Join National Pension Scheme Tier I Plan for a comfortable retirement

National Pension Scheme (NPS) was introduced on 01^st May 2009. It is a voluntary retirement scheme introduced by the Government of India for the purpose of granting a pension to the subscribers. All the operations of the NPS are managed and regulated by Pension Fund Regulatory and Development Authority (PFRDA).

There are two plans under the scheme:

1. Tier I scheme is purely a pension plan
2. And Tier II is an investment plan.

Who can apply for the National Pension Scheme Tier 1 Plan?

1. Any individual between the age of 18 and 65 years can opt-in into the scheme.
2. The applicant should be a resident citizen of India or an NRI.

How to join the National Pension Scheme Tier 1 Plan?

1. The National Pension Scheme account can be opened in any of the authorized bank branches also known as POP (point of presence) or online through enps.nsdl.com.
2. The account can be opened with a minimum deposit of Rs. 500/-.
3. The subscriber needs to submit the application form, KYC documents, etc to the branch.
4. In order to register online under the National Pension Scheme, the subscriber needs to submit the online registration form along with valid Aadhar Number, a valid mobile number associated with the Aadhar number, a scanned image of signature and net banking account.
5. The subscriber gets a unique 12-digit Permanent Retirement Account Number or PRAN once the account is opened. The PRAN card is delivered physically to the subscribers’ mailing address.
6. The subscriber can also find the nearest POP from the NSDL website.

Features of National Pension Scheme Tier I Account

1. Only one National Pension Scheme account can be opened by any individual.
2. The subscriber is issued a Permanent Retirement Account Number which can be managed from anywhere.
3. The National Pension Scheme account is portable from one fund manager to another.
4. Minimum Rs. 500/- needs to be deposited in each financial year.
5. The yearly premium amount is not fixed, which means that the subscriber can deposit any amount above Rs. 500/- for every financial year.
6. If the account is not maintained with a minimum yearly deposit of Rs. 500/-, the account becomes inactive on such default. In order to revive the account, the subscriber needs to deposit minimum Rs. 500/- for each of the defaulted premium.
7. Under the plan, the deposited amount is invested in equity markets and debt funds such as government securities and corporate bonds.
8. At the time of retirement, the policyholder can avail monthly pension plus withdraw a lumpsum amount.
9. The subscriber can opt to manage the account and its investment in each of the above funds with the Active choice option.
10. The subscriber can also choose the auto choice option under which the funds are managed by the fund managers depending upon various factors such as age, market conditions, etc.
11. If the subscriber chooses an active choice option, he or she can invest a maximum of 75% of the total invested amount in equity funds.
12. The applicant gets long term and higher returns in comparison to other saving plans based on the equity component.
13. The subscriber can choose to change the investment criteria from an action plan to an auto plan or vice versa maximum twice in any financial year.
14. The subscriber can change the fund manager once in the financial year.
15. The subscriber can avail tax benefit under section 80C up to a limit of Rs. 1,50,000/-.
16. The subscriber gets an additional tax benefit of Rs. 50,000/- for investing in only NPS.
17. The returns on investment are also exempted from tax.
18. No tax is charged on the maturity amount or corpus money.
19. In case of a contribution made by the corporate employer of the individual, such contribution is exempted from tax.
20. The funds are managed by Pension fund managers who invest the money in the equity market and various securities.
21. For the government sector employees, the pension fund is managed by UTI, LIC & SBI.
22. For the private sector subscribers, the pension fund is managed by UTI, LIC, SBI, ICICI, HDFC, Reliance, Birla Sun Life, Kotak.
23. Partial withdrawal can be made only after completion of 3 years and under special conditions such as the critical illness of self or dependent or for the higher education of children.
24. The subscriber can withdraw a maximum of 25% of the investment made by self under such circumstances.
25. Maximum 3 partial withdrawal is allowed from the date of joining the scheme till the date of retirement.

Maturity or Retirement

The subscriber gets three options on attaining the age of retirement:

1. The subscriber can continue the investment up till the age of 70.
2. The subscriber can deffer the corpus money till the age of 70 years.
3. Exit from NPS with Monthly Pension and lumpsum amount. The subscriber can withdraw a maximum of 60% of the corpus money as a lump sum and the balance 40% is invested into an annuity plan and a monthly pension is granted to the individual.