How to open a new NPS account and start investing in 5 minutes?

Opening a new NPS account is an easy process that can be done online as well. First, let us understand few things about NPS in brief.

NPS – National Pension Scheme or National Pension System is a Government of India initiative regulated by the Pension Fund Regulatory and Development Authority (PFRDA).

It is aimed to offer retirement benefits to its subscribers through a transparent platform in a cost effective way.

new nps account

Benefits of opening a new NPS account

NPS returns are market based, dependent on the asset allocation amongst Equity (E), Corporate Bonds (C), Government Securities (G) and Alternate Investment Funds (A) and are directly linked to the market as per the market returns

A new NPS account comes with some additional tax benefit for the subscriber. NPS provide additional tax savings as contributions made are eligible for additional tax deduction benefit on voluntary contribution of up to Rs. 50,000/-under section 80CCD (1B), over and above Rs.1,50,000/-u/s 80C.

To avail tax benefit you need to subscribe for TIER- I account. Investments in TIER-II account is not eligible for any tax benefit. You can choose an account type during the process of initial subscription to NPS.

To know more on the tax benefits on contribution to an NPS account check this article Extra tax-saving with NPS.

Can start Investing with as small as Rs 500/-

It is an investment option that might be suitable for your retirement planning

Features of an NPS account

1. On successful registration under NPS, a PRAN (Permanent Retirement Account
Number) is allotted to the subscriber that remains with the subscriber throughout.

2. The subscriber has the flexibility to choose an annuity service provider. Available National Pension Schemes:

  • HDFC Pension Management Company Limited Scheme
  • ICICI Prudential Pension Fund Scheme
  • KOTAK Pension Fund Scheme
  • LIC Pension Fund Scheme
  • SBI Pension Fund Scheme
  • UTI Retirement Solutions Pension Fund Scheme
  • Aditya Birla Sun life Pension Fund Scheme

3. The subscriber also has the flexibility to choose the amount of investment done in a scheme to be distributed among Equity (E), Corporate Bonds (C), Government Securities (G) and Alternate Investment Funds (A), within some pre-described maximum percentage limitations for each category of asset.

To select your allocation, NPS offers you two approaches to invest in your account:

  1. Active choice
  2. Auto choice

In Active choice, Subscriber selects the allocation percentage in assets classes, however, in Auto choice, funds are automatically allocated amongst asset classes in a pre-defined matrix, based on the age of the subscriber.

4. The returns are transparent in nature.

5. NPS provides you two types of accounts: Tier I and Tier II.

Tier I is mandatory retirement account, whereas Tier II is a voluntary saving account. Tier II offers greater flexibility in terms of withdrawal, unlike Tier I account, you can withdraw from your Tier II account at any point of time.

As for Tier I account, currently, in case of retirement, when a person attain the age of 60, he/she can withdraw up to 60% of the total corpus as a lump sum, while one needs to subscribe to an annuity plan with the remaining 40%.

According to the new rules of NPS, subscribers can withdraw the entire corpus if it is less than or equal to ₹5 lakhs without purchasing an annuity plan.

These withdrawals are tax-free, however, an annuity is taxable as per the income slab. (Separate withdrawal rules apply if one wishes to retire voluntarily before the age of superannuation.)

6. Opening and accessing NPS account online is a hassle-free process requiring regular KYC and bank account details- can transact through web or mobile-based app.

Here is the link for seamless new NPS account opening in 5 mins

Click to get onboard to open a New NPS account.

Also, if you are an existing subscriber and want to make additional contributions, you can access your account here Existing investors, Click here to make further contributions

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