National Pension Scheme

NPS Scheme

National Pension Scheme

The National Pension Scheme was a scheme for government employees. It was launched in January 2004 and is a government-sponsored scheme. Later in the year 2009, the national pension scheme widened its scope. Every person who can apply under the scheme has to contribute a regular amount of money to their pension account during their work tenure. After retirement, they can withdraw the money. They can even withdraw a part of the mature amount as a lump sum and use the remaining to get a regular source of income after retirement. How can a person join NPS?

Those persons who are interested in opening an NPS account should contact the point of presence service providers. They act as the collection points. These authorized branches help people open an NPS account. The point of presence of entities can be both public and private sector banks, financial institutions, etc. Who is eligible for NPS?

A national pension scheme is for every Indian citizen who is between the age group of 18 to 60 years. They must comply with the KYC norms. Even NRIs are eligible for NPS until there is a change in their citizenship status. Are the documents necessary to open an NPS account? The subscribers need to furnish certain documents to the POPs to open their NPS account.

● Registration form

● Identity proof

● Address proof

● Birth certificate How does NPS work?

● Those who open an NPS account get a number known as the Permanent Retirement Account Number or PRAN. Every NPS account holder is issued a card with the 12 digits unique number.

● Under the National Pension Scheme, every subscriber can hold two accounts known as Tier 1 accounts and Tier 2 accounts.

● Tier 1 account is compulsory whereas Tier 2 account is voluntary.

● Tier 1 does not allow the subscriber to withdraw the whole amount even after retirement. There are certain restrictions on complete withdrawal.

● There are no such restrictions in the Tier 2 account. The National Pension Scheme account holder is free to withdraw any amount of money from that account.

● Those who are willing to open a national pension scheme account must deposit payment of rupees 6000/- per year in the tier 1 account. In cases of discrepancy, the account may freeze. The subscriber can then visit their nearest POP centre and pay the required sum of money with a minimum penalty of rupees 100/-. What investment choices does NPS offer? The national pension scheme offers the following choices-

• Life cycle fund /auto choice- This is a default option that automatically invests money for the subscriber, as per their age.

• Active choice- Under this, a National Pension Scheme Subscriber can decide himself/herself on how he can invest in different assets. How can a person withdraw money from an NPS account? The subscriber has to submit a withdrawal form to the POP center along with the necessary documents. POPs, after checking the authenticity of the document will forward them to the National Securities Depository Limited and Central Record-Keeping Agency. After the final checks, the Central Record-Keeping Agency registers the claim of the subscriber and forwards the application form along with the name of the documents needed for the withdrawal. After the final submission, CRA helps settle the account of the National Pension Scheme Account Holder.