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  • National Pension Scheme for NRIs

    Know about National Pension Scheme for NRIs

    The National Pension Scheme is a retirement savings scheme launched by the Indian Government in 2004. Under the NPS system, subscribers are allotted a Permanent Retirement Account Number (PRAN) which is unique to every subscriber.

    It’s a cost-effective, tax-efficient scheme that enables the subscriber to operate a flexible and portable retirement savings account that operates on the basis of Defined Contribution. Ultimately, the benefits that the subscribers receive depends on the volume of contributions, returns on these contributions, and the total period for which contributions were made.

    Non-resident Indians can also open these accounts and make full use of the benefits they carry.

    Eligibility criteria for NRIs who wish to open NPS account

    NRIs who wish to open NPS accounts must first check whether they meet the following eligibility criteria:

    • Age: Between 18 and 60 years old.
    • Must comply with KYC norms.
    • PIOs and OCIs are not eligible.

    NPS Contributions

    • The contributions towards NPS must come from either an NRE account or NRO account.
    • Minimum contribution on opening the account: Rs.500.
    • Minimum amount per contribution: Rs.500.
    • Minimum contribution per annum: Rs.6,000.

    Features and benefits of NPS account for NRI

    • Investment portfolio is highly diversified and affords the investor the flexibility to choose in what ratio funds should be allocated across investment options.
    • Investments can be made in a variety of asset classes like Equity, Corporate Bonds, and Government Securities.
    • Up to 85% of the funds can be diverted to Equity, or Corporate Bonds, or Government Securities – depending on the risk appetite of the investor.
    • There are two investment options:
      • Active Choice: Where the NRI investor decides the asset classes and ratios of investment.
      • Auto Choice: Where the investment will be done on behalf of the NRI investor, based on his or her age.
    • Every subscriber is given a Permanent Retirement Account Number (PRAN) Card with a unique 12-digit number.
    • There are two available sub-accounts under the NPS account scheme:
      • Tier – I accounts: Withdrawals are allowed for up to 25% of the borrowers own contribution. This is subject to the Withdrawal and Exit Regulations.
      • Tier – II accounts: This account is allowed as an add-on to Tier – I accounts, as a savings facility. Withdrawals are permitted as and when the investor wishes from Tier – II accounts.
    • NPS accounts can be operated from any location in the country.

    Rules for Exit and Withdrawal

    1. For exit from the scheme before the age of 60:
      • Compulsory annuitisation: Minimum of 80%.
      • Lump Sum withdrawal: Maximum of 20%.
      • If the total corpus is less than Rs.1,00,000 complete withdrawal.
    2. For exit upon attaining the age of 60:
      • Compulsory annuitisation: Minimum of 40%.
      • Lump Sum withdrawal: Maximum of 60%.
      • If corpus is less than Rs.2,00,000 complete withdrawal.
      • Investors can stay invested in the scheme up to the age of 70 years.
      • Purchase of annuity can be deferred for a maximum period of 3 years at the time of exiting the scheme.
    3. Exit upon death of the subscriber:
      • Nominee will be instantly eligible to receive 100% of the funds in the NPS account.

    How to register and apply for NPS

    In order to apply for NPS, the NRI applicant must:

    • Acquire an NRI NPS Application Form from PFRDA, NPS Trust Website, or at a participating bank.
    • Duly fill up the form with mandatory information and necessary attachments.
    • Submit the form to the NRI Bank Branch in India.
    • Once the NRE / NRO account particulars have been verified, the bank will forward the application to the Central Recordkeeping Agency (CRA) directly.
    • Deposit the initial deposit cheque.
    • The application will be digitized.
    • PRAN will be generated by the CRA.
    • An email or SMS will be sent to the NRI applicant intimating him or her about the PRAN number.
    • All subsequent transactions can be made online.

    Applicable Charges

    Intermediary

    Charge Heading

    Service Charge

    Method of Deduction

    POP

    Initial Subscriber Registration

    Rs.125

    Collected up front

    Initial Contribution

    0.25%

    Minimum: Rs.20.

    Maximum: Rs.25,000

    All Subsequent Contributions

    All non-financial transactions

    Rs.20

    CRA

    PRA Opening (One time charge)

    Rs.50

    Through NAV cancellation

    PRA Maintenance (per annum)

    Rs.190

    Per Transaction (Financial / Non-financial)

    Rs.4

    Custodian

    Asset Serving (Per Annum)

    0.0075%

    PFM

    Investment Management (Per Annum)

    0.01%

    Through NAV cancellation

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