National Pension System or NPS

Security & Stability

Government of India established Pension Fund Regulatory and Development Authority (PFRDA) on 10th October, 2003 to develop and regulate pension sector in the country. The National Pension System (NPS) was launched on 1st January, 2004 initially for government employees. However, in 2009, it was opened to all sections including the unorganised sector workers on voluntary basis.

NPS is for all those who do not have a lifelong assured source of income. It is easy to ignore the benefits of a pension scheme by calling it passe or old school. But think of it this way – would I like an assured monthly inflow when I am above 60? Whether your answer is “well…..maybe” or an unequivocal “yes”, you should opt for it. More so in case of housewives or private sector employees who do not have huge wealth to fall back on. The earlier you start putting aside some money, the better it will be for you. A small amount on yearly basis will go a long way to make a difference. And you get immediate tax benefits as well.

You can join NPS through any of the authorised entities known as Points of Presence (POPs). India Post Office is a POP; so are most of the banks and plenty of financial institutions. You visit one of these POPs, fill out an application form and provide your identity documents. Once your application is processed you will be intimated of your account details through registered post. You will be allotted a unique Permanent Retirement Account Number (PRAN). This unique account number will remain the same for the rest of subscriber’s life. This unique PRAN can be used from any location in India.

You can deposit funds into your NPS account through any of the POPs or online through NPS website.

For Tier-I account:

  • Minimum amount at the time of Account opening – Rs.500
  • Minimum amount per contribution – Rs.500
  • Minimum contribution per year – Rs.6,000
  • Minimum number of contributions in a year – one

A subscriber can decide on the frequency of the contributions across the year as per his / her convenience. No maximum limit has been mandated.

Please note the tax benefit is for amounts upto Rs 50,000 per year.

You can deposit as much as you like but the tax benefit is for amounts upto Rs 50,000 per year.

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