General 1. Who shall be responsible for protecting my interests as a NPS subscriber?
PFRDA is the Regulator for the NPS appointed by Government of India and will endeavor to protect the interests of the subscribers through prudential norms of investments etc.
2. Who is eligible for enrolling in NPS?
Any Indian citizen whether resident or non- resident between the age group of 18 to 60 years can join.
3. What is the process for enrolling in NPS?
i. You would be required to go to your nearest South Indian Bank (POP – SP). ii. You need to fill in the subscriber registration form and attach the prescribed documents (ID, Age & Address Proof) before submitting it to the authorized person at the branch. An initial Minimum Contribution of Rs 500 & only an initial opening charge of Rs 100 along with contribution charge & Service tax are applicable iii. Upon registration, the branch would give an NCIS Slip which is an acknowledgement of contribution for the contribution made. iv. You shall receive the Permanent Retirement Account Number (PRAN), followed by a PRAN card from CRA (Central Record Keeping Agency) within 3 weeks of registration. v. Thereon, you can make subsequent minimum contributions of Rs.500 per transaction and Rs. 6,000 per year. There is no limit on the maximum amount that you can contribute in a year or the maximum number of contributions that you may make during the year (The minimum number of contribution is one)
4. What will happen if I relocate to another city or country?
The PRAN shall remain the same and you shall be able to access your Permanent Retirement Account from anywhere in India, based on the I-PIN sent to you by the CRA. The details of your PRAN and the Statement of Transaction (SOT) shall be available on the CRA website www.npscra.nsdl.co.in on a 24X7 basis.
5. Would my personal information be held confidential?
Your personal information shall not be disclosed to a third party (outside NPS) without your expressed or implied consent. The information will be used internally or for creating awareness (telephonic/written) of new services of NPS. However, there are some exceptions, viz. disclosure of information under compulsion of law, where there is a duty to the public to disclose and where the interest of the NPS requires disclosure.
6. Under what circumstances can my account be closed before attaining Natural Retirement Age?
Your account would be closed under various circumstances, such as: i. Death ii. Account value reduces to zero iii. Citizenship status is changed 7. How Can I check my account statement/ balance towards my NPS Account? For NPS, the subscribers are given T-Pin (Telephonic PIN) & I-Pin ( Internet PIN) to check the NPS account statement/ Balance. However this facility is not extended to NPS-Lite wherein a yearly statement would be made available to subscriber by the CRA.
8. Are there any Tax Exemptions?
Yes, Currently the subscriber can claim Tax Deductions for contribution made by him under Section 80 CCD. However the Tax benefits would be applicable as per the Income Tax act, 1961 as amended from time to time.
9. Can I exit before attaining the age of 60 years?
Yes, you can exit the system before attaining the age of 60 years provided you annuitize at least 80% of your pension corpus.
10. How many times can I make contributions during the year? There is no limit on the number of contributions in a year; Minimum of atleast one.
11. Can I make contributions of less than INR 500 at a time for NPS? No, contributions of less than INR 500 shall not be accepted.
12. Can someone else make contributions on my behalf? Yes, an authorised person can make contributions on your behalf.
Charges and Penalty
13. What would be the penalty in case I am unable to contribute the minimum annual contribution?
In such an event, you account would be frozen, to unfreeze it following process has to be initiated i. In order to reactivate the account, pay the minimum contributions, along with penalty due, for the period of dormancy. ii. Bear a default penalty of INR 100 per year of default and the account would become active. ? A dormant account shall be closed when the account value falls to zero.
14. Can the fee structure change? Yes, the fee structure may change as decided by PFRDA from time to time Investments 15. Are there any investment return guarantees?
Since the investments are market related, a specific return cannot be guaranteed. NPS is a defined contribution scheme and the benefits would depend upon the amounts contributed and the investment growth up to the point of exit from NPS. However all central Government employees come under the same NPS scheme from 01.04.2004
16. Should I seek some professional advice before making any investment decisions?
You may seek professional advice to assist you in planning your financial goals. However, it would be your own decision to invest in NPS.
17. What should I consider before choosing investment options?
Investment options should be chosen carefully. Remember there is a tradeoff between risk and return. Young subscribers who enter the NPS at early age would normally be in a better position to take higher risks as compared to subscribers who enter the system later age.
18. Who will decide the selection of Pension Fund and the investment options for NPS?
The choice of Pension Fund and Investment option rests with you. In case you are unable/unwilling to exercise choice regarding your investment strategy, your funds will be invested in accordance with Auto choice option. For details see section on ‘Investment in the NPS’. In both active and auto choice you must choose one Pension Fund Manager.
19. Will I be permitted to select more than one Pension Fund to manage my savings for NPS?
You have to mandatorily select only one PFM while opting for either ‘Active Choice’ or Auto choice. However, PFRDA may allow the subscribers to choose more than one PFMs to manage their savings in the future.
20. Will I be permitted to change my Pension Fund preference in NPS? Yes, subject to such conditions as may be specified by PFRDA. 21. Where will be my contributions invested? Your contributions shall be invested as desired by you. In case you have opted for ‘Active Choice’, your contributions shall be invested in E, C or G asset classes in percentage allocations as per the instructions given by you. If you have not opted for any choice or you have opted for ‘Auto Choice’, your contributions shall be invested in E, C or G asset classes in the percentage allocations as prescribed by PFRDA, depending on your age.
22. Can I invest more than 40% of my pension wealth to purchase the annuity? Yes, you may choose to invest up to 100% of your pension wealth to purchase the annuity.
23. What will happen to my savings after I retire at age 60? After you retire at age 60, you shall have to compulsorily invest a minimum of 40% of your pension wealth to purchase a life annuity from an IRDA – regulated life insurance company. You may choose to purchase an annuity for an amount greater than 40 percent or else withdraw the remaining pension wealth in lump sum.
24. What will happen to my savings if I decide to exit NPS before age 60? You would be required to invest at least 80% of your pension wealth to purchase a life Annuity from any IRDA – regulated life insurance company. The remaining 20% may be withdrawn as a lump sum.
25. Will the annuity also provide for a family (survivor) pension? Yes, you will have an option of selecting an annuity which will pay a survivor pension to your spouse.
26. On my death, can my nominee continue to operate the account in my name? No, the balance standing to the subscriber’s account may be transferred into the nominee’s account after following regular KYC procedure.
27. What is Tier II account? This is a Voluntary Savings facility. Customer is free to withdraw savings from his account whenever they wish.
28. Who can operate a Tier-II account? Tier –II can be opened by anyone who has a Tier- I account.
29. What will be the conditions for opening a Tier-II account? You would need to have an active Tier-I account to open a Tier-II account under NPS.
30. Is there an option of Tier II for NPS- Lite? No, as of now the option of having Tier II account persists only with NPS.