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Investment Options
NPS is available to all citizens of India with effect from 1st May 2009 (Other than Government employees already covered under NPS). Under NPS two types of accounts are available and the subscribers have the option to actively decide how their contribution is to be managed in the following four options.

  • Asset Class E
  • Asset Class C
  • Asset Class G
  • Asset Class A

Who can join?
  • The subscriber should be a citizen of India whether resident or non-resident and age between 18-65 years on the date of submission of his/her application to Point of Presence (POP)/Point of Presence - Service Provider (POP-SP). 
  • The subscriber should comply with the Know Your Customer (KYC) norms as detailed in the Subscribers Registration Form. All the documents required for KYC compliance need to be mandatorily submitted.

Who cannot join?
The following applicants cannot join:
  • Undischarged insolvent: Individuals who are not granted an ‘order of discharge’ by a court.
  • Individuals of unsound mind: An individual is said to be of unsound mind for the purposes of making a contract if, at the time when he makes it, he is incapable of understanding it and of forming a rational judgment regarding its effect upon his/ her self-interest.
  • Pre-existing account holders under NPS.

NPS Accounts
Under NPS following two types of accounts will be available:

Tier - I :
Subscriber shall contribute their savings for retirement into this non-withdrawable account. Tier-I account available from 1st May, 2009.

Contribution
Subscribers are required to make their NPS contribution to Tier - I, subject to following conditions:
Minimum amount at the time of account opening & for all subsequent transaction - Rs 500
Minimum total amount of contribution per year - Rs 1000. excluding charges & taxes
Minimum number of contributions made each year - 1
If the subscriber contributes less than Rs. 1,000/- in a year his/her account would be frozen & facility provided by CRA such as online view of account etc. will be restricted.

Tier - II :
This is a voluntary savings facility. Subscriber will be free to withdraw their savings from this account whenever he/she wishes. The facility of Tier-II account is being offered from 1st December, 2009. This account would enable the existing PRAN holders to build savings through investments over & above those in the Tier - I account. An active Tier-I account will be a pre-requisite for opening of a Tier-II account.

Key Features of Tier-II account :
1. No. additional CRA charges will be levied for account opening & annual maintenance in respect of Tier-II.
2. There will be no limits on the number of withdrawals.
3. There will be facility for separate nomination and scheme preference in Tier-II.
4. The subscriber would have the same choice of PFMs and schemes as in the case of Tier-I account in the unorganized sector.
5. Contributions can be made through any POP/POP-SP.
6. There will be facility of one-way transfer savings from Tier-II to Tier-I.
7. Bank details will be mandatory for opening a Tier-II account.
8. No separate KYC for Tier-II account opening will be required; the only requirement is a pre-existing Tier-I account.

Contribution
Minimum contribution at the time of account opening - Rs. 1,000
Minimum amount per contribution - Rs 250
Minimum number of contributions made each year - 1


Investment Features

NPS offers subscriber two approaches to invest their contribution

Active Choice:(Individual Funds)
The subscriber will have the option to actively allocate his contribution among the four asset classes:

1.Asset Class E: The Investment in this class would be subject to cap 50%. It would be invested in shares of the companies which are listed on Bombay Stock Exchange or National Stock Exchange and on which derivatives are available or are a part of BSE Sensex or Nifty 50 Index.
2. Asset Class G : Investment would be in Central Government Bonds and State Government Bonds.
3.Asset Class C : Investment would be in Credit Risk bearing fixed income securities other than Central and State Government Bonds.
4.Asset Class A : Investment in Alternative Investment Schemes including instrument like CMBS, MBS, REITS, AIFs, InvIts, Basel-III Tier-I bonds of schedule commercial Banks etc. subject to cap of 5%

Auto Choice : (Lifecycle Fund)
In case the subscriber does not exercise any choice as regards asset allocation, the contribution will be invested in accordance with the ‘Auto choice’ option. In this option the investment will be determined by a predefined portfolio (which would change as per age of subscriber), with the investment in E decreasing and in C & G increasing with the age of the subscriber.

Three Life Cycle funds are available under this Auto Choice:
(i) LC75 – Aggressive Life Cycle Fund: In this Life Cycle Fund, the exposure in Equity Investments starts with 75% till age 35 and gradually reduces as per the age of the subscriber.
(ii) LC50 - Moderate Life Cycle Fund: In this Life Cycle Fund, the exposure in Equity Investments starts with 50% till age 35 and gradually reduces as per the age of the subscriber.
(iii) LC25 - Conservative life cycle fund: In this Life Cycle Fund, the exposure in Equity Investments starts with 25% till age 35 and gradually reduces as per the age of the subscriber.

The default auto choice if the subscriber is not choosing any of the above option is Moderate life Cycle Fund.

LC50- Moderate Life Cycle Fund: This Life cycle fund provides a cap of 50% of the total assets for Equity investment.
 
   Age Asset Class E Asset Class C Asset Class G
up to 35 years 50% 30% 20%
36 years 48% 29% 23%
37 years 46% 28% 26%
38 years 44% 27% 29%
39 years 42% 26% 32%
40 years 40% 25% 35%
41 years 38% 24% 38%
42 years 36% 23% 41%
43 years 34% 22% 44%
44 years 32% 21% 47%
45 years 30% 20% 50%
46years 28% 19% 53%
47 years 26% 18% 56%
48 years 24% 17% 59%
49 years 22% 16% 62%
50 years 20% 15% 65%
51 years 18% 14% 68%
52 years 16% 13% 71%
53 years 14% 12% 74%
54 years 12% 11% 77%
55 years 10% 10% 80%

LC75 - Aggressive Life Cycle Fund: This Life cycle fund provides a cap of 75% of the total assets for Equity investment.
 
   Age Asset Class E Asset Class C Asset Class G
up to 35 years 75% 10% 15%
36 years 71% 11% 18%
37 years 67% 12% 21%
38 years 63% 13% 24%
39 years 59% 14% 27%
40 years 55% 15% 30%
41 years 51% 16% 33%
42 years 47% 17% 36%
43 years 43% 18% 39%
44 years 39% 19% 42%
45 years 35% 20% 45%
46years 32% 20% 48%
47 years 29% 20% 51%
48 years 26% 20% 54%
49 years 23% 20% 57%
50 years 20% 20% 60%
51 years 19% 18% 63%
52 years 18% 16% 66%
53 years 17% 14% 69%
54 years 16% 12% 72%
55 years & above 15% 10% 75%

LC25 -Conservative Life Cycle Fund: This Life cycle fund provides a cap of 25% of the total assets for Equity investment.

   Age Asset Class E Asset Class C Asset Class G
up to 35 years 25% 45% 30%
36 years 24% 43% 33%
37 years 23% 41% 36%
38 years 22% 39% 39%
39 years 21% 37% 42%
40 years 20% 35% 45%
41 years 19% 33% 48%
42 years 18% 31% 51%
43 years 17% 29% 54%
44 years 16% 27% 57%
45 years 15% 25% 60%
46years 14% 23% 63%
47 years 13% 21% 66%
48 years 12% 19% 69%
49 years 11% 17% 72%
50 years 10% 15% 75%
51 years 9% 13% 78%
52 years 8% 11% 81%
53 years 7% 9% 84%
54 years 6% 7% 87%
55 years & above 5% 5% 90%

Withdrawal /Exit Options
A. Upon attainment of the age of 60 years :
At least 40% of the accumulated pension wealth of the subscriber needs to be utilized for purchase of annuity providing for monthly pension to the subscriber and balance is paid as lump sum payment to the subscriber. In case the total accumulated corpus is less than Rs. 2 Lacs, the subscriber may opt for 100% lumpsum withdrawal.
However, the subscriber has the option to defer the lump sum withdrawal till the age of 70 years. Subscriber has also got the option to continue contributing upto the age of 70 years. This option is required to be exercised upto 15 days prior to completion of 60 years.
B. At any time before attaining the age of 60 years:
The subscriber may exit from NPS before attaining the age of 60 years, only if he has completed 10years in NPS. At least 80% of the accumulated pension wealth of the subscriber needs to be utilized for purchase of annuity providing for monthly pension to the subscriber and the balance is paid as a lump sum payment to the subscriber.
In case the total accumulated corpus is less than Rs. 1 Lac, the subscriber may opt for 100% lumpsum withdrawal
C. Death of the subscriber:
In such an unfortunate event, option will be available to the nominee to receive 100% of the NPS pension wealth in lump sum. However, if the nominee wishes to continue with the NPS, he/she shall have to subscribe to NPS individually after following due KYC procedure
Under National Pension System, PFRDA has entrusted the responsibility of receiving, processing and settlement of all withdrawal claims made to Central Recordkeeping Agency (CRA) and CRA has created a special NPS claim processing cell (NPSCPC) for this purpose for handling all types of withdrawal claims. The CRA will monitor the performance of NPSCPC on the withdrawal processing as per the instructions provided by PFRDA in this regard. At present the NPSCPC is fully functional.

Tax Benefits
Tax benefit to employee:
Individuals who are employed and contributing to NPS would enjoy tax benefits on their own contributions as well as their employer’s contribution as under: -
(a) Employee’s own contribution - Eligible for tax deduction up to 10% of Salary (Basic + DA) under Section 80 CCD(1) within the overall ceiling of Rs. 1.50 lacs under Sec 80 CCE.
(b) Employer’s contribution – The employee is eligible for tax deduction up to 10% of Salary (Basic + DA) contributed by employer under Sec 80 CCD(2) over and above the limit of Rs. 1.50 lacs provided under Sec 80 CCE.
Tax benefit for self-employed:
Eligible for tax deduction up to 10 % of gross income under Sec 80 CCD (1) with in the overall ceiling of Rs. 1.50 lacs under Sec 80 CCE.
Subscriber is allowed deduction in addition to the deduction allowed under Sec. 80CCD(1) for additional contribution in his NPS account subject to maximum investment of Rs. 50,000/- under sec. 80CCD 1(B)
Tax benefits would be applicable as per the Income Tax Act, 1961 as amended from time to time.

Cost Structure
NPS offers Indian citizens a low cost option for retirement planning. The world’s lowest cost money managers managing wealth, makes pension funds under NPS.
The following are the charges:

 

Intermediary Charge head Service charges* Method of Deduction
POP Initial Subscriber
Registration
Rs. 250 To be Collected
Upfront
 
Initial Contribution 0.25% of the contribution Mi: Rs. 20 & Max : Rs.25,000
All Subsequent
Contribution
All Non-Financial
Transaction
Rs. 20
Persistency Charges(per annum per associated account where minimum contribution of Rs.1000/- received in the account ) Rs.50 Through cancellation of units
CRA   NCRA(NSDL) KCRA(Karvy) Through
cancellation of
units
  From
01.04.2017
Existing
Account Opening
Charge
Rs. 40 Rs. 39.36
Annual
Maintenance
Charges
Rs. 95 Rs. 57.63
Per Transaction (Financial/Non- Financial) Rs. 3.75 Rs. 3.36
Custodian Asset maintenance
(Per Annum)

0.0032% of AUM

Through
adjustment in NAV
PF Investment
Management (Per Annum)
0.01% of AUM
NPS Trust Reimbursement of
Expenses
0.01% of AUM Through adjustment in NAV
Trustee Bank Trustee Bank
charges
No charges levied by Trustee Bank  
         
Service tax and other levies, as applicable, will be levied as per the existing tax laws. There are no additional CRA charges for
the maintenance of Tier –II account. Also, please note that the fee structure may change from time to time as may be decided by PFRDA.
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