What is National Pension System?
The NPS scheme allows individuals to make their savings in an organised manner throughout their employment life. Investment in the NPS scheme allows Indian citizens to earn a regular income after their retirement.
Working of the National Pension System
Under the NPS scheme, the Point of Presence (PoP) centre that ICICI Bank has appointed is the Pension Fund Regulatory and Development Authority (PFRDA). Designated branches have also been selected by ICICI Bank, which act as the Point of Presence Service Providers (PoP-SP), that help in carrying out the activities of the NPS scheme.
- The savings of an individual is accumulated in a pension fund.
- PFRDA fund managers regulate the funds that are invested as per a list of pre-approved guidelines that are diversified into shares, corporate debentures, bills, and government bonds.
- Depending on the returns that have been made on the investments, there is a growth in the accumulated contributions.
Subscribers under the scheme can either withdraw a part of the accumulated contribution as a lump sum or invest in life annuity from a PFRDA approved life insurance organisation.
Eligibility to invest under the National Pension System
The eligibility criteria of the scheme are mentioned below:
- The individual must be an Indian citizen.
- Individuals between the ages of 18 years and 60 years can invest in the NPS scheme.
- All Know Your Customer (KYC) norms must be followed by the subscriber. It is mandatory for subscribers to submit all the KYC documents.
Features of the National Pension System
Some of the main features of the NPS are given below:
- Investment options: Various investment options and choices of Pension Fund Managers are available under the NPS scheme offered by ICICI Bank. Subscribers are also allowed to switch the investment option and fund manager in case they are not happy with the performance of the investment.
- Market related: The returns that are generated from the scheme is completely dependent on the market.
Contributions towards the scheme:
- Tier 1 account: The minimum contribution that must be made at the time of opening the account is Rs.500. The minimum contribution that must be made towards a Tier 1 account in a year exclusive of taxes and any charges is Rs.1,000. Subscriber will also have to make a minimum of 1 contribution in a year.
- Tier 2 account: A minimum contribution of Rs.1,000 must be made at the time of opening a Tier 2 account. Subsequent contributions must be a minimum amount of Rs.250.
Type of distribution: Individuals have the option to choose the type of distribution. The two types of distributions available are mentioned below:
- Active Choice
- Auto Choice
If the individual opts for active choice, he/she must choose a certain percentage of the contribution to be provided towards equity, gilt, and corporate. The maximum percentage of the contribution that a subscriber can make towards equity is 75%.
- Transfer of scheme: Unlike most other pension schemes, the NPS scheme can be transferred across all locations and jobs throughout India easily. The process for the transfer is also hassle-free.
- Modes of payment: Contributions towards the scheme can be made in the form of Demand Draft (DD), cheque, or cash at any chosen POP-SP. However, ICICI Bank does not accept any cash payments above Rs.25,000. Outstation cheques are also not accepted by ICICI Bank.
- Opening of an NPS account: The process to open an NPS account is simple and easy. Subscribers who have opened an NPS account will also receive a distinctive Permanent Retirement Account Number (PRAN) that remains the same throughout their employment life.
- Regulation of the scheme: The regulation of the scheme is handled by the PFRDA. Under PFRDA, all investment norms are transparent, and provide regular monitoring and performance reviews of the fund managers.
Types of National Pension System Accounts
Given below are the two types of accounts that are available under the NPS scheme:
- Tier-I account: It is a mandatory account that must be opened under the scheme. Subscribers will not be able to withdraw their contributions made towards this account until maturity.
- Tier-II account: Subscribers have an option to open a Tier-II too. However, they must have an active Tier-I account to open a Tier-II account. Subscribers will also be allowed to make withdrawals rules under this account.
Procedure to invest in the National Pension System under ICICI Bank
The steps for individuals to enrol for the NPS under ICICI Bank are given below:
- First, individuals must log in to their ICICI Internet Banking Account.
- Next, the individual must click on ‘Customer Service’.
- On the next page, individuals must click on ‘Service Requests’.
- Next, individuals must click on ‘Bank Account’.
- The next step would be to click on ‘Enroll for National Pension System’.
- Individuals will receive a Service Request for the account to be processed. The number must be saved for future references.
- Once the Service Request is processed, the NPS account will be activated within one working day.
- Subscribers will receive the PRAN from National Securities Depository Limited (NSDL) via SMS on their registered mobile numbers.
Withdrawal or Exit from the National Pension System
When subscribers attain the age of 60 years or 65 years: Upon attaining the age of 65 years, subscribers can withdraw up to 60% of the amount that has been contributed in a lump sum. The remaining 40% must be used to buy annuity which will provide a monthly pension to the subscribers. However, the lump-sum withdrawal can be deferred by subscribers until they reach the age of 70 years old.
In case subscribers retire before the age of 60 years, they will be allowed to withdraw the amount by initiating a request on the Central Recordkeeping Agency (CRA) system www.cra-nsdl.com. However, the request will have to be verified on the CRA system by the Nodal Office.
Before the subscribers attain the age of 60 or 65 years: In case subscribers want to withdraw the contribution amount before attaining the age of 60 or 65 years, they will only be able to withdraw 20% of the amount in a lump sum and the rest of the 80% must be used to purchase annuity.
In case the subscriber passes away: In case the subscriber passes away during the tenure of the scheme, the nominee or legal heir will receive the entire 100% of the amount that has been contributed in a lump sum. In such cases, no annuity needs to be purchased.
The process for withdrawals is available online, and processing and settlement of the claims are handled by the PFRDA. The PFRDA has set up the NPS Claim Processing Cell to handle the entire claims process.
- What is the process of paying the contributions of the National Pension System for a year online?
The contribution towards the NPS must be made online within 45 days from the day the PRAN has been generated. In case the payment is not made, the NPS account will be frozen. The procedure to make the payment online is mentioned below:
- Initially, you will have to log in to the ICICI Bank website (www.icicibank.com).
- Next, you must click on ‘Payments & Transfer’. The next step would be to click on ‘Manage Biller’.
- On the next page, you must click on ‘Manage Biller’. Next, you must click on ‘Register Biller’.
- Next, you must click on ‘Electricity, Telecom, and other utilities’.
- Next, you must click on ‘Register Now’.
- On the next page, under the Biller name, enter NPS. Next, click on ‘Search’.
- Under the ‘Available Biller Section’, click on ‘Register’.
- On the next page, you must enter the PRAN details and your date of birth as per the records that are mentioned with ICICI Bank.
- Click on ‘Submit’ after previewing the details entered.
- After the above procedure is completed, registration of the biller is successful, and payments can be made in 3 working days.
- In order to make payments, you will need to click on ‘Payments & Transfer’ after logging in to the ICICI Bank website.
- Next, you must click on ‘Bill Payments’.
- The next step would be to click on ‘Registered Billers’.
- Upon completion of the first payment, subscribers are allowed to make further payments at any given time.
Any payments that have been made before 3 working days of the registration will be reversed back to the savings account.
No, it is not possible to open a joint account under the National Pension System.
Subscribers who wish to open a brand new NPS account can refer to the link mentioned below.
Individuals can also visit the nearest ICICI branch and submit the subscription form along with the NPS Contribution Slip (NCIS). Rs.500 as the initial contribution must also be paid by the individual. The NCIS and subscription are available on http://pfrda.org.in/ or at the bank branches.
Given below are the different organisations that are present under the National Pension System:
- Point of Presence (PoP)
- Trust & Trustee Bank (TB)
- Annuity Service Provider (ASP)
- Pension Fund Managers/Pension Fund (PFs)
- Central Record-keeping Agency (CRA)
- Pension Fund Regulatory and Development Authority (PFRDA)
Once the subscribers receive the PRAN, the following documents must be submitted at an NPS enabled ICICI Bank:
- The original as well a copy of the application form.
- All Know Your Customer (KYC) documents such as address proof and PAN Card. A passport-size photograph must also be submitted. The documents must be self-attested.
- An ICICI Bank cancelled cheque must be submitted as well.
However, subscribers must follow the below points when submitting the documents:
- The PRAN and Service Request (SR) number must be mentioned on the top of the application form.
- The ID and address details that are being submitted must be available with the bank.
- The details that are being filled in the application form must be the same as the one that was mentioned in the Service Request.
The documents must be submitted within 2 weeks of receiving the PRAN for the account not to be frozen.
Individuals can find out the list of NPS enabled ICICI Banks by following the below mentioned procedure:
- Initially, individuals must visit the ICIC Bank website (www.icicibank.com).
- Next, individuals must click on ‘Products’.
- The next step would be for individuals to click on ‘All’ which can be found under ‘Account & Deposits’.
- On the next page, individuals must click on ‘Pension Accounts’.
- Individual must click on ‘National Pension System’ next.
- Next, individuals must click on ‘NPS Enabled Branches’ which can be found under ‘More’.
The different Pension Fund Managers that available under NPS are mentioned below:
- UTI Retirement Solutions Limited
- SBI Pension Funds Limited
- Reliance Capital Asset Management Company Limited
- Kotak Mahindra Asset Management Company Limited
- IDFC Asset Management Company Limited
- ICICI Prudential Life Insurance Company Limited
Individuals can visit the PFRDA website (https://www.pfrda.org.in/). On the website, individuals can click on ‘About NPS’ which can be found under ‘NPS’. On the next page, individuals can click on ‘NPS Architecture’ to get details about NPS.
NPS Other Pages
- HDFC National Pension Scheme
- Swavalamban Pension Yojana
- NPS Features and Guidelines
- NPS Withdrawal Forms
- New Pension Scheme
- POP and CRA Charges under NPS
- Axis Bank National Pension System
- Bank of Baroda National Pension System
- Bank of Maharashtra New Pension Scheme
- Central bank of India New Pension Scheme
- South Indian Bank New Pension Scheme
- Canara Bank New Pension System
- Corporation Bank New Pension Scheme
- Federal Bank New Pension Scheme
- IDBI New Pension Scheme