NPS is a highly beneficial scheme that allows one to develop a significant fund for the second innings of life by regularly making an investment in this account during one’s period of employment. A regular income invested in the account in one’s active years can be a great way to secure one’s future, particularly for those getting retired from the private sector jobs. Our Government already provides this type of pension facility for the employees working in the public sector but those working in the private corporate sector or any unorganized segment also do not have access to this facility. That’s exactly why a systematic plan of investment such as NPS can be a good choice. Thus, all the salaried class people on the lookout for taking the maximum advantage of 80C deductions may also consider this scheme.

Tier I subscribers are required to make contributions subject to the following conditions:

Over and above the mandated limit of a minimum of one contribution, a subscriber may decide on the frequency of the contributions through the year as per his/her convenience.

Minimum contribution requirements for Tier II are:

Both Tier I and Tier II accountholders have to make at least one contribution in a financial year.

To contribute in Tier I and Tier II accounts, the subscriber needs to deposit the contribution amount along with the duly completed NCIS (NPS Contribution Instruction Slip) to any POP-SP.

Tier I subscribers are required to make contributions subject to the following conditions:

Over and above the mandated limit of a minimum of one contribution, a subscriber may decide on the frequency of the contributions through the year as per his/her convenience.

Minimum contribution requirements for Tier II are:

Both Tier I and Tier II accountholders have to make at least one contribution in a financial year.

Employers’ contributions to NPS on behalf of their employees will receive deductions from income (employer’s income), an amount equivalent to the amount contributed or 10% of the Basic Salary + DA of the employee, whichever is less. (Section 36(1) (iv a) of the Income Tax Act 1961). Individual employees contributing additionally to the NPS, the investment is eligible for deduction from income under Section 80CCD of the Income Tax Act 1961.

The following applicants cannot join:

Undischarged insolvent: Individuals who are not granted an ‘order of discharge’ by court.

Individuals of unsound mind: An individual is said to be of unsound mind for the purposes of making a contract if, at the time of making it, he is incapable of understanding it and of forming a rational judgement regarding its effect upon his self-interest.

Pre-existing account holders under NPS.

In the event of a subscriber’s death, the beneficiary submits a withdrawal request to the associated POPSP who will enter the request in the CRA system. After the request is processed, a cheque is issued favoring the beneficiary and forwarded to the associated POP.

CRA – Central Record Keeping Agency – is the core infrastructure for the NPS. It is managed by NSDL and its main function is recordkeeping, administration and customer service functions for all NPS subscribers such as, issuing unique PRAN (Permanent Retirement Account Number) to each subscriber, maintaining a database of all PRANs issued and recording transactions related to each subscriber’s PRAN.

On successful registration, PRAN (Permanent Retirement Account Number) will be allotted to the subscriber. The PRAN Card is a document with the PRAN, subscriber name, subscriber’s father’s name, photograph and the subscriber’s signature or thumb impression.

An individual cannot transfer savings from one NPS account to another.

Annuity is the context of NPS refers to the monthly sum that is received by the subscriber from the Annuity Service Provider after he attains the age of 60.

If a subscriber wishes to exit from NPS before attaining the age of 60, he/she can withdraw up to 20% of the sum accumulated till that point of time. The subscriber has to buy annuity with the rest of the money. If a subscriber dies before attaining the age of 60, the entire sum goes to the nominee.