New Pension Scheme: NPS (New Pension Scheme NPS) is a voluntary scheme under the pension system of PFRDA (Pension Fund Regulatory and Development Authority), which is available to all citizens in the age group of 18-60 years.
New Delhi:National Pension Scheme or New Pension system NPS details : How to ensure regular income in old age so that life after job can be spent comfortably, this is the concern of everyone, from people working in private jobs to businessmen. The responsibility of old people in the society lies with the society as well as the government. The government has made several efforts to address this concern. For this purpose, a new pension system or National Pension Scheme (NPS) was started by the Government of India for all citizens. It is operated by the Pension Fund Regulatory and Development Authority (PFRDA) as the regulator of pension funds. Once the subscriber(s) i.e. the person availing the benefits of the scheme completes 60 years of age, it secures income in the form of pension in old age.
Let us tell you that NPS (New Pension Scheme NPS) is a voluntary scheme under the pension system of PFRDA (Pension Fund Regulatory and Development Authority), which is available to all citizens in the age group of 18-60 years. This scheme was implemented by the UPA government from 01.05.2009. The objective of the NPS (National Pension System) scheme is to provide old age pension with market driven returns in the long term.
What is NPS scheme?
NPS scheme is implemented through the designated branches of the bank i.e. Point of Presence-Service Provider (POP). These locations accept applications and register the subscriber with the Central Record Keeping Agency (CRA) to generate a Permanent Retirement Account Number (PRAN). Also, PRAN (PRAN Permanent Retirement Account Number) is mentioned for all future transactions.
There are two types of NPS accounts
There are two types of accounts in NPS – Tier I and Tier II. Tier-I account is an account in which customers contribute their savings for retirement into a non-withdrawable account till the age of 60 years and can receive pension for the rest of their life.
In case of Tier-I
- Minimum contribution at the time of opening account – Rs.500/-
- Minimum amount per contribution – Rs. 500/-
- Minimum account balance at the end of the financial year – Rs. 6000/-
- Minimum number of contributions in a year – 1
Here the customer can exit the scheme after attaining the age of 60 years. He will have to compulsorily make an annuity plan of 40% of the accumulated pension money. Here the option to annuitize 100% of the corpus is also available.
Whereas, Tier-II account is a voluntary savings account. In this, the customer is free to withdraw his savings whenever he wants. Tier-II account is available to existing PRA Permanent Retirement Account holders. Here, the facility of saving through investment is available in addition to Tier I and above. Please note that to open a Tier II account, you must already have an active Tier I account.
No additional CRA (Central RecordKeeping Agency) charges (Charge Per Transaction) will be levied for account opening and annual maintenance in respect of Tier II. At the same time, CRA will charge separately for each transaction in Tier II, which will be in line with the transaction charge structure prescribed in Tier I. Let us tell you that there is no limit on the number of withdrawals in Tier II. Apart from this, Tier I and Tier II have separate nomination and plan preferences. There is also a facility for one-way transfer of savings from Tier II to Tier I. It is noteworthy that bank details have been made mandatory for opening Tier II account. No separate KYC will be required for opening Tier II account; Only pre-existing Tier I account is required.
In case of Tier II,
- Minimum contribution at the time of opening account – Rs.1000/-
- Minimum amount per contribution – Rs. 250/-
- Minimum account balance at the end of the financial year – Rs. 2000/-
- Minimum number of contributions in a year – 1
In case of composite application for both Tier I and Tier II, the minimum contribution at the time of account opening is Rs. Should be Rs 1500/-.
How to get the benefits of the scheme
After the process is completed, the person availing the benefits of the scheme is informed about the Permanent Retirement Account Number (PRAN) by the CRA. Thereafter once the PRAN is provided by the CRA, the customer can start submitting his subscription through his chosen POP-SP. CRA maintains records of all subscriptions in the scheme.
A subscriber is allowed to invest in any one of the three options available as per his choice.
- First – High Risk High Return (Asset Class E): Invests primarily in equity market instruments.
- Second – Moderate Risk Moderate Returns (Asset Class C): Investments in debt securities other than government securities.
- Third – Low Risk Low Return (Asset Class G): Investing in government securities.
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