The National Pension Scheme (NPS) was introduced by the Government of India in the financial interest of senior citizens in the country. The primary objective behind its introduction is to help people build a retirement corpus for their old age and maintain their financial independence.
This pension scheme will help you maintain your lifestyle and meet financial goals even when you don’t have an active source of income.
Want to know how to start investing? This article provides detailed instructions on the NPS login and NPS account opening process. Read along.
What Is the National Pension Scheme?
National Pension Scheme (NPS) is a Government of India-backed voluntary contribution scheme which is administered by the Pension Fund Regulatory and Development Authority of India (PFRDA). It is a market-linked scheme managed by professional fund managers.
Objectives of NPS are as follows:
- To help subscribers create a substantial corpus for retirement
- To assist individuals in navigating their post-retirement life without much hassle
- To address the financial concerns of the increasing demography of senior citizens in India
- To inculcate financial discipline among investors and enable them to save systematically throughout their working years
Benefits of Investing in the National Pension Scheme
Here are some of the reasons why many people invest in the NPS:
It’s Entirely Voluntary
There's no fixed time by which subscribers have to make contributions. There’s a minimum investment requirement of ₹1000 per financial year for Tier 1 accounts, which you can pay at any frequency. For Tier 2 accounts, there are no minimum requirements.
Simple to Invest
Subscribers are required to open an NPS account with any of the POPs (Point of Presence). They can also open an account from the e-NPS portal.
Portability
Subscribers can operate their accounts from anywhere. This condition will be applicable even if there's a change in their employment or city of residence.
Flexible Investment
As an NPS subscriber, you can choose any pension fund. You can also choose your investment options depending on your needs.
Well Regulated
This scheme is regulated by PFRDA under the direction of the Central Government. As a result, its investment guidelines are completely transparent. The performance of fund managers is regularly monitored and tracked by the NPS Trust.
Attractive Returns
A portion of National Pension Scheme is reserved for equity investments. While it doesn’t offer guaranteed returns, it holds the potential of generating higher returns than traditional investment options such as the Public Provident Fund (PPF).
If you check the historical returns of most NPS schemes, you’ll see that they have delivered around 9% to 12% annualised returns. Furthermore, if you’re unhappy with the fund’s performance, you can choose another fund manager.
Tax Benefits of NPS for Individuals
Here are the tax advantages of investing in NPS:
- Every NPS subscriber can avail tax deductions under Section 80CCD(1) of the Income Tax Act (ITA). The maximum amount that you can claim for tax deduction is ₹1.5 lakh under Section 80CCE.
- As per Section 80CCD(1B) of ITA, you can avail additional deductions of up to ₹50,000 if you have an NPS Tier 1 account. This tax benefit can be availed over and above the tax exemption of ₹1.5 lakh.
- Proceeds from the lump sum withdrawal after maturity are tax-exempt up to 60% of one’s total corpus.
Tax Benefits of National Pension Scheme for Corporates
Here are the tax benefits of NPS for corporates:
• Subscribers in the corporate sector can avail tax benefits under Section 80CCD(2) of ITA. Employees can seek tax exemption for their employer’s contribution to the NPS scheme. Up to 10% of basic salary can be deducted from total taxable income, provided the amount is within ₹7.5 lakh.
• Employer's contribution towards NPS, which is up to 10% of basic salary can be deducted from the profit and loss account of corporates as 'business expenses'.
Scheme Details of National Pension Scheme
There are two types of NPS accounts which people can use to build their corpus systematically. These are:
NPS Tier 1 Account
These are the most basic form of NPS accounts. Anyone who wishes to subscribe to NPS has to open an NPS Tier 1 account. People aged between 18 years and 70 years can open this long-term investment scheme. Tax benefits are available on Tier 1 NPS accounts.
While partial withdrawals are allowed after the completion of 3 years, one can get it approved only by providing a specified reason. The minimum amount per contribution to an NPS Tier 1 account is ₹500. Moreover, the minimum annual contribution is ₹1000.
Subscribers have the freedom to decide the frequency of contribution. They can also decide the maximum amount they wish to contribute—there’s no upper limit.NPS Tier 2 Account
While it is not mandatory to open an NPS Tier 2 account, you can open one if you have a Tier 1 account. The most important features of this account are that there are no exit loads or restrictions regarding withdrawals. An NPS Tier 2 account allows you to make investments and withdrawals as and when you require.
If you wish to contribute more money to your NPS account, you can opt for an NPS Tier 2 account.
How to Fill up the NPS Registration Form? (Offline & Online)
Before we check the steps for NPS registration, we need to take into account the requirements. These are:
- You must have PAN (Permanent Account Number).
- You need to submit your bank, demat and folio account details to the empanelled bank/non-bank. Your name and address during registration must match that of PoP records. Your request will be rejected if the details don’t match.
- All of the details must be filled out accurately.
The following are the various steps to follow for NPS account opening:
• Online
You need to keep the below requirements ready before opening an NPS account online:
- Upload a scanned copy of your PAN card and a cancelled cheque in .jpeg/.jpg/.png format having a file size between 4KB - 2MB.
- Scan and upload your photograph and signature in .jpeg/.jpg/.png format having a file size between 2KB – 5MB.
Follow these steps to register online:
- Visit the official website of NPS. Navigate to ‘National Pension System’ then the registration form.
- Choose whether you wish to register with your PAN, Aadhaar, DigiLocker and Existing Customer of Bank/ PoP.
- Choose the correct applicant type, i.e. individual subscriber/corporate subscriber/Government employee.
- Select the status of the applicant, i.e. citizens of India/Non-Resident of India (NRI)/Overseas Citizens of India (OCI)
- Choose the account type you wish to open, i.e. Tier 1 or Tier 2.
- Add the details of one or more nominees.
- Choose your pension fund manager. Currently, there are ten options to choose from. Note that you can choose only one fund manager.
- Finally, choose the ratio in which you wish to invest in various securities.
- You’ll be redirected to the payment gateway. Make the necessary payment through this payment gateway to open an NPS account.
- You can also follow OTP authentication or add your eSign on the registration form.
- Contributions will be credited in PRANs on a T+2 basis. But it will be credited only if the Payment Gateway Service Provider provides an intimation of funds getting cleared.
• Offline
How can you fill up and submit your registration form via offline mode?
Documents Required for NPS Account Opening
You need to submit the following documents to open an NPS account:
• NPS account opening form
• Registration form
• Proof of identity
• Proof of address
• Age or D.O.B proof
Download and fill up the registration form and attach one of your recent photographs. Submit it at the nearest point of presence (PoP) that is registered with PFRDA. Submit it along with your KYC papers and a demand draft/ cheque with your initial contribution. The PoP will then send your Permanent Retirement Account Number (PRAN) in a welcome kit. It acts as your identity for carrying out NPS account transactions.
How to Login to your NPS account through Protean?
If you are going to log in to your account for the first time, you must create a new password. Follow these steps for NPS login:
1. Go to the official portal of NPS and click on ‘Log in with PRAN/IPIN'. You’ll get redirected to the log-in screen.
2. You need to generate a password. Click on the link ‘Reset Password’. On the redirected page, type in your date of birth, PRAN, and new password and confirm it. Next, type in the CAPTCHA code. Click the ‘submit’ button after you have inserted all these details.
3. Type in the OTP once you receive it on your registered mobile number and confirm the new password.
4. After you complete the procedure, you can log in to your e-NPS account with your PRAN and new password.
After registration, log in to your NPS account, follow these steps:
1. Visit the NPS website of Protean (formerly called NSDL e-Governance Infrastructure Limited) and click the button ‘login with PRAN/IPIN’.
2. You’ll get redirected to the NPS login screen. Make sure you have your PRAN and password ready.
3. Enter your PRAN and password in the designated places before clicking on the ‘submit’ button to access your e-NPS account.
Final Words
If you are looking for a reliable investment/savings option to ensure a substantial corpus for your post-retirement days, you can consider opening an NPS account. It will help you lead a financially independent life after you retire.
Go through the NPS login details provided in this blog as it will help you while opening an NPS account.
Frequently Asked Question
1. How many times can I make withdrawals from National Pension Scheme?
You can make premature withdrawals for a maximum of 3 times during the NPS investment tenure. Note that there must be a gap of a minimum of 5 years between each withdrawal. Moreover, an investor can withdraw at most 25% of the total corpus contributions. Premature withdrawals are allowed only for specific reasons mentioned by PFRDA.
2. What is PRAN and PRAN Kit?
After the procedure of registration is complete, the NPS subscriber will receive a PRAN card with their name, photograph, father’s name, date of birth and signature. The PRAN kit comprises the PRAN card, information booklet and subscriber’s details.
3. What is IPIN?
The password you need to use to access your NPS account online is known as the IPIN.
4. What will happen if an NPS account holder dies before 70 years of age?
In case an NPS account holder dies before maturity, the nominee or legal heir can withdraw the entire corpus from the NPS account. However, if the NPS account holder was a Government employee, it is compulsory to purchase an annuity plan. In this case, the legal heir can withdraw any of the annuities being offered upon exit. If the legal heir wishes to opt for annuity (pension), he/she is required to select Annuity Service Provider (ASP) and Annuity Scheme in Death Withdrawal Form.
5. Can I open an NPS account on behalf of my aunt?
No, the National Pension Scheme is an individual pension account and you will not be able to open it on behalf of any other person. NPS applicants must be legally competent to execute a Contract as per the Indian Contract Act.
