New Pension Scheme (NPS) India

Below is the official communication from ICICI Direct explaining about the New Pension System (NPS), how one can register and how much to save.

As you may be aware, these days there is a lot of talk about the ‘New Pension System’. Some people know about it while others are unsure what this is. This mail is for the latter.

Now the ‘New Pension System’ popularly called ‘NPS’ is regulated and developed by Pension Fund Regulatory and Development Authority (PFRDA). You may be aware that PFRDA has been established by the Government of India to provide sustainable solutions to provide for adequate retirement income.

Now that sounds like a good thing, doesn’t it.

After all we know that planning for retirement is indeed a very critical objective or goal. And it isn’t so easy. The reason is obvious. For one, it is difficult to visualize the changes in lifestyle and finances that we may require at that stage of life.

But there’s one change that we can easily foresee and that is that the cost of living will increase with inflation and so our daily expenses will be many times more in the future. How many times more is difficult to say. But what one can do is to save now without further ado. Also while you may have already made some investments for your retirement, it makes sense to separately look at a financial product that specifically addresses the issue of retirement. And that’s NPS.

So much for the need the product meets. Now on what it actually is and how one can avail it.

We are happy to announce that the simple way of investing in NPS is available right under your nose – yes online on your computer through ICICIdirect.com the way you already invest..

So you can take advantage of facilities like seamless subscription to NPS at the click of a button. Select a fund manager, view and access registration details as well as place contributions and get instant confirmations.

Now you can start your retirement plan through NPS with a contribution of as little as 6000 per annum. This contribution is exempted from income tax under section 80C of the Income Tax Act. So go ahead and reap the rewards of low asset management charges and tax benefits.

Some highlights of NPS:

  • Scheme designed by PFRDA
  • Option to select from 6 of the top Fund Management Houses
  • Low fund management charges of less that 0.01%
  • Flexibility to withdraw 60% of funds on reaching the age of 60
  • Flexibility to withdraw in lump sum or in trenches of minimum of 10% each and buy annuities of the remaining 40% and be set for life
  • For special requirements a onetime withdrawal or liquidity of 20% of corpus is allowed before maturity
  • Contributions to NPS are exempt under Sec 80C

New Pension System (NPS) Tier 1 account for opening the NPS Tier 1 account, you will first have to register yourself through us to obtain the PRAN number (Permanent Retirement Account Number) from Central Recordkeeping Agency (CRA) – i.e. National Securities Depository Limited [NSDL]). At the time of Registration you will have to select the Pension Fund Manager, Asset Class allocation and will have to place the initial contribution amount. Once the PRAN number is allotted, your initial contribution amount shall be invested and the units shall be credited by CRA.