National pension system
● The national pension system was introduced on 1st January 2004 except for the
armed forces.
● All citizens of India: May 01, 2009.
● Regulated by: PFRDA
Objectives of NPS:
● Provide old-age income.
● Extending old security coverage to all citizens.
Central record keeping agency (CRA)
● The Pension Fund Regulatory and Development Authority (PFRDA) is the regulatory
body for NPS.
● Appointed: protean eGov Technologies Limited as a Central record keeping agency.
● Create:PRAN(permanent retirement account number)
● Term of Chairperson of PFRDA:5years up to 65 years.
● Administrative Powers delegated to the Chairperson of PFRDA.
● Total members are not more than 25.
● allot a unique 16-digit Permanent Pension Account Number (PPAN) to the
employees:PAO
Functions of CRA
● Record keeping
● administrative
● Customer service for all subscribers under NPS.
Function PFRDA and NPST:
● NPST is regulated by the pension fund regulatory and development authority.
● In the National pension system, the trust established by PFRDA is the registered
owner of all assets under NPS.
Join NPS:
● Both resident and nonresident citizens in India.
● The age group 18 to 70 years
Open multiple accounts:
● are not allowed in NPS. But joint in atal pension Yojana.
● Open an individual account, not any other family member.
● First-time option selected: April 1, 2019.
● If you do not choose: select by default pension scheme. The by default pension
scheme is of the three pension fund managers. viz.
1. LIC Pension Fund Limited
2. SBI pension fund pvt.
3. UTI retirement solution limited.
Default scheme:
1. LIC
2. UTI
3. SBI
scheme G:100% of the contribution shall be invested in Government bonds and related
instruments.
Scheme LC 50: equity investment is 50% of the total asset.
Scheme LC 25: equity investments are 25% of total assist.
The government shares 3 types
1. Government Bond(G)
2. Corporate debt(C)
3. Equity (E)
Contributions of employee
● 10% of salary (basic+DA+NPA)
Contribution of government
● 40% of salary (basic+DA+NPA)
Partial withdrawal under NPS:
● 3 years after joining
● The withdrawal amount will be not existing 25% contribution.
● Maximum of three times.
● Withdrawal allows only specific reasons.
1. High education of children
2. Marriage of children
3. To propose residential house
4. For medical emergency
5. Etc
Process of partial withdrawal:
● Website: [Link] to log in with PRAN as a user ID and password.
● Form: partial withdrawal form 1.
● Time: amount credit within 4 working days.
● For updating details or wrong bank details: from S2.
Subscriber exit from NPS:
● Upon normal superannuation.
● The interest of 40%
● If Equity shares are less than 5 lakh as of the date of retirement we withdraw all
money.
Upon death:
● At least 80 of the accumulated pension wealth.
● Less than 5 lakh.
Premature exist:
● 80% of accumulated pension wealth.
● Less than 2.5 lakh withdrawal All amount.
Subscriber at the time of superannuation:
● Invest up to 70 years. NPS accounts continue for up to 70 years.
Deferment of withdrawal:
● Maximum withdrawal is 60%.
● Up to 70 years of age continue.
Start your pension:
● Not wishing to continue or differ in PS account the pension will be started.
Withdraw in phases manner:
● Can be phased manner
● Maximum 10 instalments.
● Between 60 to 70 years.
Deferment of annuity:
● Deferment maximum period of 3 years.
● This subscription is submitted 15 days before superannuation.
● Must be informed of Nodal officers.
Tax benefits:
● Under section 80-C 1.50 lacs tax free.
● Partial withdrawal- tax-free
● Lam Sam withdrawal-60% tax-free and the other 40% will be used to buy anyway for
payment of monthly pension.
● There is no tax benefit on investment towards a tier ii NPS account.
Important point:
● If we start the deferment option we cannot use the continuous option and vice versa.
● Closure of NPS before retirement: 20% of the Corpus can be withdrawn tax-free and
80% will have to be utilized for purchase of the annuity.
● NPS subscribers are allowed to change the investment pattern twice in a financial
year.