National Pension Scheme (NPS)
All citizens age from 18 years to 60 years of age, including NRIs. However, persons having an existing NPS account and government employees who are already covered under NPS cannot again open an additional account under NPS.
Opening an account with NPS provides a Permanent Retirement Account Number (PRAN), which is a unique number and it remains with the subscriber throughout his lifetime.
PRAN will provide access to two personal accounts:
· Tier I Account: This is a non-withdrawable account meant for savings for retirement.
· Tier II Account: This is simply a voluntary savings facility. The subscriber is free to withdraw savings from this account whenever subscriber wishes. No tax benefit is available on this account.
For All citizens model
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Tier I
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Tier II
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Minimum Contribution at the time of account opening
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Rs. 500
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Rs. 1000
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Minimum amount per contribution
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Rs. 500
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Rs. 250
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Minimum total contribution in the year
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Rs. 6000
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Rs. 2000
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Minimum frequency of contributions
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1 per year
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1 per year
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Flexibility to choose between Active and Auto Choice for distribution:
A subscriber must choose between active choice and auto choice for distribution of his contribution. If active choice is selected, the subscriber must indicate the percentage distribution between corporate, gilt and equity. The maximum investment allowed in equity is 50%.
Individuals can switch over from one investment option to another or from one fund manager to another, subject, of course, to certain regulatory restrictions. The returns are totally market related.
NPS offers a range of investment options and choice of Pension Fund Manager (PFMs)
Flexibility to choose between 8 Fund Managers:
1. ICICI Prudential Pension Fund Management Co. Ltd.
2. HDFC Pension Management Co. Ltd.
3. Kotak Mahindra Pension Fund Ltd.
4. LIC Pension Fund Ltd.
5. Reliance Capital Pension Fund Ltd.
6. SBI Pension Funds Pvt. Ltd
7. UTI Retirement Solutions Ltd
8. Pension Fund (PF) to be incorporated by Birla Sunlife Insurance Co. Ltd
One Fund Manager must compulsorily be selected.
Illustration
Your Present Age : 30 Years
Your Expected Retirement Age : 60 Years
Investment Amount : Rs.2,000 per month
(To avail maximum tax benefit, contribute 10% of your Basic income + DA towards NPS )
Assumed Rate of Return : 8%
On reaching your retirement at : 60 years
The Principal amount you have paid is : Rs.7,20,000
Interest earned on your Investment is (on monthly compounded basis) is: Rs.22,48,609
Total Tax saved is : Rs.2,16,000
Total Pension Accumulated is : Rs.29,68,609
Monthly Pension Receivable (at annuity rate of 7%): 13,853 Per Month
Open your Individual Pension Account in just few clicks through eNPS.
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