Author Topic: News related to New Pension Scheme (NPS)  (Read 43901 times)


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News related to New Pension Scheme (NPS)
« on: September 08, 2011, 07:34:19 PM »
From today, Indians will have access to another investment avenue to plan for retirement in the New Pension Scheme (NPS). The scheme has been in the pipeline for at least five years but it finally took shape in 2007-08. Although the government was pushing for the scheme after a law providing statutory backing to the regulator was enacted, the Left parties, which were supporting the UPA government, did not allow the passage of the Bill. So, last year, the government decided to go ahead by allowing the NPS Trust to enter management agreements with fund managers. What benefits does the NPS offer? Who is eligible? Business Standard provides a ready-reckoner.

Who can join the New Pension Scheme?
Any Indian citizen between 18 and 55 years. At present, only tier-I of the scheme, involving a contribution to a non-withdrawable account, is open. Subsequently tier-II accounts, which permit voluntary savings that can be withdrawn at any point of time, can be opened. But to be eligible to open a tier-II account, you need a tier-I account.

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How do I enrol?
You will need to visit a point of presence (PoP), fill up the prescribed form with the required documents. Once you are registered, the Central Recordkeeping Agency (CRA) will send you a Permanent Retirement Account Number (PRAN), along with telephone and internet passwords.
REGULATOR: Pension Fund Regulatory & Development Authority
NPS TRUST: A trust, set up under the Indian Trusts Act, that is responsible for taking care of the funds under the New Pension Scheme (NPS) and protect subscriber interests
POINTS OF PRESENCE(PoPs): It is the first point of interaction. The 22 registered PoPs have authorised branches to act as collection points and extend services to customers
CENTRAL RECORDKEEPING AGENCY (CRA): The back  office for maintaining records, administration and customer service functions. National Securities Depository Ltd has been designated the CRA
PENSION FUND MANAGERS: At present, there are six fund managers
TRUSTEE BANK: Bank of India is the designated agency to facilitate fund transfers across various entities such as subscribers, the fund managers and the annuity service providers

How much can I invest?
There is no investment ceiling. But the minimum investment limit has been fixed at Rs 500 a month or Rs 6,000 annually. Subscribers are required to contribute at least once a quarter but there is no ceiling on how many times you invest during the year.

What is the penalty for failure to make the minimum payment?
You will have to bear a penalty of Rs 100 per year of default and will need to pay it with the minimum amount to reactivate the account. Also, dormant accounts will be closed when the account value falls to zero.

Are my investments guaranteed?
No. There is no guarantee since NPS is a defined contribution scheme and the benefits depend on the amount contributed and the investment growth up to the time of exit.

How should I select my investment option?
You can choose the investment mix between equity or E (high risk but high returns), mainly fixed income instruments or C (that come with medium risk and returns) and pure fixed investment products or G (which offer low returns but have very low risks associated with them). Equity investment is capped at 50 per cent.

At present, the equity investment consists of index funds that replicate the Sensex or Nifty portfolio. The C segment includes liquid funds, corporate debt instruments, fixed deposits and public sector, municipal and infrastructure bonds. The pure fixed investment instruments include state and central government securities.

There is a trade-off between risk and returns, with a younger investor placed better to take risks.

If you are unable to decide the investment mix, the default option will kick in.

What is the default option?
The default option, called auto choice lifecycle fund, will see the investment mix change according to the age of the subscriber. At the lowest entry age of 18 years, auto choice entails an investment of 50 per cent in E, 30 per cent in C and 20 per cent in G.

The ratios will remain unchanged till the subscriber turns 36, when the ratio of investment in E and C will decrease annually, while the proportion of G rises.

By the time the subscriber is 55 years, G will account for 80 per cent of the corpus, while the share of E and C will fall to 10 per cent each.

Who will decide the fund manager?
At the moment, the Pension Fund Regulatory and Development Authority (PFRDA) has selected six fund managers ''  '   State Bank of India, UTI, ICICI Prudential, Kotak Mahindra, IDFC and Reliance ''  '   on the basis of a bidding and technical evaluation process. You have to select one fund manager at the time of deciding your investment option; later, PFRDA may allow subscribers to choose more than one fund manager.

Can I change my investment mix and the fund manager?
You can shift from one fund manager to another from May 2010.

What happens if I relocate to another city?
The PRAN remains the same and you can access a toll-free number (1-800-222080). The details of your PRAN and the statement of transactions will be available on the CRA website (
Agency    Service    Charge    Mode
CRA    Account opening
   Rs 50    Through cancellation of units
Annual maintenance charge    Rs 350*
Per transaction    Rs 10*
(Max allowed)    Registration    Rs 40    Upfront payment
Per transaction    Rs 20
Trustee bank    Per transaction at RBI location    NIL    Through NAV deduction
Per transaction at non-RBI location    Rs 15
(on asset  value)    Asset servicing    Electronic segment: 0.0075% a year:
Physical segment: 0.05% a year    Through NAV deduction
Fund manager    Investment management    0.0009% a year    Through NAV deduction
Service tax and other levies as applicable
* Once there are 1 million CRA accounts the annual maintenance charge will decrease to Rs 280 and per transaction charge to Rs 6. It will go  down to Rs 250 and Rs 4 once there are 3 million accounts                 Source: PFRDA

How can I exit the scheme?
The normal retirement age has been fixed at 60 years. At 60, you will be required to use at least 40 per cent of your accumulated savings to buy a life annuity from an insurance company. A phased withdrawal is also allowed but the lump sum benefit has to be availed of before you turn 70 years.

For those looking to exit before turning 60, there is an option to withdraw 20 per cent of the accumulated savings but buy an annuity with the remaining 80 per cent.

If the subscriber dies before he or she turns 60, the nominee can receive the entire pension corpus. Alternatively, a subscriber can exit if the account value falls to zero or if the citizenship status changes. The age of exit will be reviewed by PFRDA from time to time. There will also be the option to select an annuity that will pay a survivor pension to your spouse.

Are there tax benefits for NPS?
At present, the investment is covered under section 80CCD of the Income Tax Act and a tax will be levied if you withdraw the money. You can avoid paying tax by transferring the entire corpus to the annuity service provider. PFRDA has, however, approached the government to treat investment in NPS on a par with instruments like Employees Provident Fund and Public Provident Fund, for which no tax is levied at the investment, accumulation or withdrawal stage.

Neeraj Gupta

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Re: News related to New Pension Scheme (NPS)
« Reply #1 on: January 22, 2012, 09:14:11 PM »
The deduction against NPS from our salary (of teaching fellow to regular teachers w.e.f.01/04/2011) has not been deposited in our NPS Account for the last 10 months. There is no deposit entry in the NPS Account. What to say of employer's contribution even our contribution has not been deposited. The union leaders should take up the matter. Even if it is deposited now, who will give the interest for that. Perhaps it may be another scam.


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Re: News related to New Pension Scheme (NPS)
« Reply #2 on: January 23, 2012, 07:44:00 AM »
main patiala dist. nu belong karda ha mere a/c te vi no record found aa reha hai jad ke main femail alert te sms alert v yes kita c ki eh detail har mohine ja quarter to baad ni auni chahidi through sms


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Re: News related to New Pension Scheme (NPS)
« Reply #3 on: January 23, 2012, 03:16:45 PM »
ki kise kol punjab govt. dwara december 2011 vich lecturar promote kite masters di list hai. je hai tan paste it


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Re: News related to New Pension Scheme (NPS)
« Reply #4 on: March 17, 2012, 06:16:08 PM »
A primer on the New Pension
Scheme (NPS)
I've wanted to write about the
New Pension Scheme (NPS) a lot
sooner, but never got around to it.
Reader Gaurav sent me some
great material on it, and got me
The stuff that he sent me was an
entire post in itself, but I thought
I'd add to it, and create a
comprehensive post on the New
Pension Scheme.
First off, you can call it New
Pension Scheme, National Pension
System, New Pension System or
NPS, anything you like. They're all
the same; I've seen different
articles call them different names,
so that might get a bit confusing,
but you'll soon get used to it.
Next up, some of the things this
post will address, are:
What is the New Pension Scheme?
What are Tier I and Tier II
accounts in the NPS?
What are the three categories in
the NPS?
Fees and Expenses related to the
What is the minimum amount
needed to invest in the NPS?
What are the tax implications of
How can I open a NPS account?
Why hasn't this become popular?
What is the New Pension
The NPS was introduced by the
government last year to give
people a way to get a pension
during their old age. Employees of
the government sector already
get a pension, so this scheme was
introduced as a social security
measure that enables people from
the unorganized sector to draw a
pension as well.
The working mechanism is quite
simple '   " you contribute a certain
sum every month during your
working years, which is then
invested according to your
preference. You can then
withdraw the money when you
retire, which is currently set at 60
years old.
When I say you invest according
to your preference, I mean that
there are a couple of different
options that you need to select
from. These options pertain to
your preference on withdrawal,
and asset allocation.
What are Tier I and Tier II
accounts in the NPS?
The NPS is meant to be a pension
scheme, so it is geared towards
giving you a steady stream of
income on your retirement.
That means that NPS makes it
difficult to withdraw your money
during your working years or till
the age of 60 in this case.
Tier I and Tier II are two options
under the scheme where you can
invest your money, the primary
difference between them is how
they differ in allowing you to
withdraw your money before
NPS Tier I
There is severe restriction on
withdrawing your money before
the age of 60, because it is
necessary to invest 80% of your
money in an annuity with
Insurance Regulatory
Development Authority (IRDA) if
you withdraw before 60. You can
keep the remaining 20% with you.
When you attain the age of 60,
you have to invest at least 40% in
an annuity with IRDA; the
remaining can be withdrawn in
lump-sum or in a phased manner.
Here are the details of how your
money can be withdrawn in a NPS
Tier I account.
Death is another way of getting
the money, but that might come in
the way of other plans you have.
NPS Tier II Account
The first thing about the NPS Tier
II account is that you need to have
a Tier I account in order to open a
Tier II account.
The Tier II account makes it easy
for you to withdraw your money
before retirement because there
is no limit on the withdrawals you
can make from the Tier II account.
You need to maintain a minimum
balance of Rs. 2,000, and you can
transfer money from the Tier II
account to Tier I account, but not
the other way around.
There is a Rs. 350 CRA (Credit
Record Keeping Agency) charge
which is not present in the Tier II
account, but the rest of the fees
remain the same.
Asset Allocation and
Categories in the NPS
There is an Active Choice option,
and an Auto Choice option. If you
select Auto Choice then your
money is invested in a certain
percentage in the various classes
based on your age.
Here are the three investment
Class Risk Profile Description
G Ultra Safe Will only invest in Central and
State government bonds.
C Safe Fixed income securities of entities
other than the government
E Medium Investment in equity related
products like index funds that
replicate the Sensex. However,
equity investment will be
restricted to 50% of the portfolio.
In the Active Choice you can select
how much of your money will be
invested in the different classes
with a cap of 50% in Class E.
Now, there are pension funds that
will manage your money, and in
either of these options you have
to select the fund manager who
will manage your fund. So even if
you select the Auto Choice, you
still have to tell them which fund
manager you want to manage
your money.
Fees and Costs related to the
I talk about expenses a lot here,
and the expenses on the NPS are
really low. The annual fund
management charge is 0.0009%,
which is probably the lowest in the
There are some other expenses
associated with the NPS, but as
you will see all of them are quite
low as well. Here is a list of the
other expenses.
What is the minimum amount
needed to invest in the NPS?
For a Tier I NPS account you need
to contribute a minimum of Rs.
6,000 per year, and make at least
4 contributions in a year. The
minimum amount per contribution
can be Rs. 500.
Minimum amount for opening Tier
II account is Rs. 1,000, minimum
balance at the end of a year is Rs.
2,000, and you need to make at
least 4 contributions in a year.
What are the tax implications
of NPS?
The revised Direct Tax Code
proposes to make the NPS tax
exempt at the time of withdrawal.
Initially NPS was going to be taxed
at the time of withdrawal, and that
had put it at a disadvantage to
other products like ULIPs and
Mutual Funds. But the revised
code proposes it to be exempt
from tax, and that really adds to
its lure.
How can I open a NPS
You can open a NPS account by
going to the bank branches of the
banks that are authorized to sell
This is quite a good option for
people who wish to invest for their
retirement, and the government
has done good to come up with
such an option. It is still early days
for the scheme so there are going
to be some teething troubles, and
I am sure you have come across
several articles that write the NPS
off completely, or suggest major
While it has not gained in
popularity the way you would've
expected with the low cost
structure, a primary reason of
that is there is no real incentive
for anyone to push this to
consumers, so it has not gained
any real traction.
That being said, the scheme is a
good initiative, and given enough
time, the chinks should be ironed
out in its favor.
As a final word '   " a big thank you
to Gaurav who sent me all the
material, and pushed me to write
about the NPS. Thanks


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Re: News related to New Pension Scheme (NPS)
« Reply #5 on: May 05, 2012, 04:52:06 PM »
Providers; PFRDA takes Important Step towards Providing an Exit Route to the Subscribers
Subscribers to the National Pension System (NPS) will now have a choice of Annuity Service Providers, from whom they can choose their annuity schemes on their exit from NPS on attainment of 60 years of age. Pension Fund Regulatory and Development Authority (PFRDA) has empanelled the following six IRDA approved life insurance companies for providing annuity services to the subscribers of National Pension System (NPS).

1. Life Insurance Corporation of India
2. SBI Life Insurance Co. Ltd.
3. ICICI Prudential Life Insurance Co. Ltd.
4. Bajaj Allianz Life Insurance Co. Ltd.
5. Star Union Dai-ichi Life Insurance Co. Ltd.
6. Reliance Life Insurance Co. Ltd.

under the provisions of NPS, a maximum of 60% of corpus accumulated at the time of exit, normally on the attainment of 60 years of age, can be withdrawn but a minimum of 40% corpus has to be utilized for purchasing an annuity from one of the empanelled annuity service providers. Subscriber can choose from any of the six above mentioned annuity service providers and can also make their choice of the annuity scheme from amongst the schemes being offered by these providers.

With the above empanelment, PFRDA has taken an important step towards providing an exit route to the subscribers.



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Re: News related to New Pension Scheme (NPS)
« Reply #6 on: May 05, 2012, 05:00:52 PM »


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Re: News related to New Pension Scheme (NPS)
« Reply #7 on: July 27, 2012, 01:15:32 PM »
NPS performed better that GPF in the last year

The three NPS managers handling the pension funds of Central and state government employees have delivered average returns of 9.33% in the past one year, outperforming the state-run government provident fund (GPF), employees provident fund (EPF) and the public provident fund (PPF). The three-year annualised returns are also quite decent at 8.47%, though not as spectacular as in the past one year.

More than 16 lakh central and state government employees have almost Rs 8,500 crore invested in the NPS. This money is managed by three pension fund managers - SBI Pension Funds, LIC Pension Fund and UTI Retirement Solutions. Each of the three funds manages roughly one-third of the NPS corpus.
Though three years is a very short time to judge long-term instruments such as pension funds, the impressive performance is likely to silence the criticism that NPS is not allocating enough to growth assets. Central and state government NPS funds can invest a maximum of 15% in equities. Even in NPS for the general public, where investors can choose their own asset allocation, a maximum of 50% can be put in equities.
The Pension Funds Regulatory and Development Authority has defended this conservative allocation saying that pension funds should not have a large exposure to risky assets.
The past few years have proved it right. Equity markets have floundered in the past one year, with the Niftyfalling 6.5%. In the past three years, it has delivered an annual average growth of 4.95%. But government securities and other debt instruments have rallied in recent months following rate cuts by the RBI. After a lacklustre two years between 2009 and 2011, gilts shot up in 2012 as benchmark yields tumbled. The gilt funds managed by the six fund managers of the NPS for the general public have risen by almost 9.95% in the past one year. This has helped shore up the overall returns from the NPS funds.
Source : Economic Times
« Last Edit: July 27, 2012, 01:17:35 PM by RAJ »

puneet garg

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Re: News related to New Pension Scheme (NPS)
« Reply #8 on: September 19, 2012, 04:39:03 PM »


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Re: News related to New Pension Scheme (NPS)
« Reply #9 on: September 19, 2012, 05:02:27 PM »
yes its true...................april ya may vich esse fouram te e bare discission ho chuki ha
eh ginneya javega  ..........but not for cutting income tax but for savings



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