Professional Documents
Culture Documents
BFSI Guide
lump-sum amount depending on the performance of
that fund. This is different from the earlier pension
system where the amount one received every month
after retirement was determined by the government
and increased periodically (also called defined benefit
system). Under the NPS, after retirement one will
have to depend on their corpus for their monthly
pension.
NPS Schemes
As per the NPS investment guidelines, pension
fund managers manage three separate schemes, each
investing in a different asset class. The three asset
classes are equity (E), government securities (G) and
credit risk-bearing fixed-income instruments (C).
! E Class: Here the investment is mainly in equity.
The fund managers invest in Index funds that
replicate the portfolio of either BSE Sensex or
NSE Nifty 50.
! G Class: Here the investment is in government
securities like Government of India bonds and
state government bonds.
! C Class: Here the investment is in fixed-income
securities with credit risk that is, securities other
than government securities.
The subscriber has the option to decide how the
money is to be invested in the three asset classes.
This is called active choice. On the other hand,
if the subscriber does not exercise any option, the
contribution will be invested in accordance with the
auto choice option. This option has a predefined
portfolio wherein, at the lowest age of entry of 18
years, the allocation will be 50 per cent in E Class,
30 per cent in C and 20 per cent in G. This ratio is
applicable till 36 years of age.
From 36 onwards, the weight in E and C asset
classes decreases and the weight in G Class increases
28 s
Pension
Ketchup
The NPS Corporate Model
Introduced in December 2011, this provides a platform for corporate entities to extend old-age socialsecurity benefits to their employees through flexible contributions. This model can coexist with other
retirement pension schemes like Employees Provident Fund (EPF) and Superannuation Fund (SAF).
Under this model, a corporate group/company (employer) has the flexibility to select the point of presence
(commercial banks and India Post), pension funds (PFs) as well as investment choice (active choice
investments in government securities, non- government securities or equity instruments; or auto choice
life-cycle funds (predetermined portfolios). The corporate entity can also leave such choices to employees.
BFSI &
Guide
I
If investing in NPS, both the employer (u/s 80
CCD [2]) and the employee (u/s 80 CCD [1]) can
avail of income tax exemption on their contributions.
Corporates can also claim tax relief as NPS
contributions are accepted as business expenses u/s
36 (1) of Income Tax Act with effect from 1 April 2012.
Any individual between 18 years and 60 years of
age is eligible to open a PRAN account. To open an
The Charges
The following are the charges payable for opening and subscribing to the account.
Nature of Service Charges
Subscriber registration
Per
Year
Payable to
Per
Transaction
100
POP
Contribution
0.25%
PRAN-opening charges
50
CRA maintenance
POP
CRA
190
CRA
0.05% or
0.0075%
(minimum Rs 20
and maximum Rs
25,000)
Stock Holding
Corporation of India
Limited (SHCIL)
0.01%
Pension Fund
of
100
PoP
100
PoP
Asset servicing
non-deposit
30 s
Pension
Ketchup
Types of Accounts
The NPS offers the following two types of accounts
to subscribers:
Tier I Account: This account is mandatory for
opening the NPS account. It is generally a nonwithdrawal account except when allowed under
PFRDA Act. Subscribers contribute their savings in
this account and can claim tax exemption on their
contributions under Section 80C of Income Tax
Act. The minimum contribution is Rs 500 for initial
and subsequent contributions. So, the minimum
contribution in a year is Rs 6,000.
Scheme
Returns (CAGR %)
(since inception)
Government schemes
Central Government
State Government
1 April 2008
25 June 2009
9.10
8.59
1 May 2009
1 May 2009
1 May 2009
9.20
10.53
7.93
s 31
BFSI Guide
PFRDA Grievance Redressal Cell
1st Floor, ICADR Building
Institutional Area Phase II, Vasant Kunj
New Delhi 110070
email: grc@pfrda.org.in
To file claim withdrawal, subscribers can submit requests with NPS Claim Processing Cells Mumbai office:
Claim Processing Cell
Central Record-Keeping Agency
NSDL, 4th Floor, A Wing | Trade World
Kamala Mills Compound, Senapati Bapat Marg
Lower Parel
Mumbai 400013
Phones: 022-24994512/24994862/249904200
32 s