National Pension System One Pager V2

National Pension System
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What is NPS
National Pension System is a contribution based retirement scheme initiated by Government of India & regulated by
Pension Fund Regulatory & Development Authority – PFRDA. It helps you build a retirement corpus in a systematic
manner during your working life.
Features of NPS
1. Prudently Regulated – NPS is regulated by PFRDA with transparent investment norms, regular monitoring &
performance review of fund managers by NPS trust.
2. Low Cost – It is one of the low cost pension fund in the world.
3. Voluntary – It is open for every Indian citizen. Entry age 18 – 65 years.
4. Flexibility – You can choose & switch any fund manager out of seven mention below & investment choice as
per you need & requirement.
5. Portability - You will be issued a Permanent Retirement Account Number (PRAN) which can be operated
from anywhere & anytime even if you change state, city or your job.
6. Tax Benefit – Triple tax benefits under various section of Income Tax Act 1961.
Triple Tax Benefits

1. Employee contribution towards NPS is tax exempted under section 80 CCE up to limit of Rs 1.5 lacs.
2. Additional tax deduction on investment up to Rs 50000 under section 80 CCD (1B). This tax benefit is over &
above the limit mentioned in first point. This is an exclusive tax deduction available for NPS only.
3. Employer’s contribution towards NPS is tax exempted under section 80 CCD (2) up to 10% of salary (Basic +
DA). This tax benefit is in addition to the benefits mentioned in the above sections. PFRDA has introduced a
maximum capping of Rs. 7.5 lakh on employer’s contribution of PF, Superannuation, and NPS.
Types of Account
A subscriber can open Tier I & Tier II account
1. Tier I : This is a non-withdrawable account to which the subscriber can contribute his/her savings to build a
retirement corpus.
2. Tier II : This is a voluntary savings account which provides liquidity to subscribers i.e. subscribers are free to
withdraw their investment from this account whenever they wish. Tier I is mandatory to open Tier II account
How much do you need to contribute per year?

Account Type Details Amount
Min Amount per Contribution Rs 500
Tier I
Min contribution per year Rs 1000
Contribution at the time of Account Activation Rs 1000
Tier II Min Amount per Contribution Rs 250
Min Yearly Balance Rs 2000
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National Pension System
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Pension Fund Manager

There are 7 Pension Fund Manager appointment by PFRDA. Subscriber can choose any one from the list. HDFC
Pension, ICICI Pru, Kotak Pension, Aditya Birla, LIC, SBI & UTI.
Investment Option
NPS offers two investment choices (I) Active Choice (II) Auto Choice.
i. Active Choice: This option allows a subscriber to actively decide the allocation in asset class Equity (max
75%), Corporate Bonds, Government Securities & Alternate Funds (5%).
ii. Auto Choice: Subscriber has the option to choose life cycle fund wherein funds would be allocated based on
the age of the subscriber.
How to Exit from the Scheme

i. On attaining the age of 60 years
• Maximum 60% of the corpus can be withdrawn as lumpsum. Alternatively, subscriber can withdraw in
maximum 10 unequal annual instalments up to the age of 70 years.
• Minimum 40% of the corpus to be mandatorily used to purchase an Annuity.
ii. Before attaining the age of 60 years
• Maximum 20% of the corpus can be withdrawn as a lumpsum
• Minimum 80% of the corpus to be mandatorily used to purchase an annuity
iii. Exit due to death
• Nominee or legal heir can claim 100 % of the corpus accumulated
Partial Withdrawal
• It is allowed post completion of 3 years of account opening
• Only 25% of own’s contribution withdrawal is allowed for specific purpose like higher education, child
marriage, buying home, critical illness & starting business venture
• This withdrawal is tax free.
Services by HDFC Bank as PoP

• Subscriber Registration for Tier I & Tier II
• Subscribers subsequent contribution upload
• Subscribers personal, contact & other details modification
• IPIN/TPIN Reissue
• Switch / Withdrawal / Scheme Change / PFM Change / Sector Shifting etc.
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National Pension System

3. Voluntary – It is open for every Indian citizen. Entry age 18 – 65 years.

Triple Tax Benefits

How much do you need to contribute per year?

Pension Fund Manager

How to Exit from the Scheme

• Minimum 40% of the corpus to be mandatorily used to purchase an Annuity.

ii. Before attaining the age of 60 years

• Maximum 20% of the corpus can be withdrawn as a lumpsum

• Minimum 80% of the corpus to be mandatorily used to purchase an annuity

iii. Exit due to death

• Nominee or legal heir can claim 100 % of the corpus accumulated

• This withdrawal is tax free.

Services by HDFC Bank as PoP

• Subscribers subsequent contribution upload

• Subscribers personal, contact & other details modification

• Switch / Withdrawal / Scheme Change / PFM Change / Sector Shifting etc.

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