New Pension System

The Government of India has established a Pension Fund Regulatory and Development Authority (PRFDA) for developing and regulating the pension funds under the New Pension System. Department of Posts has been identified by PFRDA as one of the Points of Presence (POP) to implement the scheme and the Head Post Offices will be POP Service Providers(POP-SP) to enrol, receive and forward deposits and grievance handling.

Objectives :

  • To provide old age income
  • Reasonable market based returns over the long term
  • Extending old age security coverage to all citizens.

Who can Join NPS ?

  • NPS is available to all citizens of India with effect from 01.05.2009.
  • All Central/State Govt. Servants who joined service on or after 01.01.2004 are already covered under this scheme.
  • Any citizen of India (Resident/Non Resident) from 18 years to 55 years of Age (As on date of submission of application to POP-SP).
  • They have to comply with Know Your Customer norms.

Documents required for opening NPS accounts :

  • Two recent color photographs of 3.5 x 2.5 cm
  • Two copies of KYC documents (Proof of Identity, Proof of Address and Proof of Date of Birth)
  • Passport/Proof of Address card issued by India Post serves as both proof of identity and address.

PRAN - Permanent Retirement Account Number

A unique Permanent Retirement Account Number will be allotted to all NPS subscribers. Subscribers can view their accounts online ( using this PRAN and password allotted to them.

Types of Accounts

1. Tier-I Pension Account :

  • A non withdrawable account to which the subscriber shall contribute his/her savings for building a retirement fund.
  • Tier I is available for all citizens within the age limit except those Govt servants already covered under NPS
  • Minimum amount per contribution – Rs.500/- and minimum contribution per year – Rs.6000/-
  • No Maximum limit for contribution.
  • Contribution can be paid in one lumpsum also.
  • No periodicity prescribed.

2. Tier-II Savings Accounts :

  • A voluntary savings facility which provides liquidity to subscribers (ie) subscribers will be free to withdraw their savings whenever they wish like Savings Bank account.
  • Tier II is available to all citizens including Govt servants covered under NPS.
  • Minimum contribution at the time of opening of account – Rs.1000/-
  • Minimum amount per contribution – Rs.250/-
  • Balance of Rs.2000/- to be maintained at the end of each financial year. (Penalty of Rs.100/- is levied for not maintaining the minimum account balance)
  • No periodicity prescribed.
Please Note: Service charge of Rs.20/- + service tax per transaction will be charged by POP-SP.

Pension Fund Managers

PFRDA has appointed six Pension Fund Managers. They are:

  • ICICI Prudential Fund Management Company Limited
  • IDFC Pension Fund Management Company Limited
  • Kotak Mahindra Pension Fund Limited
  • Reliance Capital Pension Fund Limited
  • SBI Pension Fund Private Limited
  • UTI Retirement Solutions Limited

Salient Features :

  • World’s lowest operator cost of fund manager @ 0.0009%.
  • Highly accountable scheme
  • NPS offers its subscribers to choose Investment Options and Pension Fund Manager of their choice. This feature is not available in any of the Pension Funds.
  • Subscribers can choose the percentage of investment among three asset classes. Three assets classes are
    • E - Equity Market Instruments (Maximum 50% only)
    • C – Corporate Bonds (credit risk bearing fixed income instruments)
    • G – Government Securities
      • Two types of investment plans are available – Active Choice and Auto Choice

      When a subscriber can withdraw his amount

      On attaining the age of 60 years and upto 70 years of age At exit you would be required to invest minimum 40% of your accumulated savings (pension wealth) to purchase a life annuity from any IRDA – regulated life insurance company.You may choose to purchase an annuity for an amount greater than 40%. The remaining pension wealth can either be withdrawn in one lump sum after age of 60 or in a phased manner before 70 years.
      At any point of time before 60 years of age You would be required to invest at least 80% of the pension wealth to purchase a life annuity from any IRDA – regulated life insurance company (Annuity Service Provider). Rest 20% of the pension wealth may be withdrawn as lump sum
      Death due to any cause In such unfortunate event, option will be available to the nominee to receive 100% of the NPS pension wealth in lump sum. However, if the nominee wishes to continue with the NPS, he/she shall have to subscribe to NPS individually after following due KYC procedure

      For further details on NPS visit Please visit your nearest Head Post Office for enrolment and deposits.

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