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NPS

NPS is an easily accessible, low cost, tax-efficient, flexible and portable retirement savings account. Under NPS, the individual contributes to his retirement account and his employer can also co- contribute for the social security/welfare of the individual.

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    Introduction

    • Pension Fund Regulatory and Development Authority (PFRDA) was established in 2003 to promote old age income security
    • PFRDA launched the NPS Corporate Sector Model in December 2011 as an initiative to promote NPS for the employees working with Corporates
    • It facilitates employees working with various organizations to on board NPS within the purview of their employer – employee relationship.
    • As on 31 Mar 2024, count of NPS subscribers was 1.85 crores out of which 16.5 Lacs are from corporate sector
    Operated through single PRAN*
    All Citizen Model
    An individual can open NPS account, & voluntarily contribute towards his NPS to build his pension corpus It is popularly also known as Individual or Retail model

    This model is available since 2009

    Corporate Sector Model
    This is a separate model to provide NPS to the employees of corporate entities, including PSUs to additionally contribute to their own NPS account through their Corporate*

    This model was launched in 2011

    Permanent Retirement Account Number

    How Retail NPS works

    Individual regularly invests in NPS account

    How corporate NPS works

    Corporate contributes regularly. Employee may also contribute in same PRAN

    NPS: Key constituents

    • Point of Presence Acts as first point of interaction for subscriber Responsible for account opening, receiving contributions and instructions from subscribers
    • NPS Trust Responsible for taking care of the funds under NPS by prudently monitoring / auditing portfolio of Pension Fund Manager on regular basis
    • Annuity Service Provider Responsible for providing Annuity Service after Subscriber exits from NPS
    • Pension Fund Manager: To be responsible for managing the retirement savings of subscribers under NPS
    • Central Recordkeeping Agency: Responsible for recordkeeping, administration and customer service functions for all subscribers of NPS

    NPS features & benefits

    Portable

    Carry your account across employers, location etc.

    Simple

    Standard product regulated by PFRDA

    Flexible

    Choose your fund manager, investment option & annuity options

    Economical

    Lowest cost investment product currently available in the market

    Corporate contributes regularly. Employee may also contribute in same PRAN

    Flexibility

    NPS features & benefits

    Tax Benefits

    Multiple tax benefits

    Capping of 7.5L on contribution towards (NPS + SA+ PF)

    Sample illustration – Reduce taxable salary

    NPS features & benefits

    Fund options under NPS

    Investment choices

    Auto allocation

    NPS Returns: Fund E

    As at 19 July 2024 * NPS Trust

    NPS Returns: Fund C

    As at 19 July 2024 * NPS Trust

    NPS Returns: Fund G

    As at 19 July 2024 * NPS Trust

    NPS features & benefits

    Partial Withdrawal

    • Subscriber can now withdraw 3 times from NPS corpus after completing 3 years in the system.
    • Subscriber can withdraw 25% of contribution made by them; excluding contribution made by employer & growth generated, adhering to below condition
    • Education of self & children
    • Marriage of children
    • Due to critical illness of self / spouse / children
    • Construction / purchase of residential property

    Exit from NPS

    Vesting criteria

    Benefits

    Upon normal superannuation (60 year)
    • Min 40% of the NPS corpus should be annuitized.
    • Max 60% is paid as lump sum to the subscriber.
    • If the corpus is less than Rs 5 Lacs then full withdrawal is permitted.
    Exit from NPS before the age of normal superannuation (e.g. Voluntary Retirement)
    • Allowed after 5 years of NPS account opening
    • Min 80% of the NPS corpus should be annuitized
    • Max 20% is paid as a lump sum to the subscriber and it is tax free
    • If the corpus is less than Rs 2.5 Lacs then full withdrawal is permitted.
    Upon death
    • NPS corpus (100%) paid to the nominee/ legal heir of the subscriber. The nominee can choose to take the annuity as well

    Continue your NPS account

    • You can be in NPS till 75 years of age and continue to avail tax benefits
    • NPS allows Subscriber an exclusive Tax Benefit upto Rs. 50,000 u/s 80CCD(1B) over and above the limit of Rs. 1.50 Lakh u/s 80C
    • You will continue to enjoy all the facilities and options of normal NPS account like option to switch fund managers and assets class etc. during the continuation period.

    Vesting criteria

    • You can defer your Withdrawal and stay invested in NPS up to 75 years of age.
    • Multiple deferment options available.
    • Defer only Lump sum withdrawal
    • Defer only Annuity
    • You have an option to withdraw deferred lump sum amount in a phased manner over a period of 10 years or withdraw entire amount anytime.

    NPS features & benefits

    National Pension System Charges

    Corporate NPS benefits

    Retail NPS

    • No authorization required by corporate
    • Normal exit at age 60
    • Exit request is authorized by POP
    • Subscriber has freedom to select annuity service provider and option

    Retail NPS

    NPS Exit

    Corporate NPS

    • Corporate has to authorize new subscriber (online) through corporate login
    • Normal exit at age of superannuation
    • POP authorizes exit request after confirmation from corporate
    • Subscriber has freedom to select annuity service provider and option

    Subscriber onboarding – Aadhar / PAN based

    PRAN gets generated on the fly

    Corporate empanelment & onboarding process

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