age of 60, only if he has completed 10 years in NPS.

At least 80 % of the accumulated pension wealth will be utilized for the purchase of annuity for monthly pension, and balance is paid as lump sum, again if the total accumulated corpus is less than Rs 1 Lac, the subscriber may opt for 100% lumpsum withdrawal.

.      Death of the Subscriber

       In such an event 100 % amount will be given to the nominee.