NPS FAQ: All your Questions are Answered here
National Pension System (NPS) frequently asked questions
Thinking of joining in National Pension System (NPS)? Read the answers to the most common questions that might arises in your mind about National Pension System (NPS).
1. What is National Pension Scheme (NPS)?
NPS is a contribution based pension scheme in India and it is regulated by PFRDA. It was introduced in 2014 for government employees and later subsequently extended to all Indian citizens in 2009.
2. Who can subscribe to NPS?
Any Indian citizen, whether resident or non-resident between the ages 18 to 60 years can join in NPS. NRI can open an NPS account only if he/she has an Indian bank account.
3. Can I open more than one NPS account?
No. You can open only one NPS Account because it is fully portable across geography and job. Government employees who are already covered under this scheme cannot again open an additional account.
4. How the NPS scheme works?
The scheme is based on PRAN number and it will be allotted to each Subscriber upon NPS joining. The contributions towards NPS (directly or through the Employer) will be invested in Equities (E), Corporate Bonds (C) and Government Securities (G). On retirement or exit, some portion of the Corpus must be invested in an Annuity plan to provide a monthly pension. NPS returns are fully market linked unlike provident fund, hence the corpus will be depends upon the return generated under Equity, Corporate Bonds and Government Securities funds.
5. Can I invest NPS along with Provident Fund?
Yes, you can invest in NPS along with your contribution to any Provident Fund.
6. Where can I open an NPS account?
NPS is distributed through Points of Presence (POP’s) and most of the banks and financial institutions are enrolled to act as POP in India. POP will assist you in opening the NPS account including the filling up of necessary forms and any other relevant NPS information.
7. How can I find nearest POP-SP (Point of Presence Service Providers)?
You can get the details for the nearest POP through website of CRA: https://www.npscra.nsdl.co.in/pop-sp.php
8. What are the different types of NPS Account?
You get two types of account under NPS scheme, Tier 1 and Tier 2. Tier 1 is a mandatory account to open in NPS. Tier 1 is a basically a pension account and withdrawal from Tier 1 is permitted only after 10 years of joining or attaining the age 60 years whichever comes early. Tier 2 account is an optional and pure investment account, where one can withdraw the corpus at any time.
9. How the check the status of my NPS application?
Subscriber can check the status of their NPS application by accessing CRA website: https://cra-nsdl.com/CRA/ by using the 17 digit acknowledgement number allotted by POP-SP at the time of account opening.
10. What are the documents needed for opening an NPS account?
You need to submit following documents to POP for NPS opening:
- Completely filled NPS registration form
- Proof of Identity
- Proof of Address
- Age proof
11. How your money are managed under NPS?
The money invested in NPS will be managed by the Pension Fund Managers (PFM) as per the investment guidelines provided by PFRDA. Currently, there are 8 Pension Fund Managers who manages the NPS funds. You have the option to select any one of the following Pension Fund Manager
- ICICI Prudential Pension Fund
- LIC Pension Fund
- Kotak Mahindra Pension Fund
- Reliance Capital Pension Fund
- SBI Pension Fund (Default Pension Fund Manager)
- UTI Retirement Solutions Pension Fund LIC Pension Fund
- HDFC Pension Management Company
- DSP Blackrock Pension Fund Managers
The Pension Fund Managers follow two approaches to invest subscriber’s money as per the guidelines provided by PFRDA
- Active choice: In this option, you can decide on the asset classes in which your funds are to be invested and their percentages (Asset class are Equities (maximum of 50% allowed), Corporate Bonds and Government Securities.)
- Auto choice: This is the default option under NPS. Under this choice, your funds will be invested in pre-defined portfolio based on your age.
Later, you can change your Pension Fund Manager and the Investment Option with certain restrictions.
12. What is the minimum and maximum contribution in a year under NPS?
Under Tier 1, you must deposit Rs 6000/- in a year and the minimum contribution is Rs 500/- at one time. Minimum at least one transaction has to be made per year and there is no limit on maximum number of transactions in a year.
Under Tier 2, you must deposit Rs 2000/- in a year and the minimum contribution is Rs 200/- at one time. Minimum at least one transaction has to be made per year and there is no limit on maximum number of transactions in a year.
13. Tax benefits under NPS?
Individuals who are employed and contributing to NPS is eligible for a tax deduction. Tax deduction upto 10% of Salary (Basic + DA) under Section 80 CCD(1) within the overall ceiling of Rs. 1 lac under Sec 80 CCE. Your employer contribution to NPS is also eligible for tax benefits under Section 80CCD (2).
Self-employed are eligible for tax deduction up to 10 % of gross income under Sec 80 CCD (1) with in the overall ceiling of Rs. 1 lac under Sec 80 CCE.
Apart from above tax benefits, you can also claim an additional deduction of upto INR 50,000 under Section 80CCD (1B) above to INR 1.5 lakh permitted under Section 80C.
14. How to register NPS grievances?
Any NPS grievance can be raised through the following options.
Call centre: Dial toll free number 1800 110 708 and lodge the complaint using T-PIN
Online: Post your grievance online in the CRA website https://cra-nsdl.com/CRA/ using your I-PIN
POP-SP: You can also contact your POP-SP, as they can raise the grievance on behalf of the client.
Email: Lodge a grievance by email to firstname.lastname@example.org
Post: You can also send a compliant/grievance by post to the following address
NPS Grievance Redressal Cell,
Pension Fund Regulatory and Development Authority,
1st Floor, ICADR Building, Plot No. 6, Vasant Kunj,
Institutional Area, Phase – II, New Delhi – 110070,
Tel: 011-26897948-49, FAX: 011-26892417,