National Pension System (NPS) is a government promoted pension / annuity scheme under which any Indian citizen between the age of 18 and 65 years can open ‘Tier I’ or ‘Tier I and Tier II both’ types of pension accounts. NPS account can also be opened by a non-resident Indian or a person with an overseas citizenship of India (OCI). However, NRI and OCI persons can only ‘Tier I’ NPS accounts. NPS accounts are managed by NPS Trust which invests in different asset classes, such as government bonds, equity market instruments and corporate debt according to preference of an investor.
Here is all you need to know about National Pension System (NPS):
NSDL (National Securities Depository Limited) is the Central Recordkeeping Agency (CRA) for National Pension System (NPS). Each employee is identified by a unique number and has a separate Permanent Retirement Account Number (PRAN).
An NPS account can be opened by a citizen of 18-65 years of age in two modes: online and offline. The subscriber can either apply for an NPS account by visiting a Point of Presence (PoP), or do it online through the e-NPS website- enps.nsdl.com/eNPS, according to NSDL.
Under NPS, an exit is defined as closure of individual pension account of the subscriber. NPS also allows partial withdrawal from the mandatory Tier-I account under certain conditions, according to NSDL.
For withdrawal before attaining 60 years of age, at least 80 per cent of the accumulated pension wealth of the subscriber has to be utilized for purchase of an annuity, providing the monthly pension to the subscriber and the balance is paid as a lump sum to the subscriber, according to NSDL.
In case if the total accumulated corpus in the NPS account is less than Rs 2 lakh, the subscriber can opt for a 100 per cent lump sum withdrawal, upon attaining 60 years of age. In other cases, at least 40 per cent of the accumulated corpus needs to be utilized for purchase of an annuity scheme, providing a monthly pension to the subscriber. In this case, the remainder is paid as lump sum to the subscriber.
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