Primary Attributes
of National Pension System
Reduce Your
Tax Liability
Reduce your tax liability by upto
Rs. 16,800 every year.
Historical
Investment
Historical Investment return ranges
between 9%-12%
Long-Term
Retirement Solution
NPS is a voluntary and long-term retirement
savings System that helps individuals build a
retirement corpus over their working years.
Flexibility in
Contribution
Subscribers have the flexibility to choose their
contribution amount and frequency, which
can be
regular or irregular, as long as the minimum annual
contribution requirements
are met.
Two Tiers
NPS consists of two tiers - Tier I and Tier II.
Tier I is a mandatory pension account
with withdrawal
restrictions until retirement, while Tier II is an optional
investment account with more flexibility for withdrawals.
Choice of
Investment Allocation
Subscribers can choose between three investment
options - Active Choice (where they
decide the
allocation among different asset classes), Auto
Choice (where the
allocation changes based on
the subscriber's age), and Conservative Life Cycle
Fund
(a pre-defined allocation based on age).
Wide Range of
Asset Classes
NPS allows investments in various asset classes
including equity, government securities,
corporate
bonds, and alternative assets, offering a diversified
investment
portfolio.
Regulated by PFRDA
The Pension Fund Regulatory and Development
Authority (PFRDA) regulates and oversees the
NPS
to ensure transparency and protect the interests of
subscribers.
Portable Account
NPS accounts are portable across employers
and locations, giving subscribers the freedom
to
continue contributing even if they change jobs or
locations.
Tax Benefits
Contributions to NPS are eligible for tax benefits
under Section 80CCD(1), and an
additional deduction
of up to ₹50,000 is available under Section 80CCD(1B)
of the
Income Tax Act.
Tier I Withdrawal
Restrictions
While partial withdrawals are allowed for specific
purposes like higher education,
purchasing a home,
or medical treatment, Tier I withdrawals before
retirement are
subject to certain conditions and
penalties.
Annuity Purchase
at Retirement
At retirement, a portion of the accumulated corpus
(maximum 60%) can be withdrawn as a
lump sum,
and the remaining must be used to purchase an
annuity that provides
regular pension payments.
Choice of
Annuity Provider
Subscribers have the option to choose from
various annuity providers and annuity options,
allowing them to customize their pension payouts
based on their needs.
Corporates
and Self-Employed
NPS is suitable for both salaried individuals and
self-employed individuals, including
professionals
and entrepreneurs, looking for a structured retirement
savings
solution.
Online Account
Management
Subscribers can manage their NPS accounts
online, including tracking contributions,
investment
performance, and making changes to investment
preferences.
Regular Statements
NPS provides regular statements and updates to
subscribers, offering transparency and
visibility into
their investment progress.
Exit Options
Apart from annuity purchase, subscribers can also
opt for a partial lump-sum withdrawal
and receive a
regular pension with the remaining corpus.
NPS VS Alternative Retirement
Returns Comparison
National Pension
System Calculator
Check how your tax-saving National Pension
System investment can contribute to your
retirement requirement.
Frequently Asked Questions
About National Pension System
National Pension System (NPS) is a pension cum investment System launched by the Government of India to provide old age security to its citizens. It brings an attractive long term saving avenue to effectively plan your retirement through safe and regulated market-based returns. The System is regulated by Pension Fund Regulatory and Development Authority (PFRDA).
Opening an NPS account has its own advantages as compared to other pension products available. Here are its features:
- Low cost product
- Tax breaks for Individuals, Employees and Employers
- Attractive market-linked returns
- Easily portable
- Professionally managed by experienced Pension Funds
- Regulated by PFRDA, a regulator set up through an act of Parliament
Any citizen of India, aged between 18-65 years as on the date of submission of his/her application can invest in NPS. The citizens can join NPS either as individuals or as an employee-employer group(s). However, OCI (Overseas Citizens of India), PIO (Person of Indian Origin) card holders and HUFs are not eligible for opening an NPS account.
Currently, investment in NPS on our platform is available for Indian citizens who are resident and pay tax in India.
User can make investment of up to ₹2,00,000 to be eligible for tax saving of ₹62,400
Investment of up to ₹50,000 to be eligible for tax deduction u/s 80CCD (1B) - Tax saving of ₹15,600
Investment of up to ₹1,50,000 to be eligible for tax deduction u/s 80CCD (1) - Tax saving of ₹46,800
Tax saving of ₹46,800 under u/s 80CCD (1) is an alternative to saving of ₹46,800 on ₹1,50,000 under 80C
NPS offers you two approaches to invest in your account:
Active choice
Auto choice
In Active choice, Subscriber selects the allocation percentage in asset 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.
Active choice:Unlike traditional investment products, NPS offers you 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:
- Equity or E
- Corporate Debt or C
- Government Securities or G
- Alternative Investment Funds or AIF
Auto 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 an 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 the subscriber, there are three different options available within Auto Choice-Aggressive, Moderate and Conservative.
Under NPS accounts, there are two types of accounts - Tier I & II.
Tier I account is mandatory for investing in NPS and all the tax-saving benefits are applicable on this account type. However, it is a restricted and conditional withdrawable retirement account which can be withdrawn only upon meeting the exit conditions prescribed under NPS.
Tier-II account is optional in nature and is available as an add-on to any Tier-1 account holder. Subscribers are free to withdraw their savings from this account whenever they wish, however, there are no tax benefits on investing in a Tier II account. Currently users can invest only in Tier I accounts on our Platform.
No, multiple NPS accounts for a single individual are not allowed as NPS is fully portable across sectors and locations, hence, users need not apply for a new account incase of change in job or location.
NPS is a Government of India initiative to provide old age security to the citizens of India, however, the Government will not be making any contribution to your NPS account. The contribution in an NPS account is made only by the individual under the "all citizens of India" model or by the employee-employer group under the corporate model. Currently you can invest only under "all citizens of India" model on our Platform
NPS is a retirement product and investment is done by users with an objective of saving for the post retirement years. As per PFRDA Regulations 2015, subscriber can withdraw money as per following conditions:
Upon SuperannuationWhen a subscriber reaches the age of 60 years of age, he or she can withdraw up to 60% of the accumulated corpus as lump sum and remaining share is invested for regular monthly/quarterly pension for a period as chosen by the user. If the total accumulated pension corpus is less than or equal to ₹5 lakh, subscribers can opt for 100% lump sum withdrawal.
Premature Exit-In case a need arises for early withdrawal, users can opt for premature exit after completing 10 years in NPS. Users can withdraw up to 20% of the accumulated corpus as a lump sum and the remaining share is invested for regular monthly/quarterly pension for a period as chosen by the user. If the total corpus is less than or equal to ₹2.5 lakh, subscribers can opt for 100% lump sum withdrawal.
Upon Death of Subscriber - The entire accumulated pension corpus (100%) would be paid to the nominee/legal heir of the subscriber.
Yes, NPS Subscriber can withdraw a certain amount out of his own contribution. It is considered as partial withdrawal under NPS:
Following are the conditions of conditional withdrawal:
- Subscriber should be in NPS at least for 3 years
- Withdrawal amount will not exceed 25% of the contributions made by the subscriber
- Withdrawal can happen a maximum of three times during the entire tenure of subscription.
- Withdrawal is allowed only against the specified reasons, for example; Higher education of children Marriage of children For the purchase/construction of residential house (in specified conditions) For treatment of critical illnesses
NPS qualifies as an EEE product, where your investment is completely tax-free at all stages. Your invested amount, return earned and maturity withdrawal are all completely tax-free.But your Annuity Income will bring taxation as per your Income Tax slab.
