Overview
National Pension scheme (NPS) is a voluntary and defined contribution retirement saving scheme. The NPS has been designed in such a way that it provides Systematic Saving (just like SIP) during subscribers working life. It is an attempt to find a sustainable solution to provide adequate retirement income to every citizen of India.
How NPS Works
Ø Under the National Pension Scheme, the subscribers savings is pooled in a pension fund.
Ø These
pooled funds are invested by PFRDA (Pension Fund Regulatory and Development
Authority) regulated professional fund managers as per the approved investment
guidelines in the diversified portfolios comprising of Government Bonds, Bills,
Corporate debentures and shares.
Ø These
contributions would grow and accumulate over the years, depending on the
returns earned on the investment made.
At the time of normal exit from NPS, the subscribers may use the accumulated pension wealth under the scheme either to purchase a life annuity from a PFRDA empanelled life insurance company or withdraw a part of the accumulated pension wealth as lump-sum, if they choose to do so.
Eligibility
All Citizens age from 18 years to 60 years of age.
NRI’s Status
Yes, NRIs are allowed to invest in NPS
Tax Status
Any subscriber to NPS would get an additional benefit of Rs.50,000 under section 80CCD (1B) which would be over and above the ceiling limit of Rs.150,000 as prescribed under section 80C.
Features of National Pension Scheme
National Pension Scheme offers a range of investment options and choice of Pension Fund Manager for planning and growth of investments in a reasonable manner and watch your money growth. Subscriber have the liberty to switch over from one fund to another or from one fund manager to another. The investment and returns are market related and work like mutual funds.
Subscriber
enjoys the flexibility to choose between eight fund managers (one fund manager
to be selected compulsorily ) mentioned as below :
1. HDFC
Pension Management Co Ltd.
2. ICICI
Prudential Pension Fund Management Co. Ltd.
3. LIC
Pension Fund Ltd.
4. Kotak
Mahindra Pension Fund Ltd.
5. UTI
Retirement Solutions Ltd.
6. SBI
Pension Funds Pvt. Ltd.
7. Reliance
Capital Pension Funds Ltd.
8. Birla
Sunlife Insurance Co. Ltd.
A subscriber must choose between active choice
and auto choice for distribution of his contribution. If active choice is
selected, the subscriber must indicate the percentage distribution between
corporate , gilt and equity. The maximum investment allowed in equity is 50%.
PRAN
Account opening in NPS is simple which provides a Permanent Retirement Account Number (PRAN) , which is unique number and it remains with the subscriber throughout his lifetime. The scheme is structured into two tiers :-
1. Tier-I
Account : This is non withdrawal Permanent Retirement Account in which the
accumulations are deposited as per the option of the subscriber.
2. Tier-II
Account : This is a voluntary withdrawal account which is allowed only when
there is an active Tier I Account in the name of the subscriber. The
withdrawals are permitted from this account as per the needs of the subscriber.
NPS Withdrawal
· The subscriber wishing to exit from NPS has
to submit a Withdrawal Application Form to the concerned Point of presence (POP)
along with the documents specified below for withdrawal of benefits
Following documents are required to be submitted along with the withdrawal
forms in order to settle the claims:
1. PRAN card in original
2. Attested copy of proof of identity (e. g. Passport,
Aadhar Card, PAN Card, valid Driving License, Voter ID Card etc.)
3. Attested copy of proof of address (e. g. Passport, Aadhar
Card, Valid Driving License, Voter ID Card etc.)
4. Cancelled cheque (containing Subscriber Name, Bank
Account Number and IFSC Code) or Bank Certificate containing Name, Bank Account
Number and IFSC code, for direct credit or electronic transfer.
·
The POP would authenticate the documents and
forward them to Central Record-keeping Agency (CRA) the National Security
Depository Limited (NSDL).
·
CRA in turn would register the claim and
forward the necessary application form along with the procedure to be followed
and documents that need to be submitted.
·
Once the documents are received, CRA
processes the application and settles the account.
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