National Pension Scheme

The government of India launched the National Pension System (NPS) in January 2004 with an objective to promote pension schemes among public, private, and unorganized sector employees. However, the scheme was made effective for all citizens including armed forces only from May 2009. The scheme encourages employees to invest in a pension plan at regular intervals during their employment period.

The regulatory body of NPS – Pension Fund Regulatory and Development Authority (PFRDA), has appointed National Securities Depository Limited (NSDL) for keeping and maintaining records for NPS. NSDL is a Central Recordkeeping Agency (CRA), which carries the functions of record keeping, administration and customer service for the NPS subscribers.

Under the scheme, CRA issues a Permanent Retirement Account Number to subscribers and maintains database for each subscriber. It also keeps records PRAN-related transactions.

Who should invest in NPS scheme?

If you wish to secure your future financially post-retirement, then National Pension Scheme is a good option to look for. Any individual employed in public, private, or unorganized sector can avail the benefits of the scheme. In fact, tax payers can also avail tax deductions under Section 80 C of the Income Tax Act. This way the subscribers can enjoy double saving benefits in both long run and short run. .

Features and benefits of National Pension Scheme:

Premature withdrawals and exit rules:

According the National Pension Scheme terms and conditions, the subscriber has to continue investing in the scheme until the age of 60. However, if the subscriber has been regular for at least last 3 years, then he/she can withdraw only up to 25% for listed reasons such as medical emergency, child’s wedding, etc.

As per the withdrawal norms, the subscriber can withdraw for maximum of 3 times during the entire tenure. Although, each withdrawal can be made only in a gap of 5 years. However, the restrictions are effective only on tier I accounts.

How to open NPS account?

National Pension Scheme account can be opened in both offline and online mode.
Offline mode – If you opt for an offline mode, then first search for the nearest PoP (Point of Presence) and get the subscriber form from there. Fill the form with the required details in respective fields and submit it along with the self-attested KYC documents. As soon as you make the initial investment (minimum of Rs.250 monthly or Rs.1000 annually), the PoP will assign a unique Permanent Retirement Account Number. With unique account number, you can easily track your investment and corpus funds.

Online mode – Comparatively, online mode is easier and convenient than the offline mode. It just takes less than 30 minutes to complete the process and open an NPS account. All you need to do is visit National Pension Scheme’s official website, enter the details, validate the registration using mobile OTP, and submit. A PRAN will be generated, which can be used for further NPS login.

Fees and charges:

Documents required:

Final Words:

Hence, if you searching for a long-term investment plan with elaborated benefits, then National Pension Scheme is a sure thing to look for. This is especially beneficial if you have low equity exposure as the scheme comes with diversified investment options. So, get ready to enjoy your life without any financial crunches even after retirement.