The National Pension System (NPS) stands as a cornerstone in India's retirement planning landscape, offering individuals a structured approach to secure their financial future. Amidst its complexities and nuances, questions often arise regarding its operational aspects, investment options, and account management procedures. In this article, we delve into seven pivotal queries surrounding NPS, providing clarity and guidance to both current and prospective subscribers.
1. Can I change investment options in NPS?
Yes, NPS subscribers can channelise their contributions and prioritise among the four available asset classes. These include equity, government bonds, alternative investment funds and corporate debt.
Changing the investment option is allowed a maximum of four times during a year. You can either select active choice or auto choice to create the ideal asset mix abiding by the maximum permissible allocation regulations.
For instance, when you go for the active choice in NPS, equity allocation is restricted to 75%. But you can drive 100% of your contributions towards government securities or corporate debt if you want.
For auto choice NPS, your selected pension fund manager determines the asset allocation systematically as per the life cycle approach picked by you. It means in case you have preferred a moderate life cycle fund then your equity exposure will be capped to 50%. As you approach retirement, the proportion towards equity will further decrease.
Similarly, you can go for the conservative or aggressive life cycle fund. Also, the PFRDA allows all subscribers to change their Pension Fund Manager once a year. So, in case you are not satisfied with the performance or wish to change the scheme preference, then consider filling up Form-UOS-S3/CS-S3 through the eNPS website or by visiting a POP/ POP-SP outlet.
Explore these insightful podcasts on NPS account management available on SoundCloud, tailored especially for corporate subscribers looking to adjust their NPS investments. Delve into topics like Changing Investment Options and Rebalancing of Portfolio through the provided SoundCloud links.
2. How to activate a Tier-2 NPS account?
An NPS Tier-2 account can be voluntarily opened when you already have a Tier-1 account. It has no lock-in period and is generally preferred by those who wish to build a huge corpus by the time they retire.
Here is the step-by-step guide on how you can activate a Tier-2 NPS account:
Online Method:
Step 1: Visit the eNPS portal and navigate to the “Tier-2 activation” section.
Step 2: On clicking, a new window opens. Provide your Permanent Retirement Account Number (PRAN), PAN and DOB here. Then verify the login process by entering the OTP sent to your registered phone number.
Step 3: Enter the bank account details and validate your Aadhaar details.
Step 4: Copy the acknowledgement number displayed on your screen and click on “OK”.
Step 5: In the next window pick a Pension Fund Manager before setting your investment option as ‘active’ or ‘auto’. Then click on “Save and Proceed”.
Step 6: Upload a scanned copy of your PAN card.
Step 7: Make the initial transaction towards your NPS Tier-2 account. The minimum amount allowed is Rs. 1000.
Step 8: Collect the receipt and e-sign the application by providing Aadhaar details.
Step 9: As you finally enter the OTP and submit the details, your duly filled application form is now ready to be downloaded. Now, you have to take a printout of it and send it to Protean's head office via a registered post.
Offline Method:
Step 1: Visit the concerned Point of Presence (POP) branch and ask for the Annexure 1: Tier II Details form.
Step 2: If you download it yourself then you will find it under the “Subscriber Registration” section.
Step 3: Give your bank details to ensure you can withdraw funds at any time with just a few clicks.
Later on, for any particular service related to NPS account management, kindly visit the eNPS portal and click on “Service Request”. To access the tab you must enter your PRAN, and password and fill in the CAPTCHA.
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3. What happens if you miss the minimum annual contribution for your NPS account?
According to the regulations published by the Pension Regulatory and Development Authority (PFRDA), it is necessary to contribute at least Rs. 500 every year to keep an NPS scheme active. On forgetting to pay the amount, you will have to compensate Rs. 100 as a penalty. This sum is used to unfreeze your NPS account.
You can visit a PoP to submit the penalty amount. However, please note that the PFRDA hasn’t mandated any lower or upper limits to the frequency of contributions. Thus, you can contribute periodically at regular intervals or may even invest a lump sum for the entire year.
To know more, listen to the following podcast on SoundCloud.
4. What happens to your NPS account after 60 years of age?
After an NPS subscriber has attained 60 years of age they can request to withdraw 60% of the corpus as a lump sum. With the remaining amount they have to purchase an annuity plan so that they can receive a regular pension for a fixed number of years.
If an exit request is not initiated after you turn 60 then the NPS is automatically continued till you reach 75 years of age. Thus, after the maturity period, you must raise the request within 90 days.
In case you decide to defer the withdrawal, not necessarily both the lump sum and the annuity need to be deferred together. Any NPS subscriber can defer their annuity program by 3 years. Similarly, their lump sum redemption can be delayed by 10 years.
If you are interested in learning more about what happens to your NPS account above 60, please listen to this podcast on SoundCloud.
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5. Is it possible to contribute to NPS through UPI?
Yes, now NPS subscribers can add funds to their National Pension Scheme account by scanning PFRDA-customised QR codes. Also, there are no restrictions regarding which UPI app must be used to execute the transactions.
These scan-and-pay codes are based on D-remit and are separate both for your Tier-1 and Tier-2 accounts. To generate your D-remit ID you have to visit the Protean website and generate the 15-digit Virtual ID by entering your Permanent Retirement Account Number.
After the launch, more than 10 lakhs of D-remit IDs have been issued, the contributions from which have already piled up to Rs. 2700 Crores. These numbers speak highly of the technology integrated to make NPS payments more secure and convenient.
Interested in knowing more about this topic? Listen to the podcast on SoundCloud to get your queries answered.
6. Can you invest 100% in equity in NPS Tier-2?
The PFRDA allows any subscriber to invest 100% of their equity contributions to Tier-2 NPS unlike putting an upper cap of 75% as is the case for Tier-1 equity contributions. Although this decision can secure more attractive returns, your investments will be completely market-linked.
Therefore, investment experts recommend opting for an appropriate asset blend that also provides room for government securities and corporate debt, just like hybrid funds. Later on, as per your risk appetite, you can adjust the mix over an extended period of time.
To know more, listen to the podcast on SoundCloud.
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7. How can you update your details registered under NPS?
As per the rules, NPS subscribers can change or update their details anytime they want with the requirement of any additional authorisation. They can change their communication details or bank details anytime by visiting the official website and using OTP or e-sign.
In case of OTP authorisation, the OTP is sent to the email ID or the registered mobile number. However, for e-sign, the OTP is sent to the mobile number of the subscriber that is registered with their Aadhaar.
The steps to update details are as follows:
- Navigate to the official website at www.cra-nsdl.com
- Log in to your CRA account using your credentials.
- Select the ‘Demographic Details’ menu.
- Next, choose the details that you want to update.
- After that, enter the updated details accurately.
- Finally, submit your request through OTP or e-sign.
To know further details regarding updating your details registered under NPS, listen to this podcast on SoundCloud.
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