New Pension Scheme

The New Pension Scheme is a voluntary pension scheme launched by the Government of India to enable people of the unorganised sectors to enjoy the benefits of pension. It is administered by the Pension Fund Regulatory and Development Authority.
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The New Pension Scheme was initiated by the government in 2009, giving people a route to avail a pension after they are retired or as a senior citizen. Government employees already enjoy pension, and this new scheme was introduced to enable the people from unorganised sectors to enjoy the benefits of pension.

Eligibility Criteria for New Pension Scheme

The New Pension Scheme has very simply eligibility criteria and contribution requirements:

  • The applicant for the scheme should be an Indian citizen
  • The applicant should be a minimum of 18 years of age
  • The applicant should be a maximum of 60 years of age
  • The minimum contribution to be paid is Rs. 500
  • The contribution has to be made at least once per year
  • The minimum annual contribution should be Rs. 6,000
  • The maximum contribution to the scheme should not exceed Rs. 12,000 per annum

Benefits of the New Pension Scheme

The following are the major benefits of the New Pension Scheme initiated by the Government of India on May 1, 2009.

  1. Tax Benefits: There is no direct tax exemption mentioned except that during the time of withdrawal the amount is free from tax as per the Tax Act, 1961.
  2. Options of Investment: There are two options for investments under this scheme. Tier 1 requires the mandation of no withdrawal before the individual reaches the age of withdrawal, while Tier 2 allows the facility of withdrawal before the maturity age which is 60 years.
  3. Low Investment Charges: NPS has a low investment charge, which is 0.0001% of the total amount of investment and hence is a relief in the savings effort for senior citizens.
  4. Minimum Requirements: The investor can deposit a minimum of Rs. 500 and the minimum amount to be deposited per year is only Rs. 6,000, making it extremely convenient for common Indian citizens.
  5. Government Initiative: Since this is an initiative of the Indian Government, the guarantee of receiving a withdrawal amount is less risky due to its nature.

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Display of any trademarks, tradenames, logos and other subject matters of intellectual property belong to their respective intellectual property owners. Display of such IP along with the related product information does not imply BankBazaar's partnership with the owner of the Intellectual Property or issuer/manufacturer of such products.

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