With effect from January 1, 2004, the Central Government of India created the National Pension System (NPS) (except for the armed forces). All Indian citizens now have access to NPS as of May 1, 2009. Protean eGov Technologies Limited has been named the Central Recordkeeping Agency (CRA) for the National Pension System by the Pension Fund Regulatory and Development Authority (PFRDA), the organization responsible for NPS regulation.
For all NPS subscribers, CRA will perform the duties of record keeping, administration, and customer service in a first-of-its-kind endeavor in India. Each subscriber will receive a Permanent Retirement Account Number (PRAN), and the CRA is required to keep a database of all Permanent Retirement accounts as well as record transactions involving each PRAN.
A significant step toward the creation of an effective and efficient voluntarily defined contribution retirement savings system in India is the National Pension System (NPS), which is governed by the PFRDA. Its broad goals are as follows:
- Provide a retirement income.
- Long-term, reasonable market-based returns.
- Providing all citizens with access to old age security.
National Pension System Important Features & Beneﬁts
Every worker receives a specific Permanent Retirement Account Number (PRAN), which is the foundation of the National Pension System (NPS).
The Government of India has made the scheme secure from a security standpoint and has provided certain attractive perks for NPS account holders to encourage saving.
The advantages of an NPS Account include:
NPS is governed by PFRDA (Pension fund regulator under the Ministry of Finance, Government of India), which makes sure that transparent rules govern the operations. With routine monitoring, NPS Trust makes sure the rules are followed.
1- Voluntary: Any Indian citizen may participate in the voluntary program. Any money, at any time, may be invested in your NPS account.
2- Flexibility: You get the freedom to choose or modify the fund manager, POP (Point of Presence), and investment strategy. This ensures that you can increase profits dependent on how comfortable you are working with various asset classes and fund managers (equity, corporate bonds, government securities, and alternative assets).
3- Economical: NPS is among the most cost-effective investing choices.
4- Portability: NPS accounts or PRANs will remain the same regardless of changes in employment, city, or state.
5- Transferring superannuation funds: While transferring superannuation funds to their NPS accounts, NPS account members are not liable to tax repercussions.
6- Tax Benefits: NPS provides three types of tax advantages, which are as follows:
Tax Benefits for Salary People & Self-Employed Individuals
Section 80CCD allows you to obtain a tax exemption of up to Rs. 50,000. (1B). This benefit exceeds the section 80C maximum of Rs. 1,50,000.
1- Tax Benefits for Salary People
Section 80CCD (1)allows you to invest up to 10% of your basic salary plus your dearness allowance without incurring any tax liability. According to section 80C of the Income Tax Act of 1961, this tax exemption is limited to Rs. 1,50,000.
2- Tax Benefits for Self-Employed Individuals
Under section 80CCD (1), you are allowed to invest up to 20% of your gross annual income without paying taxes on it. According to section 80C of the Income Tax Act of 1961, this tax exemption is limited to Rs. 1,50,000.
NOTE: Employer contributions to NPS, PF, and superannuation are limited to a combined maximum of 7.5 lakhs.
What Options are There for Investing in NPS Scheme?
NPS provides two options for adding money to your account:
- Active choice
- Auto Choice
In the Active Choice option, the subscriber chooses the percent of funds to be assigned to each asset class. In the Auto Choice option, however, funds are automatically distributed based on the subscriber’s age among the asset classes in a pre-defined matrix. The subscriber must execute their investment decision after choosing a pension fund manager.
Steps to join NPS Scheme
Generating plans using pop-sp
Get your application form for a Permanent Retirement Account Number (PRAN)
If you are a Subscriber between the ages of 18 and 65, you can obtain a PRAN application form from any Point of Presence – Service Provider (POP-SP) you desire to register with. The PRAN application form is also available on our website by clicking here
You must make sure that your PRAN application form is completed, including your photo, signature, mandatory information, scheme preferences, etc. You must also submit the KYC documentation, which includes your identification and address proof. Please refer to the offer document provided by the Pension Fund Regulatory and Development Authority (PFRDA) for more information about NPS.
Send your application form to the closest Point Of Presence – Service Provider the PRAN (POP-SP)
You can submit the PRAN application and the KYC documents at the nearest POP-SP location. Your correspondence address will receive a PRAN card from the CRA.
Track your PRAN submission
When you submit your PRAN application, POP-SP will provide you with a receipt number. By entering the receipt number in the following field at https://cra-nsdl.com/CRA/pranCardStatusInput.do, you can check the status of your PRAN application.
Send in your first contribution slip
After requesting registration with any POP-SP, you must pay your first contribution (a minimum of Rs 500). You must send an NCIS (Instruction Slip) with information about the payment made towards your PRAN account.
How to Register for NPS Online Using Your PAN (KYC Verification by Bank/Non-Bank POP)
- A “Permanent Account Number” is required (PAN)
- Account information with the authorized Bank/Non-Bank for Bank/Demat/Folio authentication of KYC for subscribers registering through eNPS
- Your chosen Bank/Non-Bank POP upon registration will carry out your KYC verification. For KYC verification, the name and address supplied upon registration must coincide with POP data. The request may be turned down if the details do not match. The applicant is encouraged to get in touch with the POP if the chosen POP rejects their KYC.
- All required information must be entered online.
- PAN cards and canceled cheques must be uploaded in *.jpeg/*.jpg/*.png format with file sizes ranging from 4KB to 2 MB.
- You must upload a scanned copy of your photo and your signature in the *.jpeg/*.jpg/*.png format with a file size of 4KB to 5MB.
- When using Internet Banking to make a payment to your NPS account, you will be sent to a payment gateway.
- PRANs credit contributions on a T+2 basis (subject to receipt of clear funds from Payment Gateway Service Provider).
Eligibility for the National Pension Scheme
The many NPS models now in use determine a person’s eligibility for the National Pension System. They include
Model of the National Pension System for the Government Sector
Except for individuals who work for the military forces, the pension system is available to all central and state government employees.
By this approach, the government contributes 10% of each government employee’s income to the National Pension System. A 14% government contribution is given to Central Government employees.
Apart from the Government of West Bengal, every state in the nation has adopted the NPS National Pension System.
The National Pension System’s Corporate Model
The NPS benefits of the pension scheme are available to company employees who have been registered by their employers under the corporate model. They must be Indian nationals between the ages of 18 and 60 who meet the KYC standards to do this.
The following entities are eligible to use the model.
- Registered following the Companies Act.
- Different Co-Operative Acts under which it is registered.
- Referred to as Central or Public Sector Businesses.
- A proprietary concern has been identified.
- registered as LLPs or partnership firms.
- incorporated on a State or Central government’s order.
- Identified as a trust or a society.
Every Citizen an NPS model
Any Indian residents who meet the eligibility requirements listed below are free to choose to enroll in and make voluntary contributions to the NPS pension plan to secure their retirement.
He or she must be between the ages of 18 and 60 on the date of application with a PoP service provider.
He or she must provide the required documentation and meet the KYC standards outlined in the Subscriber Registration Form.
The Government of India launched the NPS initiative intending to offer retirement benefits to all of its inhabitants. The NPS aims to help persons develop the habit of saving for their retirement.