NPS is largely focused on one's retirement. While up to 60% of the maturity corpus can be withdrawn as a lump sum on maturity, the balance is compulsorily annuitized, i.e., balance is used to fund the annuity (pension) after retirement. This annuity is fully taxable in the year of receipt as income from other sources.

Portability – NPS does not have any Geographical restrictions. An account opened in any state of India can be accessed from all over the country. NPS corporate account is transferable between employers. Flexible – NPS gives the subscriber the flexibility to choose the Fund Manager, Investment Option, Annuity Service Provider, etc. This gives you the control over your investments. Economical – NPS is currently one of the cheapest investment products available. Voluntary – NPS is voluntary product for citizens of India. Only for central and state Government employees, NPS is compulsorily under the fixed contribution scheme.

Types and Tiers:

NPS accounts are primarily of two types, Individual NPS account (All Citizen Model) and Corporate NPS account.

In an Individual NPS account, the subscriber (Account holder) is the only contributor. All selections pertaining to Scheme preference, Investment choice, Annuity Service Provider, etc. Are done by the subscriber alone. Any citizen of India can voluntarily choose to open an Individual NPS account to avail tax benefits on investments and to ensure a fixed income post retirement.

When a corporate chooses to offer NPS scheme to their employees as a retirement benefit plan, this is a Corporate NPS account. Any employee of a Company that is registered with a CRA for NPS can avail Corporate NPS benefits. In such an account, the employee and the employer, both are contributing to the same NPS account. The employer makes a certain contribution to the employer's NPS account on his/her behalf. This employer contribution should not exceed 10% of the employee's Basic + DA. The employee too makes certain contribution to the same account. This ensures higher amount being contributed in the account and also gives better tax benefits to the employee.

Subscribers have the option to open two types of NPS Accounts under the same Permanent Retirement Account Number (PRAN). These are called tiers in NPS:

Tier I: Contributions done to this account are eligible for additional tax deduction benefit of up to Rs. 50,000/- under section 80CCD (1B), over and above Rs.1,50,000/- u/s 80C. Withdrawals are restricted and subject to terms and conditions.

Contributions done to this account are eligible for additional tax deduction benefit of up to Rs. 50,000/- under section 80CCD (1B), over and above Rs.1,50,000/- u/s 80C. Withdrawals are restricted and subject to terms and conditions. Tier II: Subscribers can invest an additional amount in Tier II NPS Account. Subscriber is free to withdraw his entire accrued corpus under Tier II at any point of time. In case subscriber has not contributed even the initial contribution towards Tier II a/c, it will be automatically deactivated as per process. No tax benefits are available in this account.





Benefits:

National Pension System (NPS) is a perfect solution for retirement planning. It provides old age income with reasonable market based returns. It is based on unique Permanent Retirement Account Number (PRAN) which is allotted to every subscriber for NPS.

In case of any queries, please write to : NPS@hdfcbank.com

An NPS Account offers the following benefits:

Regulated: NPS is regulated by PFRDA (Pension fund regulator under Govt. of India)

NPS is regulated by PFRDA (Pension fund regulator under Govt. of India) Transparency: NPS account can be accessed online to make contributions and track investments.

NPS account can be accessed online to make contributions and track investments. Flexibility : The subscriber has the flexibility to choose the investment option, fund manager, Annuity Service Provider, Annuity Option.

: The subscriber has the flexibility to choose the investment option, fund manager, Annuity Service Provider, Annuity Option. Control : The subscriber has the control of his/her investments. This ensures that you can take calculated risks and ensure higher returns.

: The subscriber has the control of his/her investments. This ensures that you can take calculated risks and ensure higher returns. Long term returns : NPS is a long term investment plan. The minimum lock in period for NPS is 10 years. Hence the subscriber gets the benefit of compounding which ensures higher corpus on maturity.

: NPS is a long term investment plan. The minimum lock in period for NPS is 10 years. Hence the subscriber gets the benefit of compounding which ensures higher corpus on maturity. Online presence : You can register and access your NPS accounts online making it very convinient to access and manage. Multiple features are made available online and also on the NPS application.

: You can register and access your NPS accounts online making it very convinient to access and manage. Multiple features are made available online and also on the NPS application. Tax Benefits: NPS investments attract lucrative tax benefits. This ensures a yearly (immediate) saving. Following are the multiple tax benefits on NPS:

Section Description 80 CCD(1) Individual Subscriber's contribution can clain tax benefit U/s 80 CCD(1) with in the overall ceiling of Rs. 1.5 lakh U/s 80 CCE 80 CCD(1B) Individual Subscriber's contribution upto Rs. 50,000 is eligible for tax exemption U/s 80 CCD(1B) 80 CCD(2) Corporate Contribution (Contribution made by the employer on behalf of the employee) made upto 10% of the employee's basic salary is eligible for tax exemption U/s 80 CCD(2)









NPS Stakeholders:





Pension Fund Regulatory and Development Authority (PFRDA) is a pension regulator which was established by the Government of India on August 23, 2003. PFRDA is authorized by Ministry of Finance, Department of Financial Services. PFRDA promotes old age income security by establishing, developing and regulating pension funds and protects the interests of subscribers in schemes of pension funds and related matters.



Central Recordkeeping Agency (CRA) as the sector regulator PFRDA has appointed Karvy Computershare & National Securities Depository Limited (NSDL) to offer NPS.



Point Of Presence (POP) - The first point of interaction between the subscriber and the NPS architecture. POP shall facilitate the subscriber registration and submission of contributions. HDFC Bank Ltd. is registered with PFRDA as a Point of Presence (POP).

Pension Fund Manager (PFM)



The contributions invested in NPS are managed by 8 Pension Fund Managers (PFM) appointed by PFRDA. The Subscriber can choose any one of the below given entities:

HDFC Pension Management Company Limited

UTI Retirement Solutions Limited

Kotak Mahindra Pension Fund Limited

LIC Pension Fund Ltd

SBI Pension Funds Private Limited

ICICI Prudential Pension Funds Management Company Limited

Birla Sunlife Pension Management Limited *New





Annuity Service Providers



After completion of 60 years of age, the subscriber will have options to start Annuity. Below are Life Insurance Companies registered with PFRDA that offer Annuity:

HDFC Standard Life Insurance Company Limited

Star Union Dai-Chi Life Insurance Company Limited

Life Insurance Corporation of India Limited

ICICI Prudential Life Insurance Company Limited

SBI Life Insurance Company Limited



