The twin advantages of an NPS scheme are retirement planning and tax savings. Managed by the Pension Fund Regulatory and Development Authority (PFRDA), the main goal of the National Pension System is to assist investors in creating sizable retirement savings. NPS investments are open to all Indian citizens between the ages of 18 and 60. There are two types of accounts under NPS accounts: Tier-I and Tier-II.
Tier-I or Individual Pension Accounts are the default pension accounts covered by all Income Tax Act tax. A subscriber with an active Tier-I account may choose to open a Tier-II investment account. There are no withdrawal limitations and tax advantages with this account. It is not a pension account, Tier-II.
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Documents needed to open NPS account
Submit duly filled Subscriber Registration Form along with the following documents to the Service Provider (PoP)/Online:
For resident Individuals:
• One Recent Photograph
• PAN Card
• Proof of Address
• Proof for the Bank Account
• Non-resident Individual (NRI):
• One Recent Photograph
• PAN Card
• Indian Passport
• Proof of address – India
• Proof for the Bank Account (NRE/NRO)
Overseas Citizen of India (OCI):
• One Recent Photograph
• PAN Card
• OCI Card
• Proof of address – foreign country
• Proof for the Bank Account (NRE/NRO)
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The Annuity Service Provider (ASP) will provide the subscriber with a pension in accordance with the terms and conditions of the Annuity Plan they selected and bought from the ASP (Insurance Company).
Permanent Retirement Account Number (PRAN)
PRAN is a unique identification number given to a subscriber for his or her NPS-opened individual pension account. The PRAN is unaffected even if the subscriber changes jobs, industries, or location.
Minimum contributions for Tier I and Tier II account
At the time of registration, a Subscriber must make an initial contribution (minimum of Rs. 500 for Tier I and a minimum of Rs. 1000 for Tier II).
Following that, a Subscriber may make a contribution under the following conditions:
Tier I:
• Minimum amount per contribution – Rs. 500
• Minimum contribution per Financial Year – Rs. 1,000
• Minimum number of contributions in a Financial Year – one
• A Subscriber may decide on the frequency of contributions throughout the year, in addition to the mandated limit of a minimum of one contribution in Tier I.
Tier II:
• Minimum amount per contribution – Rs. 250
• No minimum balance required
• If minimum contribution is missed.
