NPS – National Pension Scheme

NPS or National Pension Scheme was introduced by the Government of India in the year 2004. NPS is governed by PFRDA (Pension Fund Regulatory and Development Authority). Under the National Pension Scheme, the subscriber can invest regularly and has the option to withdraw the lump sum amount in between and the remaining amount as a fixed monthly pension.

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NPS Salient Feature

Here is the salient feature the subscriber can take advantage of under National Pension Scheme (NPS):

• The account under NPS remains the same even in the case of change of employer or geography.
• NPS provides wide choices of service providers, investment schemes, pension funds, and fund managers.
• The subscriber can switch the chosen service provider, investment schemes, pension fund, fund manager at any time.
• The subscriber has the freedom to change the frequency of contribution and the amount of contribution as per the need.
• As NPS is governed by the PFRDA, its investment norms are transparent and the investment made is regularly monitored by fund managers.
• Grievance management under NPS is very efficient the subscriber can lodge a complaint either on the call or customer care ID.
• Fund management charges under NPS is very cost-effective as they only charge 0.01% as fund management charge.
• A subscriber (whether salaried or self-employed) under NPS can take tax benefits as per Section 80CCD and 80CCE of Income Tax Act, 1961.

Which Individuals Are Eligible to Apply for NPS?

Here is the list of individuals who can subscribe to the National Pension Scheme:

Citizen of India (Resident or Non-resident) subject to certain conditions such as

1. Applicant age should lie in between 18 – 60 years at the time of submission of PRAN application.
2. The applicant needs to comply with all the KYC norms mentioned in the registration form.
3. The applicant shall submit all the documents mentioned in the application form for KYC Compliance.

Which Individuals Are Not Eligible to Apply for NPS?

Here is the list of applicants who are not eligible to apply for NPS:

1. Any individual to whom the court has not granted an order of discharge, in simple words, undercharged insolvent.
2. Any individual who is of unsound mind. In other words, any individual who is not capable of understanding the contract at the time of making it and who cannot make rational judgment.
3. Any individual who already has an account under the National Pension Scheme (NPS).

The Upper Limit of Investment in NPS

The amount of investment lies in the hand of the subscriber as there is no upper limit on investment in the National Pension Scheme (NPS).

How to Exit from National Pension Scheme (NPS) before the Age of 60?

In case if the subscriber wants to exit from NPS before the age of 60 years then he/she needs to invest not less than 80% of the pension amount in a life annuity plan of a Life Insurance Company appointed by PFRDA and regulated IRDA. Howsoever, the subscriber can withdraw the remaining 20% pension amount.