National Pension System (NPS) is a voluntary, defined contribution retirement savings scheme designed to enable the subscribers to make optimum decisions regarding their future through systematic savings during their working life. Regulated by PFRDA, NPS provides a Permanent Retirement Account Number (PRAN), which is a unique number and it remains with the subscriber throughout his lifetime.
The minimum annual contribution is Rs 6,000, which can be paid at once or in instalments of at least Rs 500.
NPS Features
The Government has authorized PFRDA vide Ministry of Finance, to extend NPS on a voluntary basis to all citizens of India including workers of the unorganized sector.
Under NPS following two types of accounts will be available:
- Tier-I account: One shall contribute savings for retirement into this (non-withdrawable account).
- Tier-II account*: This is a voluntary savings facility. One will be free to withdraw their savings from this account whenever one wishes to.
* Subscriber will be eligible for opening Tier – II account only if he has opened Tire – I account and it must be active.
How to enrol in the NPS?
To enrol in the NPS, one needs to submit the Composite Registration Form (UOS-S1) to the POPSP. NRIs should have an account with a bank based in India to open an account under NPS. The contributions made by the NRI would be subject to regulatory requirements as prescribed by RBI from time to time and FEMA requirements.
- After the account is opened, CRA shall mail a “Welcome Kit” containing the subscriber’s unique Permanent Retirement Account Number (PRAN) Card and the complete information provided by the subscriber in the Subscriber Registration form. This account number will be the primary means of identifying and operating the account.
- One will also receive a Telephone Password (TPIN) which can be used to access their account.
- One will also be provided an Internet Password (IPIN) for accessing their account on the CRA Website.
What are the benefits of joining the NPS??
- It is voluntary- NPS is open to every Indian citizen. One can choose the amount you want to set aside and save every year.
- It is simple all one has to do is to open an account with any one of the POPs and get a PRAN.
- It is flexible- One can choose his own investment options and Pension Fund Manager and see your money grow.
- It is portable- One can operate their account from anywhere in the country, even if there is change in city, job or selected pension fund manager.
- It is regulated- NPS is regulated by PFRDA, with transparent investment norms and regular monitoring and performance review of fund managers by NPS Trust.
- On attaining the Normal Retirement Age (NRA) of 60 years – One will be required to compulsorily annuitize at least 40% of their pension wealth and the remaining 60% can be withdrawn as a lump sum or in a phased manner; in case, one opts for a phased withdrawal:
- Minimum 10% of the pension wealth should be withdrawn every year.
- Any amount lying to the credit at the age 70 should be compulsorily withdrawn in lump sum.
- Withdraw any time before 60 years of age- In such a case, one will have to compulsorily annuitize 80% of the accumulated pension wealth. The remaining 20% can be withdrawn as a lump sum
Email your queries on ark.advisor@gmail.com
To know more or subscribe to NPS, please contact on 8693800025
Thanks & Regards
Raj
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