National Pension Scheme (NPS) : All Citizen Model (Series-1)

National Pension Scheme (NPS)
was introduced by the Government of India in 2004. The scheme is aimed at the providing
financial security to individuals post retirement. The Scheme has been opened
for all the citizens since 2009. The scheme is designed to maintain a balance
between return and risk, so that Individuals are protected from adverse market
scenarios and also are able maximize their investment.
I have posted about the
National Pension Scheme (NPS) in a nutshell previously. You may visit the link
below to find out more:
In this post, I will discuss
about the National Pension Scheme (All Citizen Model) in detail. I will refrain
from discussing the Maturity Benefits, Withdrawal Tax Benefits, Types of
Annuities and few other aspects in this post. The same will be taken up in the
next series.
National Pension Scheme is open to all the
citizens of India, irrespective of whether they are resident or non-resident
and are aged between 18- 60 years at the time of subscription.
The scheme is administered on
behalf of Government of India by Pension Fund Regulatory and Development
Authority (PFRDA).
Any citizen of India, whether resident or
non-resident aged between 18- 60 years at the time of subscription, may join
the scheme either as an Individual or Corporate Group (Employee-Employer
relation), subject to  submission of all
required information/forms and complying with Know Your Customer (KYC)
attaining 60 years of age, you will not be permitted to make further
contributions to the NPS accounts.
to the Scheme
Subscription to NPS may be made
through designated branches of almost all the leading banks (both private and
public sector) along apart from authorized financial institutions are enrolled
to act as Points of Presence (POP’s). Individuals are required to open a NPS
account through the Point of Presence (POP) and who will assist Subscribers
with all the details, forms required to open the account.
The designated branches of Points
of Presence (POPs) are the first point of contact for Subscribers. The
authorized branches of a POP, called Point of Presence Service Providers
(POP-SPs), will not only act as collection points but will also be responsible
for number of other customer services including withdrawal from NPS.
POP-SPs location can be accessed
from the link mentioned below:-
Online Subscription (eNPS) is
also available for Subscribers who wish to open their account online. Please
visit the link provided below for more updates.
The following documents need to be submitted
to the POP-SP at the time of Subscription to the Scheme:-
Registration Form (duly filled)
Cancelled Cheque of respective Bank
Subscription Amount (Rs 500/- minimum)
For e-NPS (Online), Subscribers have to submit
the KYC documents to the respective bank branches.
Subscriber on submission of mandatory
documents along with the initial subscription amount, will receive a 17 digit
acknowledgement number from the respective POP-SP. This acknowledgement number
is generated by Central Recordkeeping Agency (CRA). Subscriber may check the
status of the application by using the acknowledgement number.
On generation of PRAN number (12 digit),
notification will be sent on the registered mobile number and email id of the
Under NPS, Subscriber have the
option to invest in two types of Accounts, namely Tier-1 (Mandatory) and Tier-2
is mandatory for the Subscribers to open the Tier-1 account. The contribution
to this account is non withdrawable and restriction are imposed on withdrawal.
The contribution is eligible for Tax Deduction.
Tier-II: It is
a voluntary investment account which does not have any withdrawal restrictions
and contribution in this account is not eligible for Tax Deduction. It is an
additional investment window for subscribers.
Minimum Contributions (For Tier-I)
Minimum Contribution on account opening and for all subsequent
transactions: Rs 500/-.
Minimum Contribution per Year: Rs 6,000/-.
Minimum Number of Contribution in a Year: 01

No restriction on Maximum Contribution.

Minimum Contributions (For Tier-II)
Minimum Contribution on account opening and for all subsequent
transactions: Rs 1000/- ( Account opening) and Rs 250/- (subsequently).
Minimum Contribution in a Year: Rs 2,000/- (Balance of Rs 2,000/-
Minimum Number of Contribution in a Year: 01

 No restriction on Maximum Contribution.

Investment may be made
in the following classes based on the preference of the subscriber.
Investment into Equities. (Maximum up to 50% of
contribution can be invested)
Investment into Government Securities. (Quantum of
Investment Depending on Choice of Investor)
Investment in Fixed Return Securities. (Quantum of
Investment Depending on Choice of Investor)
Subscriber has the option to design their portfolio
depending on Individuals appetite for risk and return, by allocating funds to
the respective class of assets for Investment.
Auto Choice (Life
Cycle Fund):
In case subscribers are do not exercise any choice of allocation,
their funds will be invested in accordance with the Auto Choice option.
 In this option, the investments will be made in different asset class
based on Subscriber’s age. Here, the allocation of funds in the three asset
classes will be determined by a pre-defined portfolio in accordance with age.
Subscriber has the option to select any one from
the following Pension Fund Managers to manage their Investment:-
ICICI Prudential
Pension Fund
Kotak Mahindra Pension
UTI Retirement
Solutions Pension Fund
DSP Blackrock Pension
Pension Fund is default Pension Fund Manager.
Subscriber has the option to change his/her
preference for allocation and Fund Manager in the future.
Subscriber also have the option to chose
different Fund Manager for Tier1 and Tier 2 account respectively.

of Investing in NPS

  • It is one of the low cost
    Retirement benefit plan.
  • Investment is professionally
    managed by Fund Managers.
  • Diversification of Funds aims
    at mitigating risk and at the same time providing optimal return on Investment.
  • Restriction on Withdrawal (Tier
    -1) ensures that Retirement corpus does not lose out on its objective.
  • The account is portable and may
    be accessed from any location in India.

Nomination can be made at the
time of registration and one may add up to 3 nominees. In case of more than 1
nominee, Subscriber will have to declare the percentage of fund allocated to
the respective nominees. Nominees may also be changed latter, after the PRAN
has been generated.
The Investment in
National Pension Scheme is eligible for Tax Deduction U/S 80 CCD (1B) for Rs
50,000 up and over the Deduction available U/S 80C of Rs 1,50,000/- from the
Financial Year 2015-16.
Unfreeze/Reactivate Account: If the minimum contribution and balance criteria is not
maintained the account is liable to be deactivated/frozen. In order to
reactivate/unfreeze, Subscriber needs to submit a request form (UOSS10A) along
with minimum of Rs 600. Out of which Rs 100 will be charged as penalty to unfreeze/reactivate
and rest will be allocated to your portfolio.
Subscribers are not allowed to
withdraw from the Tier-1 scheme before attaining the age of 60 years. However,
if a Subscriber opts to retire before the completing 60 years of age or does
not want to continue with the scheme then, Subscriber has to utilize atleast
80% of the accumulated retirement wealth for purchasing a retirement annuity
(providing monthly pension to the subscriber) while the rest of the fund will
be paid as lumpsum to the subscriber.
Subscribers withdrawing post
the age of 60 years,
will have
to invest atleast 40% of the savings to purchase a pension annuity while the
rest could be withdrawn as lumpsum.
attaining 60 years of age, Subscriber will no longer be allowed to contribute
in the scheme. However, Subscriber is allowed to remain invested till the age
of 70, post which the entire accumulated investment will be transferred to the
respective bank account as full and final settlement.
In the unfortunate event of
death of the subscriber, the entire accumulated pension wealth (100%) would be
paid to the nominee / legal heir of the subscriber and there would not be any
purchase of annuity/monthly pension.
for Partial Withdrawal of Funds:
Partial withdrawal from NPS
account is allowed subject to fulfillment of following conditions:-
One should have remain actively
invested in NPS for 10 years.
Amount of withdrawal should not
exceed 25% of your total investments.
Withdrawal can only be allowed against
specified reasons.
Withdrawal will be allowed only
3 times during the entire tenure of subscription with a gap of 5 years between
two partial withdrawals.
Annuity may be purchased from
any one of the following companies licensed by IRDAI (Insurance Regulatory
Authority of India) and empanelled by PFRDA to act as Annuity Service Provider.
1. Life Insurance Corporation of
2. SBI Life Insurance Co. Ltd.
3. ICICI Prudential Life
Insurance Co. Ltd.
4. Bajaj Allianz Life Insurance
Co. Ltd.
5. Star Union Dai-ichi Life
Insurance Co. Ltd.
6. Reliance Life Insurance Co.
7. HDFC Standard Life Insurance Co. Ltd
List will be
upgraded as more and more Companies get empanelled.

Required for Withdrawal: 
Form duly filled along with following documents;

Grievance may be raised
through a telephone call to CRA toll free helpline number (1800222080) or
through the CRA portal ( 


Leave a Reply