1. What is National Pension System?
National Pension System is a contributory pension system which was initially (from 1st January 2004) introduced for the government employees and later rolled out for all citizens of India from May 1, 2009. Any citizen of India in the age group 18 to 65 years can join the NPS.
The person (employee/citizen) who joins the NPS is known as "Subscriber" in the NPS. Under the NPS, each Subscriber will open an account with Central Recordkeeping Agency (CRA) which will be identified through unique Permanent Retirement Account Number (PRAN).
Under NPS, two types of account are available to subscribers i.e. Tier I & Tier II; Tier I account is a pension account where subscribers contribute his / her savings (may include employer's contribution in case of Corporate sector) for retirement into a partially withdrawable account, and a Tier II account is an investment account in which subscribers are free to deposit any amount and withdraw whenever he wishes. An active Tier I account is a pre requisite for opening of a Tier II account.
2. What are the benefits of NPS?
1. It is voluntary - NPS is open to every Indian Citizen. A subscriber can choose the amount he wants to set aside and save every year.
2. It is simple - All the subscriber has to do is to open an account either with any one of POPs (Point Of Presence) or through online mode and get a PRAN.
3. It is flexible - Subscribers can choose their own investment option and pension fund and see their money grow.
4. It is portable - Subscribers can operate their account from anywhere even if they change the city, job or their pension fund manager.
3. What are the tax benefits of NPS?
• Self-employed person (Any individual other than a salaried employee) Contributions upto 20% of the Gross Income of the self-employed is deductible from the taxable income under section 80CCD(1) of the Income Tax Act, subject to ceiling of Rs. 1.50 lacs under Section 80CCE.
• Salaried Employee:
• Employees own contribution up to 10% of salary (basic plus dearness allowance) to NPS are tax deductible under Section 80CCD(1) of Income Tax Act, subject to a ceiling of Rs.1.50 lacs under section 80CCE.
• Additional Tax benefit on self contribution to NPS:
• For both salaried and self-employed individuals, an additional deduction for investment up to Rs.50,000/- has been provided under section 80CCD(1B) of the Income Tax Act, 1961 which is over and above the ceiling of Rs.1,50,000/-. Therefore, the total deduction that can be claimed for own contribution to NPS can go upto Rs.2 lakh.
• Salaried Employee also gets the tax benefit on employer contribution to his/her NPS account. Contribution made by the employer upto 10% of salary (Basic plus Dearness Allowance) can be claimed as deduction from the taxable income under section 80CCD(2) of the Income Tax Act,1961.There is no upper cap (in terms of amount) on this tax deduction. This deduction is over and above the ceiling limit of Rs 1.5 lacs provided under Section 80C and limit of Rs 50,000 under Section 80CCD(1B).
These Tax benefits are applicable for investments in Tier I account only.
4. Who can subscribe in NPS?
Any citizen of India, whether resident or non-resident, who are aged between 18 - 65 years as on the date of submission of his/her application to the POP/ POP-SP. The citizens can join NPS either as individuals or as an employee- employer group(s) (corporates) subject to submission of all required information and Know your customer (KYC) documentation.
5. Who are POPs (Point of Presence)?
POPs are banks and non-banking financial companies/ micro finance entities registered with PFRDA to provide service related functions to their associated subscribers enrolled under NPS. Points of Presence (POPs) are the first point of interaction for the NPS subscriber with the Central Recordkeeping Agency or the NPS Trust in the NPS architecture. The authorized branches of a POP, called Points of Presence Service Providers (POP-SPs), act as collection points and extend a number of customer services to NPS subscribers including registration of subscriber, remittance of their periodic contribution to the Trustee Bank, processing of the withdrawal/ exit from NPS, etc.
6. What is the procedure for registration of Subscribers under NPS?
Any Individual who wants to get registered as a subscriber and wants to open a Permanent Retirement Account (PRA)(Tier I and/or Tier II) in NPS would submit the duly filled CSRF form with other supporting KYC documents (identity and address proof) to POP-SP/POPs.
For only Tier II account, an individual with an active Tier I account needs to submit a copy of the PAN Card along with Tier II activation form or he/she can open account through online facility which can be accessed by logging into your NPS accounts through your I-Pin. One can also open the account online through the eNPS by visiting NPS Trust website, www.npstrust.org.in, after applying subscriber has to submit the printed form to the POP-SP.
7. What is the minimum contribution?
A subscriber is required to make the first contribution at the time of applying for registration (Minimum contribution Rs.500 for Tier I and Rs.1000 for Tier II) with duly filled NCIS (NPS Contribution Instruction Slip). However, this initial contribution is optional in case of Corporate Model. The POP-SP provides a Receipt (as an acknowledgement) to the Subscriber.
8. For how long should one contribute?
A subscriber has to contribute up to the age of 60 years or till superannuation. The periodic contributions into NPS are invested by PFRDA approved Pension Funds as per the investment guidelines prescribed by PFRDA in diversified pool of securities. The accumulated corpus at age 60 or superannuation is used for providing periodic pension. The higher the contribution and longer the period of investment, higher would be the accumulated corpus and higher the period pension.
9. Can a subscriber obtain/use more than one PRAN?
No, multiple NPS accounts for a single individual are not allowed and there is no necessity also as the NPS is fully portable across sectors and locations.
10. Who can open a Tier II Account?
Any subscriber who has an active Tier I account can activate his / her Tier II account through his / her associated POP-SP or through online mode. A subscriber can also open Tier I and Tier II together by filling up a composite application form.
11. What is the initial contribution that a subscriber should make, while applying for registration in NPS?
The subscriber should make an initial contribution of atleast Rs.500/- for Tier I account and Rs.1000/- for Tier II account. Initial contribution is optional for Tier I account for corporate subscribers.
12. If I have invested in any other Provident Fund, can I still invest in NPS?
Yes. Investment in NPS is independent of your contribution to any Provident Fund.
13. What is the use of I-PIN?
The I-PIN is the credential provided to the Subscriber for accessing their NPS account online.
14. How do I deposit my contributions once I have been registered into NPS?
If you have successfully registered under NPS - All Citizen Model scheme, you may deposit your subsequent contributions through either any of the POPs registered with PFRDA or using the online facility of NPS by visiting NPS Trust website, www.npstrust.org.in
15. What rate of return will my contributions earn?
Returns in NPS scheme are market based. The benefits will depend upon the amounts contributed, the duration of contribution and the investment growth upto the point of exit from NPS.
16. Will I get a receipt after depositing the contribution under NPS to the POPs?
Yes, POPs shall issue a receipt (preferably electronic receipt) to the NPS subscriber with appropriate acknowledgement number on the same day after collection of contributions.
17. How will I know the status of my investment and how much it has accumulated to?
You will receive a physical annual Statement of Transaction (SOT) of your NPS account, which will indicate the details of contribution made and current value of the corpus in the PRAN. However you can access your account anytime through either approaching POP-SPs/POP-Corporate/POPs or using online facility or through a mobile App, NPS App available on Apple store and Google Play.
18. Can I view my Statement of Transactions under NPS online?
Yes, the NPS subscribers can view their statement of transactions through online facility which can be accessed by logging into your NPS accounts on CRA website through your I-Pin.
19. Can I change my permanent/correspondence address through online mode?
Yes, the NPS subscribers can change their permanent/correspondence address using aadhar based authentication through OTP.
20. Can I change my contact details (Mobile No./Email id) through online mode?
Yes, the NPS subscribers can change their contact details (Mobile No./Email id) through online facility which can be accessed by logging into your NPS accounts through your I-Pin.
21. Can I update my personal details/nomination details into my PRAN account?
Yes, a subscriber can request for updation of personal details/nomination details by approaching POP-SPs/POP-Corporate/POPs and submitting S2 form for updation of details. Further, POP-SPs/POP-Corporate/POPs has to upload such request received from the subscriber into the CRA system within T+1 days where T is the date of receipt of request from the subscriber. In case of non updation of such request by the POP-SPs/POP-Corporate/POPs into the CRA system beyond the prescribed TAT, POP-SPs/POP-Corporate/POPs shall pay the compensation to the subscriber at the rates prescribed under the operational guidelines for POP-SPs/POP-Corporate/POPs by the way of crediting the same into the PRAN account of the subscriber.
22. Can I get the duplicate PRAN Card in the event of loss of the original PRAN card?
you can submit a request for re-issuance of a PRAN Card by approaching your POP-SPs/POP-Corporate/POPs and submitting S2 form for re-issuance of the PRAN Card by the payment of prescribed charges.
Alternatively, you can also apply for duplicate PRAN through online facility which can be accessed by logging into your NPS accounts on the CRA website through your I-Pin.
23. I have an NPS account and have a grievance on the services provided. To whom shall I report and how?
The subscriber can raise grievance through any of the modes mentioned below:
a. Call Centre/Interactive Voice Response System (IVR)
The Subscriber can contact the CRA call center at toll free telephone number 1- 800-222080 and register the grievance by using T-PIN.
b. Physical forms direct to CRA
The Subscriber may submit the grievance in a prescribed format to the POP - SP who would forward it to CRA Central Grievance Management System (CGMS).
Subscriber can directly send form to CRA.
c. Web based interface
The Subscriber may register the grievance at the website www.npscra.nsdl.co.in with the use of the I-pin allotted at the time of opening a Permanent Retirement Account.
24. Can I submit my grievance under NPS online?
Yes, the NPS subscribers can directly lodge their grievance into the CRA system by visiting the link https://cra-nsdl.com/CRA/cgmsMenuOnloadForSub.do
25. If my grievance is not resolved after raising with POP-SPs/POPs then to whom shall I report?
If the complainant is not satisfied with the redressal of his grievance or if it has not been resolved by the intermediary by the end of thirty days of filing of complaint, he may escalate the complaint to the National Pension System Trust (NPS Trust).
If complaint remained unresolved after escalating with NPS Trust or if subscriber is not satisfied by the solution provided by the NPS Trust, the he may escalate the complaint to Ombudsman against concerned intermediately or entity.
EXIT under NPS
26. When will I be permitted to withdraw from my account?
The normal exit from NPS account is at the age of 60 or superannuation, as the case may be. However early exit is also permitted with certain conditions. Withdrawal process details are as follows:
a. Exit on 60 yrs or superannuation.
At least 40% of the accumulated pension wealth of the subscriber needs to be utilized for purchase of an annuity providing for the monthly pension of the subscriber and the balance (60%) is paid as a lump sum payment to the subscriber. If the total corpus is not exceeding Rs. 2 lacs, then the subscriber has the option to withdraw the whole corpus in lumpsum.
b. Upon Death (irrespective of cause):
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. The nominee, if so wishes, has the option to purchase annuity of the total corpus.
c. Exit from NPS before attainment of age of 60 years (irrespective of cause):
At least 80% of the accumulated pension wealth of the subscriber needs to be utilized for purchase of an annuity providing for the monthly pension of the subscriber and the balance (20%) is paid as a lump sum payment to the subscriber. If the total corpus is not exceeding Rs. 1 lac, then the subscriber has the option to withdraw the whole corpus in lumpsum. Subscriber can exit from NPS only after completion of minimum 10 years in NPS.
For subscribers joining between 60-65 years
The exit conditions for subscribers joining the NPS beyond the age of 60 years in the NPS will be as under:
(a) Normal exit: The subscriber exiting after completion of 3 years from the date of joining NPS. In the normal exit, the subscriber will be required to annuitize at least 40% of the corpus for purchase of annuity and the remaining corpus can be withdrawn in lump sum. In case the accumulated corpus at the time of exit is equal or less than Rs. 2 lacs, the subscriber will have the option to withdraw the entire corpus in lump sum.
(b) Premature Exit: Any exit before completion of 3 years will be treated as premature exit. In such case, the subscriber will be required to annuitize at least 80% of the corpus for purchase of annuity and the remaining corpus can be withdrawn in lump sum. In case the accumulated corpus at the time of exit is equal or less than Rs. 1 lac , the subscriber will have the option to withdraw the entire corpus in lump sum.
(c) Exit due to the death of the subscriber: The entire corpus shall be payable to the nominee of the subscriber. The Nominee of subscriber would be able to purchase the annuities directly from the empanelled Annuity Service Providers as per their choice of annuity that is available in the market/with the ASPs.
27. Whether POP can submit physical Withdrawal request of the underlying NPS subscribers?
W.e.f. April 1, 2016, PFRDA has made it mandatory for all the POPs to raise the Withdrawal request online using the 'Online Withdrawal' module available in CRA system. Physical Withdrawal request submitted by the POPs will not be processed by CRA. Online withdrawal request can be initiated by the Subscribers using I-PIN provided to them. Such request needs to be verified and authorized by the mapped POP. In case subscriber is not able to initiate online Withdrawal request, Subscriber need to submit the physical withdrawal form along with the required documents to the mapped POP based on which POP will initiate online withdrawal request online on behalf of the subscriber.
28. What is an Exit Claim ID and what is its relevance?
In case of Superannuation, Exit Claim ID is generated 6 months before the Date of Retirement/Date of attaining 60 years of age. It enables POP or Subscriber to make any changes (like DOB, address etc.) in the system until one day before Date of Retirement/Date of attaining 60 years of age. Withdrawal request cannot be raised without generation of Claim ID In case of Pre-mature Exit, the Subscriber need to contact the POP for generation of Claim ID for Withdrawal of NPS funds. Generation of Claim ID is not required to process death online withdrawal request. POP can directly raise the withdrawal request for death cases.
29. What is the role of POP before capturing and authorizing the Withdrawal request online?
In case subscriber is not able to raise Withdrawal request online, he/she will have to submit physical withdrawal form to the respective POP. POP will perform verification checks, such as, whether name is mentioned, photograph is attached, signature is present and other mandatory fields are properly filled, before capturing and authorizing Withdrawal Request online on behalf of the subscriber.
30. Can a Subscriber claim for 100% Withdrawal in case of Superannuation and Pre-mature Exit?
In case of Pre-mature Exit, 100% is allowed if the total corpus is below Rs.1,00,000 after 10 years being part of NPS. However, in case of Superannuation, a Subscriber can claim 100% Withdrawal if the total accumulated corpus is less than Rs. 2,00,000 at the time of Superannuation.
31. In case of death of any NPS Subscriber who had nominated two nominees (one major and second minor), can the claim be made by the major claimant only?
Withdrawal form needs to be submitted by all the nominees registered in CRA system. In case the nominee is a minor, Withdrawal form has to be submitted by the guardian along with the birth proof of the minor.
32. How does a Subscriber / Claimant receive the Withdrawal proceeds?
The Withdrawal proceeds are credited electronically to the bank account of the Subscriber/Claimant (as per the bank details provided in the Withdrawal form).
33. Can I opt for partial withdrawal under NPS online?
Yes, the NPS subscriber can opt to partially withdraw from NPS through online facility which can be accessed by logging into your NPS accounts through your I-Pin.
34. Can I get full amount when I opt for partial withdrawal?
No, the NPS subscriber gets maximum 25 % of contributions made by him only when he opts for partial withdrawal.
35. What is the eligibility to avail partial withdrawal under NPS?
A subscriber should be in the system for minimum of three years to avail partial withdrawal for specific purposes only.
36. What are the specific purposes for availing partial withdrawal?
A subscriber on the date of submission of withdrawal form shall be permitted for partial withdrawal for following purposes only:
a. For higher education of his or her children including a legally adopted child;
b. For the marriage of his or her children, including a legally adopted child;
c. For the purchase of a residential house or flat in his or her own name or in a joint name with his or her legally wedded spouse. In case, the subscriber already owns either individually or in the joint name a residential house or flat, other than ancestral property, no withdrawal under the regulations shall be permitted.
d. for treatment of specified illnesses : if the subscriber, his legally wedded spouse, children, including a legally adopted child or dependent parents suffer from any specified illness, which shall comprise of hospitalization and treatment in respect of the following disease:
• Kidney failure (End stage Renal failure);
• Primary pulmonary arterial hypertension;
• Multiple sclerosis;
• Major organ transplant
• Coronary artery bypass graft;
• Aorta graft surgery;
• Heart valve surgery;
• Myocardial infarction;
• Total blindness;
• Accident of serious/life threatening nature;
• Any other critical illness of a life threatening nature as stipulated in the circulars, guidelines or notifications issued by the authority from time to time.
37. How many times can I opt for partial withdrawal?
The subscriber shall be allowed to withdraw only a maximum of three times during the entire tenure of subscription under NPS.
38. What is process to exit/withdraw from NPS?
In the event of premature withdrawal or superannuation, you have to initiate exit through online facility which can be accessed by logging into your NPS accounts through your I-Pin.
39. What are the provisions for exit in case of disability and incapacitation of the subscriber under NPS?
If subscriber is physically incapacitated or has suffered a bodily disability leading to continue with his individual pension account under NPS, the exit in such cases shall be determined as per the provisions of sub regulation (a) of regulation 4 subject to the subscriber submitting a disability certificate from a government surgeon or doctor (treating such disability or invalidation of subscriber) stating the nature and extent of disability and also certifying that:
a. the affected subscriber shall not be in a position to perform his regular duties and there is a real possibility of the affected subscriber, being not able to work for the remaining period of his life; and
b. percentage of disability is more than seventy-five percent, in the opinion os such government surgeon or doctor (treating such disability or invalidation of subscriber).
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