WHAT IS NATIONAL PENSION SCHEME (NPS)
The National Pension System (NPS), is a voluntary, long-term investment plan. It is open to all employees across the public, private, as well as unorganized structure.
The NPS is designed to enable its subscribers to secure their post-retirement future by systematic and periodic savings throughout their working years. Under the pension scheme, the subscriber's contributions are invested in market-linked instruments like debt and equity. The returns on these investments are dependent upon their performance in the market.
Let’s look at the various benefits that NPS brings to you
NPS ECOSYSTEM
Since now, you have a basic understanding of NPS
let’s understand the eco system & how you can get started with your NPS journey.
Pension Fund Regulatory and Development Authority (PFRDA)
It is the regulatory body set up by the Ministry of Finance, Government of India to supervise, develop and regulate the pension market in India
Point of Presence (POPs)
Point of Presence is your service provider through which you can open and operate your NPS account
Central Record Keeping Agency (CRA)
CRAs keep a record of all your documents related to your NPS subscription
Trustee Bank
Helps with the transfer of your (subscriber) funds among the various entities of the NPS ecosystem
NPS Trust
It has been setup to ensure that investments in NPS are secure. It monitors the portfolios of the Pension Fund Managers
Pension Fund Manager (PFM)
Fund managers of Max Life Pension Fund Management have the responsibility to manage your funds invested in NPS as per the guidance issued by PFRDA
Custodian
Holds and protects the underlying assets bought by the Pension Funds
Annuity Service Provider (ASP)
Life insurance companies such as Max Life Insurance are empaneled with PFRDA to provide you with an annuity service after you exit the NPS
HOW TO ENROLL?
Use the NPS Calculator ( coming soon... ) to get an idea of the amount you need to invest in order to live a retirement you have planned for.
You can register yourself online through the 3 available CRAs- NSDL, KFin,and CAMS and open an eNPS account by clicking on the ‘National Pension System’ tab followed by the ‘Registration’ tab. You can also go through offline route by contacting an appointed POP (Point of Presence) by PFRDA.
Eligibility Criteria for NPS
Any individual who is a citizen of India (both resident and Non-resident), falling in the age group of 18-70 years are eligible to join NPS by opening Tier-I – the primary, pension account – as well as the Tier-II or investment account.
Types of NPS account
There are two primary account categories under the National Pension Scheme – Tier I and Tier II. While a Tier I account is a basic pension account, a Tier II account is more of an additional savings option.
| NPS Tier I | NPS Tier II | |
|---|---|---|
| Eligibility | Indian citizens between 18-70 years | NPS Tier I members |
| Investment Limit | Minimum investment of ₹500 annually | Minimum investment of ₹1000 annually |
| Tax Benefit | Up to ₹1.5 lakh in tax deduction under Section 80C. Additional Rs. 50,000 allowed over and above the 80C limit u/s 80 CCD(1B) | No tax benefits |
| Maturity | Subscribers can withdraw NPS account balance upon retirement or exit from the scheme | Subscribers can make deposits and withdrawals without restriction |
Now to generate your Acknowledgement number select Aadhaar as your identity document continue with the process online. Make sure the mobile number used is linked to your Aadhaar, so that the OTP generated can be used to further to confirm your personal details.
After confirming all your details, you get the Acknowledgement number via SMS or Email. You can proceed further to provide details such as your occupation and bank account details.
At this crucial step as subscriber you need to select a pension fund manager out of the available options and also choose whether you want to put your investments in Active or Auto mode. Here you can select Max Life Pension Fund Management as the PFM to manage your investments .
Active choice
If you are someone who wants to have complete control of your investments, then this is the option for you. You can choose from the following asset classes –
Asset Class E
Refers to the equity and equity-related investments of NPS
Asset Class C
Refers to government bonds and related investments of NPS
Asset Class G
Refers to government bonds and related investments of NPS
Asset Class A
Refers to alternative investments made by NPS such as Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs), Alternative Investment Funds (AIFs), etc.
Auto choice
You have the option to put your investments in the convenience of Auto choice with NPS. You can choose between 3 life cycle options:
LC 75
This lifecycle offers you higher returns at a higher risk
LC 50
This lifecycle offers you moderate returns at moderate risk
LC 25
This is a low risk- return option
Basis what you choose, your money will be invested in various asset classes.
You need to appoint your nominees and also decide the share of proceeds they will be entitled to. Upload required documents such as PAN, cancelled cheque and signature to proceed for the payment.
You will have to make the minimum contribution to your Tier-I account to get started. Download and keep the subscriber registration form, which contains your ePRAN (Permanent Retirement Account Number). You will need this number to make future NPS contributions and other transactions.
If you are facing an issues with your enrollment or have any queries pertaining to the process or NPS then you can reach out to us on support@maxlifepensionfund.com.
APPLICABLE NPS CHARGES
Checkout the following NPS charges:
| Intermediary | Type | Service Charges* | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CRA (Central Record-Keeping Agency) | Account Opening Charges | NSDL ₹40 | Karvy ₹39.36 | ||||||||||
| Annual Maintenance Cost per Account | NSDL ₹69 | Karvy ₹57.63 | |||||||||||
| Charge per Transaction | NSDL ₹3.75 | Karvy ₹3.36 | |||||||||||
| POP (Point-of-Presence) | Initial Subscriber Registration & Contribution Upload | ₹200 - ₹400 | ||||||||||
| Any Subsequent Transactions | 0.5% of contribution | Min. ₹20 Max. ₹25000 Non-Financial ₹20 | |||||||||||
| Persistency (tenure> 6 months) | Rs.50/- per annum for annual contribution Rs.1000 to Rs.2999 Rs.75/- per annum for annual contribution Rs.3000 to Rs.6000 Rs.100/- per annum for annual contribution above Rs.6000 |
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| Contribution through eNPS | 0.20% of contribution, Min. ₹15 Max. ₹10000 | |||||||||||
| Custodian | Asset Servicing Charges | 0.000000001770% p.a. for electronic segment & physical segment | ||||||||||
| Pension Fund Manager Charges | Investment Management Fee | The Investment Management Fee shall be charged in percentage in accordance with following slab structure of Asset Under Management
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| NPS Trust | Reimbursement of Expenses | 0.005% p.a. |
NPS EXIT AND WITHDRAWAL
During normal exit/superannuation from NPS, the subscriber is mandatorily required to purchase a life annuity from the empanelled life insurance company. from Ppart of their accumulated retirement corpus is used to buy annuity and withdraw the remaining portion of the corpus as a lump sum, as an optional choice. The withdrawal and Exit under NPS must be in accordance with Exit and withdrawals under NPS (PFRDA) Regulation, 2015.
Max Life Insurance has been empanelled with by PFRDA to act as one of the Annuity Service Providers for the NPS. An annuity is an insurance product dedicated to retirement planning wherein you can invest a lump sum amount to generate steady income immediately post-retirement.
Things to consider while choosing an annuity plan
Choose the Right Amount to Invest in Annuities
Your financial needs – immediate or future
Your long-term goals
Your current savings
Your investment portfolio
Inflation Rate
Higher the accumulated corpus used to purchase Annuity, the higher will be the monthly pension that is received.
Select the Right Type of Annuity Plans
Single life immediate annuity for life without death benefit
You will get a fixed guaranteed income (pension) throughout life, but no death benefit
Joint life immediate annuity for life without death benefit
Pension is paid if one of the annuitants is alive via the chosen mode but no death benefit
Joint life immediate annuity for life with death benefit
You or the other annuitant will get a fixed income if one of you are alive, along with death benefit given to the nominee(s)
Single life immediate annuity for life with death benefit
Pension is paid throughout your life while the nominee also gets a death benefit
Joint life immediate annuity for life with death benefit
You or the other annuitant will get a fixed income if one of you are alive, along with death benefit given to the nominee(s)
Opt for a Suitable Frequency Mode
Depending on the annuity plan you choose, you can further select a pay-out frequency. Most of the renowned annuity plans for NPS subscribers offer four pay-out options, i.e. annually, half-yearly, quarterly, or monthly. *As per PFRDA withdrawal guidelines, in case of government sector subscribers, the Annuity payable shall be monthly only.
Buying the Right Annuity Plan
Being an NPS subscriber, buying the right annuity plan is a crucial step towards retirement planning. Through Max Life Annuity plans, you can start investing for your retirement plans and ensure a regular lifetime income stream.
With this retirement plan, you also get the option to plan an early retirement by locking higher annuity rates at present. As a result, you can enjoy risk-free life-long payment to support your financial needs. Check the premium using its online calculator.