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What is National Pension Scheme?

​National Pension System (NPS) is a voluntary retirement savings scheme laid out to allow the subscribers to make defined contribution towards planned savings thereby securing the future in the form of Pension. It is an attempt towards a sustainable solution to the problem of providing adequate retirement income to every citizen of India.

​​At the time of normal exit from NPS, the subscribers may use the accumulated pension wealth under the scheme to purchase a life annuity from a PFRDA empaneled life insurance company apart from withdrawing a part of the accumulated pension wealth as lump-sum, if they choose so. PFRDA is the nodal agency for implementation and monitoring of NPS.

Who can open a NPS account under All Citizen Model?

A citizen of India, whether resident or non-resident, subject to the following conditions:

Applicant should be between 18 – 70 years of age as on the date of submission of his/her application and should comply with KYC norms prescribed.

Benefits of NPS Account

• Low Cost :- NPS is considered t​o be the world’s lowest cost pension scheme. Administrative charges and fund management fee are also lowest.
• Simple :- All applicant has to do is to open an account with any one of the POPs being run through all Head Posts Offices across india and get a Permanent Retirement Account Number(PRAN)
• Flexible :- Applicant can choose his/her own investment option and Pension Fund or select Auto choice to get better returns.
• Portable :- Applicant can operate an account from anywhere in the country and can pay contributions through any of the POP-SPs irrespective of the POP-SP branch with whom the applicant is registered, even if he/she changes his/her city, job etc and also make contributio​n through eNPS. The accou​nt can be shifted to any other sector like Government Sector, Corporate Model in case the subscriber gets the employment.

Types of NPS Accounts

NPS accounts are primarily of two types, Individual NPS account (All Citizens Model) and Corporate NPS account.

• All Citizen Model : In an Individual NPS account, the subscriber (Account holder) is the only contributor. All selections pertaining to Scheme preference, Investment choice, Annuity Service Provider, etc. are done by the subscriber alone. Any citizen of India can voluntarily choose to open an Individual NPS account to avail tax benefits on investments and to ensure regular income post retirement. Entry age is from 18 to 70 years.
• Corporate Model : In Corporate NPS account, the subscriber and the employer can both contribute to the subscriber’s NPS account. A corporate entity will have to register for corporate NPS for the employees to be able to avail corporate NPS benefit. You have the option to open two sub accounts under the same Permanent Retirement Account Number (PRAN). These sub accounts are called as tiers in NPS:0
• Tier I: It is also called as pension account. Contributions upto Rs. 50,000 made in this account are eligible for additional deduction from taxable income under section 80CCD (1B). This is over and above limit of Rs 1.5 lakhs- under section 80C. Withdrawals are restricted and subject to terms and conditions.
• Tier II: You can invest an additional amount in Tier II NPS account. Subscriber is free to withdraw his entire accrued corpus under Tier II at any point of time. In case you have not contributed even the initial contribution towards Tier II a/c, it will be automatically deactivated as per process. No tax benefits are available in this account. Funds from Tier II can be transferred to Tier I

Entities Involved In NPS

Regulator has appointed multiple agencies for different NPS services to ensure better transparency and efficiency.

• Pension Fund Regulatory and Development Authority (PFRDA) - PFRDA is a regulator for NPS which was set up by the Government of India on August 23, 2003. PFRDA promotes old age income security by establishing, developing and regulating pension funds and protects the interests of subscribers in schemes of pension funds and related matters.
• NPS Trust - This is the Trust body formed for NPS. It is responsible for taking care of the funds under NPS by prudently monitoring / auditing portfolio of Pension Fund Manager on regular basis to ensure subscriber interests.
• Central Recordkeeping Agency (CRA) - The regulator PFRDA has appointed K-Fin Technology Private Ltd & NSDL e-Governance Infrastructure Limited to maintain data and records of NPS subscribers. They are responsible for recordkeeping, administration and customer service functions for all subscribers of NPS.
• Point of Presence (POP) - We are the first point of interaction between You and the NPS architecture. We shall facilitate the subscriber registration, submission of contributions, request for any modification or exit/withdrawal.
• Annuity Service Providers (ASPs) - After completion of 60 years of age, you will have option to select Annuity Plans offered by below mentioned Annuity Service Providers appointed by PFRDA :


• HDFC Life Insurance Company Limited
• Life Insurance Corporation of India Limited
• ICICI Prudential Life Insurance Company Limited
• SBI Life Insurance Company Limited
• Star Union Dai-Ichi Life Insurance Co. Ltd