How to Invest in National Pension Scheme Online

The National Pension Scheme allows online investment. It is handled by the Pension Fund Regulatory and Development Authority (PFRDA). Both employees and employers contribute towards this retirement benefit scheme.
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The scheme is particularly designed to encourage systematic savings among employees of both central and state and among common citizens. The scheme was launched on 1st January,2004 with a purpose of reforming pension in India,it is the cheapest market-linked retirement plan available in India.

Benefits of Investing in NPS

By investing in the National Pension Scheme, a subscriber can enjoy the following benefits:

  • It is a voluntary scheme and open for all India citizens falling between the age group of 18 to 60 years.
  • The scheme comes with a lot of flexibilities which allow you to choose your investment options.
  • You can also switch between different investments funds.
  • The NPS account can be operated from anywhere in India.
  • The plan involves transparent investment norms.
  • It helps you plan your retirement and you can be sure of receiving assured returns at retirement.
  • The subscriber can get tax benefits on the contribution made towards this scheme under section 80C of the Indian Income Tax Act.

Who is Eligible to Invest in NPS?

All citizens and state/ central government employees falling between the age brackets of 18 to 60 years are eligible for investing in the National Pension Scheme. The pre-existing pension account holders need apply for fresh registration under this new scheme.

How does NPS Work?

Under the NPS, an individual can invest in different pension funds. The NPS offers three different types of funds wherein you can invest and get good returns at retirement. In case, you don’t mention your preference or choice of fund at the time of registration, your investments will be invested in the default funds handled by the Pension Fund Regulatory and Development Authority (PFRDA). These funds are invested by Pension Fund Regulatory and Development Authority and managed by professional fund managers.

Any NPS subscriber can switch between different pension funds. But, a fund needs to be continued for a minimum duration of 1 year, before the subscriber switches it from one fund to another. Thus, your contribution to the pension scheme would grow over the years based on returns received from investments.

Any employee who wants to get a PRAN (Permanent Retirement Account Number) and subscribe for the National Pension Scheme can submit his/her duly filled application form along with all supporting documents.

Under the National Pension Scheme, a subscriber can open two accounts – Tier-I and Tier-II. Tier-I is the primary account which a subscriber needs to open to be eligible for opening the Tier- II account. The Tie- I account does not allow premature withdrawal unless the subscriber reaches the age of 60. The Tier-II account allows withdrawal as and when the subscriber needs fund.

Documents to be Submitted for Opening NPS Account

Any subscriber needs to submit the following documents to get enrolled into the National Pension Scheme:

  • Proof of address ( Any one of the following documents are accepted - Passport , Ration Card with photograph, Bank Passbook , PAN Card, Aadhar Card and Photo identity Card etc. )
  • Proof of Identity (PAN Card, Aadhar Card and Photo identity Card, Passport, Ration Card with photograph, Job Card issued by NREGA, Electricity Bill, Water Bill and Bank Passbook etc. – any one of the these documents will do.)

How much Minimum and Maximum Contribution do I make?

The following contributions are accepted by the National Pension Scheme:

  • A subscriber needs to make a minimum contribution Rs. 6000 per year. The minimum one time contribution is Rs. 500. These contributions are applicable for Tier-I accounts.
  • Similarly, for Tier-II accounts, a subscriber needs to make a minimum contribution of Rs. 2,000 annually, and Rs. 250 at one time.

Funds can be contributed either via cheque or cash.

There are two options available at the time of making a normal exit from the NPS scheme. Either, the subscriber may use the accrued pension wealth received from scheme to buy a life annuity from a life insurance company enlisted under PFRDA, or withdraw a part of accumulated pension in lump-sum. NPS calculator allows an individual to calculate the amount of pension amount they will get.

Thus, the National Pension Scheme is an attempt towards finding a viable retirement solution by fostering the habit of savings amongst the citizens and providing adequate retirement income to each and every citizen in India.

FAQ’s 

  1. Are there any minimum and maximum age criteria to open a National Pension System (NPS) account? 
  2. Yes, the minimum and maximum age criteria for opening an NPS account are 18 years and 65 years, respectively. 

  3. Are there any maximum contributions that can be made in a year? 
  4. Currently, there are no upper limits on contributions made towards the scheme. 

  5. Is there any minimum number of contributions that must be made in a year? 
  6. Subscribers must make at least 1 contribution in a year. However, there are no limits to the number of contributions that can be made in a year. 

  7. Is it possible for account holders to add nominees to an NPS account? 
  8. Yes, nominees can be added to an NPS account. 

  9. How many nominees can account holders add to their accounts? 
  10. A maximum of three nominees can be added to an NPS account. 

  11. Which is the website that aggregators use to download the registration forms? 
  12. Relevant registration forms can be downloaded from www.npscra.nsdl.co.in.  

  13. What are the types of grievances that can be raised? 
  14. The different types of grievances that can be raised are: 

    • PRAN card has not been received by the subscriber but has been allotted. 
    • The withdrawal amount has not been received. 
    • PRAN has been partially allotted or not allotted. 
  15. What are the different modes by which contributions can be made towards the NPS? 
  16. Contributions towards NPS can be made in the form of cheque or cash. However, in case of cheque payments, only after the cheque realises, the credit to the account is made. 

  17. Which governing body regulates the NPS? 
  18. NPS was launched by the Indian government and is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). 

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