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New Pension System (NPS)
Frequently asked Questions (FAQs)
1. What is NPS?
New Pension System is a voluntary contribution of funds for a sustained
period of time (till the age of 60years) to enable him to draw pension after he
attains 60 years of age. The Scheme has been introduced by the Government
of India and monitored by the Pension Fund Regulatory and Development
2. What are the benefits of NPS?
It is basically for people who do not have the benefit of pension after
retirement from service. The scheme gives an opportunity to the subscriber to
build up his pension fund over a long period so that after retirement he can
draw pension for his sustenance.
3. What is TierI and TierII ?
Tier I is the primary account which the subscriber has to open to be able to
open Tier II account.
4. What is the difference between Tier I and Tier II?
While in Tier I no withdrawal can be made till the subscriber reaches 60years
of age, in Tier II the subscriber can withdraw from his balance anytime he
wishes to withdraw.
5. What is the minimum age and maximum age for opening an account?
The scheme is open to people between age 18 to 60 years.
6. What is the minimum contribution in a year for Tier I?
Rs 6000/- has to be deposited by the subscriber in a year and the minimum
contribution is Rs 500/- at one time.
7. What is the minimum contribution in a year for Tier II?
Rs 2000/- has to be deposited by the subscriber in a year and the minimum
contribution is Rs 250/- at one time.
8. What is the maximum amount of contribution in a year?
There is no upper limit as of now.
9. What is the minimum number of contribution in a year?
Minimum 1 transaction has to be made in a year. However there is no limit on
maximum number of transactions that can be made in a year.
10. Can funds be withdrawn before attaining 60 years?
In Tier I funds cannot be withdrawn before attaining 60 years. However in Tier
II funds can be withdrawn from his balance anytime he wishes to withdraw.
11. Can the full amount be withdrawn after attaining 60 years?
No. Maximum 60% can be withdrawn. 40% of the total balance available at the
end of contribution year will have to be annuitized.
11. Is Nomination facility available?
Yes and unlike in Bank’s account nominations can be made in favour of 3
12. How many nominations can be made in an account?
13. What is a CRA?
The National Securities Depositories limited ( NSDL ) is the Central Record
14. Whose scheme is NPS?
It is a scheme of Government of India.
15. Can updated statement of account be made available?
16. How can funds be contributed?
Through Cash or Cheque. However credit to account in case of cheque can
only be made available on realization of the Cheque.
17. What is PRAN?
Permanent Retirement Account Number which will be given to the subscriber
on opening the Tier I account and which must be quoted in every transaction
just like in case of bank account.
18. Which are the pension funds managers?
There are 06 Pension Fund Managers:
SBI Pension Funds Private Ltd
ICICI Prudential Pension Fund Management Company Limited
IDFC Pension Fund Management Company Limited
Kotak Mahindra Pension Fund Limited
Reliance Capital Pension Fund Limited
UTI Retirement Solutions Limited
19. What is the assured rate of return?
No assured rate of return as the investment will be market related.
20. What is the transaction cost to be borne by the subscriber?
Rs 20+ service tax as applicable by Government rules at the time of opening of
account & doing the KYC and Rs 20+ service tax as applicable by Government
rules for first contribution.
Rs 20+ service tax as applicable by Government rules for any other transaction
like making contribution/statement of account or any other request.
21. What is the Swavalamban Scheme?
The scheme will be applicable to all citizens in the unorganised sector who
join the New Pension System (NPS) administered by the PFRDA.
Under the scheme, Government will contribute Rs. 1000 per year to each NPS
account opened in the year 2010-11 and for the next three years, that is, 2011-
12, 2012-13 and 2013-14. The benefit will be available only to persons who join
the NPS with a minimum contribution of Rs. 1,000 and maximum contribution
of Rs. 12,000 per annum.
22. What are the eligibility criteria for Swavalamban Scheme?
The scheme will be applicable to all persons in the unorganised sector subject
to the condition that the benefit of Central Government contribution will be
available only to those persons whose contribution to NPS is minimum
Rs.1,000 and maximum Rs. 12,000 per annum, for both Tier I and II taken
together, provided that the person makes a minimum contribution of Rs. 1000
per annum to his Tier I NPS account.
22. What are the definition of Unorganised Sector for Swavalamban Scheme ?
For the purpose of this scheme, a person will be deemed to belong to the
unorganised sector if that person:
government, or an autonomous body/ public sector undertaking
of the Central or state government having employer assisted
retirement benefit scheme, or
r any of the
Scheme Act, 1955
The Jammu and Kashmir Employees’ Provident Fund Act, 1961
23. Who are the agencies involved in the NPS:
The various agencies in the scheme as under:
1. PFRDA( Controlling Body)
2. Bank of India( Trustee Bank)
3. NSDL( Central Recordkeeping Agency)
4. CRA- FC ( viz. KARVY)
5. POP( State Bank)
6. POP-SP( Branches)