Frequently Asked Questions about National Pension System

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Here, we try to answer all your queries related to the very popular retirement scheme, National Pension System or NPS.

How Can I Open NPS?
One can open an NPS account with entities called Point of Presence (POP). Most of the banks and some financial institutions are enrolled as POPs. You can access them via PFRDA website. https://www.npscra.nsdl.co.in/pop-sp.php

What is the minimum and maximum age for opening NPS?
One who ages between 18 to 65 years is eligible to reap its benefits.

What are the documents required?
  • Subscriber registration form
  • Proof of identity
  • Proof of address

Can I open more than one account?
No.

What are Tier I and Tier II Accounts?
Tier I is the primary account where no withdrawal is permitted till the age of 60 years while the Tier II gives you the flexibility to withdraw funds at any point of time.

Is it mandatory to open Tier II NPS account?
No.

NPS


What is the minimum contribution required?
Rs. 6000/- in a financial year in Tier-I account.

Is there any upper limit on amount of contribution?
No.

If I do not make minimum contribution, what will happen?
Your account will be frozen. To unfreeze your account, you need to visit the POP, make required amount and an additional Rs. 100/- as penalty.

How does NPS Scheme works?
NPS is based on unique PRAN: Permanent Retirement Account Number. It is allotted to the subscriber upon joining and the subscriber contributes towards NPS during the work life. On retirement, the corpus is made available with the mandate that some portion must be invested into Annuity to get monthly pension post retirement or exit from the scheme.

How Many Types of Funds are there?
  • Equities (E)
  • Corporate bonds (C)
  • Government securities (G)
  • Maximum permissible limit (M)
NPS restricts investment towards Equities to 50% of contribution amount. One can choose to invest up to 100% in Corporate Bonds or Government Securities Fund.

What are the Investment Choices?
1)      Active Choice
This option allows the investor to decide the different assets where money will be invested.
2)      Auto Choice or Lifecycle Fund
This option invests money automatically in line with the age of the subscriber.

Can I change my Investment Choices?
Yes.

Can I change my Pension Fund Managers?
Yes

Is partial withdrawal allowed from Tier I?
Yes. One can withdraw up to 25% of contribution towards Tier I after 10 years. Also, subscriber can withdraw twice after a gap of 5 years after first withdrawal.

How can I exit from NPS?
Subscriber can exit from NPS after 10 years of account opening or reaching age of 60 years, whichever is early.

Feel free to ask us any queries you have in the comments!

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