Never miss a great news story!
Get instant notifications from Economic Times
AllowNot now

You can switch off notifications anytime using browser settings.

National Pension Scheme

National Pension Scheme (NPS), a government-sponsored pension scheme, was launched in January 2004 for government employees. It was opened to all sections in 2009. A subscriber can contribute regularly in a pension account during her working life, withdraw a part of the corpus in a lumpsum and use the remaining corpus to buy an annuity to secure a regular income after retirement.

Top Performing NPS Schemes

By Trailing Returns

  • Scheme Name
  • NAV
  • Trailing returns (in %)
    • 1 Year
    • 3 Year
    • 5 Year
  • Return Rating
  • Risk Rating

Most Consistent NPS Schemes

Category Average Returns

  • Category Name
  • Weighted Avg Return (in %)
    • 1 M
    • 3 M
    • 6 M
    • 1 Y
  • Quartely Category Discrete Returns
  • Yearly Category Discrete Returns
* Categories are sorted on 1 year weighted average return


What is National Pension System (NPS)?

National Pension Scheme (NPS) is a government-sponsored pension scheme. It was launched in January 2004 for government employees. However, in 2009, it was opened to all sections. The scheme allows subscribers to contribute regularly in a pension account during their working life. On retirement, subscribers can withdraw a part of the corpus in a lumpsum and use the remaining corpus to buy an annuity to secure a regular income after retirement.

Who can join NPS?

Any Indian citizen between 18 and 60 years can join NPS. The only condition is that the person must comply with know your customer (KYC) norms.

Can a Non Resident Indian (NRI) join NPS?

Yes, an NRI can join NPS. However, the account will be closed if there is a change in the citizenship status of the NRI.

How do I join NPS?

You should open an NPS account with entities known as Point of Presence (POP). Most banks, both private and public sector, are enrolled as POPs. Several financial institutions also act as POPs. The authorized branches of a POP, called point of presence service providers (POP-SPs), act as the collection points.

How can I find POPs near me?

You can access them through the website of Pension Fund Regulatory and Development Authority (PFRDA).

What are the documents needed for opening an NPS account?

You should fill the subscriber registration form and submit it along with proof of identity, address, and date of birth to the POP.

What is a Permanent Retirement Account Number (PRAN)?

Every NPS subscriber is issued a card with 12-digit unique number called Permanent Retirement Account Number or PRAN.

What are Tier-I and Tier-II accounts

NPS offers two accounts: Tier-I and Tier-II accounts. Tier-I is a mandatory account and Tier-II is voluntary. The big difference between the two is on withdrawal of money invested in them. You cannot withdraw the entire money from Tier-I account till your retirement. Even on retirement, there are restrictions on withdrawal on the Tier-I account. The subscriber is free to withdraw the entire money from the Tier-II account.

Can I have more than one NPS account?

No, you cannot open multiple NPS accounts. In fact, there is no need to open a second account as NPS is portable across sectors and locations.

What is the minimum contribution in NPS?

You have to contribute a minimum of Rs 6,000 every year in your Tier-I account in a financial year.

What will happen if I don’t make the minimum contribution?

If you do not contribute the minimum amount, your account will be frozen. You can unfreeze the account by visiting the POP and pay the minimum required amount and a penalty of Rs 100.

Will the government also contribute to my NPS account?

No, the government will not contribute to your NPS account.

Who manages the money invested in NPS?

The money invested in NPS is managed by PFRDA-registered Pension Fund Managers. At the moment, there are eight pension fund managers: ICICI Prudential Pension Fund, LIC Pension Fund, Kotak Mahindra Pension Fund, Reliance Capital Pension Fund, SBI Pension Fund, UTI Retirement Solutions Pension Fund, HDFC Pension Management Company, and DSP BlackRock Pension Fund Managers.

What are the investment choices available in NPS?

The NPS offers two choices:

1. Active Choice: This option allows the investor to decide how the money should be invested in different assets.
2. Auto choice or lifecycle fund: This is the default option which invests money automatically in line with the age of the subscriber.

What are the investment options available under Active Choice?

The Active Choice offers three funds or investment options: Asset Class E (invests 50 per cent in stocks); Asset Class C (invests in fixed income instruments other than government securities); Asset Class G (invests only in government securities). An investor can choose one of these funds or opt for a combination of them.

Can I change my investment choices?

Yes, you can change your investment choices once in a financial year for both Tier-I and Tier-II accounts.

Can I change my scheme and pension fund managers?

Yes, you can change your scheme preference and pension fund manager. You can even change your investment option (active and auto choices).

Can I have different pension fund managers and investment option for Tier I and Tier II account?

Yes, you can select different pension fund managers and investment options for your NPS Tier I and Tier II accounts.

What are the tax benefits available for NPS?

An employee’s own contribution is eligible for a tax deduction --up to 10 per cent of the salary (basic plus DA) – under Section 80CCD(1) of the Income Tax Act within the overall ceiling of Rs 1.5 lakh allowed under Section 80C and Section 80CCE.
The employer’s contribution to NPS is exempted under Section 80CCD (2).
Moreover, individuals can claim an additional deduction of up to Rs 50,000 under Section 80CCD (1B), which is in addition to Rs 1.5 lakh permitted under Section 80C.
A self-employed person can also contribute 10 per cent of his gross income under Section 80CCD (1) in NPS.

When can I withdraw money from NPS?

NPS is a pension product. So, you are expected to stay invested until your retirement. At 60, you must use at least 40 per cent of the corpus to buy an annuity income from a PFRDA-listed insurance company. You have the option to withdraw 40 per cent of the corpus tax-free. You can withdraw the remaining 20 per cent of the corpus (it will be taxed as per the income tax slab applicable to you) or use it to buy annuity.

Can I defer withdrawing the lumpsum amount at 60?

Yes, you can defer withdrawing the lumpsum amount in NPS until you are 70 years old.

What if I want to take the money out before I am 60?

If you are getting out of the scheme before you are 60 years old, you can only withdraw 20 per cent of the accumulated corpus in NPS. You must use 80 per cent of the corpus to buy an annuity.

What happens to the money if I discontinue the scheme?

If you discontinue your investment, your account will be frozen. You can reactivate the account only if you make the minimum contribution required along with the penalty.

What happens if the subscriber dies before 60 years?

If the subscriber dies before 60 years, the entire accumulated wealth would be paid to the nominee/legal heir of the subscriber.

How do I withdraw the money from NPS?

You will have to submit the withdrawal application to the POP along with relevant documents. POP would authenticate the documents and forward them to Central Record-keeping Agency (CRA) and NSDL. CRA would register your claim and forward you the application form along with details of documents that need to be submitted. Once you complete the necessary procedure, CRA processes the application and settles the account.

What are the documents to be submitted along with withdrawal forms?

You have to submit the following documents along with the withdrawal forms:

1. PRAN card (original)
2. Attested copy of proof of identity
3. Attested copy of proof of address
4. A cancelled cheque

What is an annuity?

An annuity provides a regular income (it could be monthly, quarterly, annual, etc) at a specified rate for a specified period chosen by the subscriber. In NPS, a subscriber must use at least 40 per cent of the corpus to buy an annuity. It means the person can pay the money to an Annuity Service Provider (ASP) and choose an annuity option to ensure a regular income after retirement.

Who are the Annuity Service Providers?

Currently, these insurance companies are empanelled by PFRDA as ASPs:

1. Life Insurance Corporation of India
2. SBI Life Insurance
3. ICICI Prudential Life Insurance
4. Bajaj Allianz Life Insurance
5. Star Union Dai-ichi Life Insurance
6. Reliance Life Insurance
7. HDFC Standard Life Insurance

What are the different annuity options offered by ASPs?

Here are some generic annuity options offered by ASPs. Remember, some ASPs may offer a slightly different or combination of these options:

1. Pension (annuity) payable for life at a uniform rate to the subscriber
2. Pension (annuity) payable for 5, 10, 20 years certain and thereafter as long as you are alive
3. Pension (annuity) for life with return of purchase price on death of the subscriber
4. Pension (annuity) payable for life increasing at a simple rate of 3 per cent
5. Pension (annuity) for life with a provision of 50 per cent of the annuity payable to spouse during his/her lifetime on death of the subscriber
6. Pension (annuity) for life with a provision of 100 per cent of the annuity payable to spouse during his/her lifetime on death of the subscriber
7. Pension (annuity) for life with a provision of 100 per cent of the annuity payable to spouse during his/her lifetime on death of the subscriber and with return of purchase price on death of the spouse.

How is the annuity income taxed?

The annuity income will be added to your income and taxed as per the income tax slab applicable to you.

All about NPS

How to move funds from EPF to NPS

To make the transfer, a request must be made to the recognized employee provident fund or superannuation fund to his NPS account.

Four steps to join the National Pension Scheme

One need not be a government employee to join the NPS. Any Indian citizen between 18 and 60 years can become its subscriber.

PFRDA bars third party payments in Tier II accounts of NPS

National Pension System (NPS) is structured into Tier-I (main pension account) and Tier-II (voluntary savings account).

Looking at equity returns of NPS in isolation could be misleading. Here's why

The maximum allocation that can go into equities in NPS is capped at 50 per cent of the investment. The balance has to be compulsorily invested in bonds.

NPS subscriber base to grow at 35% in FY18: PFRDA

While the subscriber addition saw a growth of 35% in the current fiscal, the pension fund grew by 40% and same growth is expected to continue in fiscal 2017-18 as well.

Step-by-step guide to open an NPS account online

To open an NPS account online, you need to have Adhaar or PAN. Adhaar should have current address and mobile number, PAN should be linked to bank account.

PFRDA proposes up to 50% investment in equities under NPS for government subscribers

PFRDA manages about Rs 1.70 trillion of funds belonging to 1.5 crore subscribers who come from government and non-government sectors.

How to register NPS grievances

Grievance redressal status can be viewed on the online CGMS by entering the token number issued at the time of registration of complaint.

How to open an NPS account offline

If you want to invest in the National Pension System in the offline mode, there are some things you need to watch out for.

Funds transferred from PF to NPS not taxable: PFRDA

"The amount so transferred from recognised Provident Fund/Superannuation Fund to NPS is not treated as income of the current year and hence not taxable," it said while specifying procedure for effecting transfers.

Here's how much NPS subscribers can save by opting for ePRAN facility

NPS subscribers must know that both the physical PRAN card as well as e-PRAN shall be considered at par whenever presented for identification, servicing, exit or any other NPS related processing.

Now you can open NPS account using OTP-based authentication. Here's how

For opening of NPS accounts through non-Internet banking digital mode, through POPs (banks as well as non-bank POPs), OTP received on their registered mobile number and email can be used for paperless NPS Account opening.

Tax optimiser: Finance professional Aikat can save tax by Rs 25,000 via NPS, perks

ET Wealth tells readers how they can optimise their tax by rejigging their income and investments.

EPFO added just 1.33 lakh net subscribers in April

April was the first month of the nationwide lockdown imposed to prevent the spread of Covid-19 as a result of which all industries and establishments were shut down during this period, extending to May and June though it was partial in the third month.

NPS subscribers can submit documents online for withdrawal process till June 30

"In the current Covid - 19 pandemic situation, considering that NPS subscribers may not be in a position to submit physical exit documents, the Nodal offices are advised to accept the scanned and self-certified images of documents through digital means," PFRDA said.

How to contribute to NPS account using UPI

To be able to make a contribution using UPI, the key requirement is to have a UPI ID. The subscriber needs to download the UPI application of the bank. A UPI id of the subscriber’s choice needs to be registered on the application.

MF portfolio doctor: Raghavan needs to hike investments, downsize targets to reach money goals

The mutual fund portfolio doctor assesses the health of the portfolio of an investor, examines the schemes and their suitability with regards to goals.

Soon e-NPS subscribers can exit from the scheme via an online process: PFRDA

The proposed online process of e-NPS exit would be similar to the existing online e-NPS platform already in use for opening NPS accounts by customers of Bank-Point of Presence (POP). Banks shall also be eligible for payment of processing fees.

PFRDA allows Aadhaar-based offline, paperless KYC process to open NPS account

The process enables immediate activation of NPS account due to instant KYC verification and also facilitates the immediate deposit of NPS contribution by the subscriber.

Voluntary provident fund: Investing, contribution, interest rate and other things to know

If you are planning to invest in the Voluntary Provident Fund (VPF), here are the answers of the some the commonly asked questions about it.

Data Sources: Mutual Funds, ETFs, and NPS data are sourced from Value Research

All times stamps are reflecting IST (Indian Standard Time). By using this site, you agree to the Terms of Service and Privacy Policy.

Other useful Links

Copyright © 2020 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service