New Pension System (NPS) || Frequently asked Questions (FAQs)

1. What is NPS?

New Pension System is a voluntary contribution of funds for a sustained period of time (till the age of 60years) to enable him to draw pension after he attains 60 years of age. The Scheme has been introduced by the Government of India and monitored by the Pension Fund Regulatory and Development Authority.

2. What are the benefits of NPS?

It is basically for people who do not have the benefit of pension after  retirement from service. The scheme gives an opportunity to the subscriber tobuild up his pension fund over a long period so that after retirement he can draw pension for his sustenance.

3. What is TierI and TierII ?

Tier I is the primary account which the subscriber has to open to be able to open Tier II account.

4. What is the difference between Tier I and Tier II?

While in Tier I no withdrawal can be made till the subscriber reaches 60years of age, in Tier II the subscriber can withdraw from his balance anytime he wishes to withdraw.

5. What is the minimum age and maximum age for opening an account?

The scheme is open to people between age 18 to 60 years.

6. What is the minimum contribution in a year for Tier I?

Rs 6000/- has to be deposited by the subscriber in a year and the minimum contribution is Rs 500/- at one time.

7. What is the minimum contribution in a year for Tier II?

Rs 2000/- has to be deposited by the subscriber in a year and the minimum contribution is Rs 250/- at one time.

8. What is the maximum amount of contribution in a year?

There is no upper limit as of now.

9. What is the minimum number of contribution in a year?

Minimum 1 transaction has to be made in a year. However there is no limit on maximum number of transactions that can be made in a year.

10. Can funds be withdrawn before attaining 60 years?

In Tier I funds cannot be withdrawn before attaining 60 years. However in Tier

II funds can be withdrawn from his balance anytime he wishes to withdraw.

11. Can the full amount be withdrawn after attaining 60 years?

No. Maximum 60% can be withdrawn. 40% of the total balance available at the end of contribution year will have to be annuitized.

11. Is Nomination facility available?

Yes and unlike in Bank’s account nominations can be made in favour of 3 persons.

12. How many nominations can be made in an account?

13. What is a CRA?

The National Securities Depositories limited ( NSDL ) is the Central Record Keeping Agency

14. Whose scheme is NPS?

It is a scheme of Government of India.

15. Can updated statement of account be made available?

Yes

16. How can funds be contributed?

Through Cash or Cheque. However credit to account in case of cheque can only be made available on realization of the Cheque.

17. What is PRAN?

Permanent Retirement Account Number which will be given to the subscriber  on opening the Tier I account and which must be quoted in every transaction just like in case of bank account.

18. Which are the pension funds managers ?

There are 06 Pension Fund Managers:

SBI Pension Funds Private Ltd

ICICI Prudential Pension Fund Management Company Limited

IDFC Pension Fund Management Company Limited

Kotak Mahindra Pension Fund Limited

Reliance Capital Pension Fund Limited

UTI Retirement Solutions Limited

19. What is the assured rate of return?

No assured rate of return as the investment will be market related.

20. What is the transaction cost to be borne by the subscriber?

Rs 20+ service tax as applicable by Government rules at the time of opening of

account & doing the KYC and Rs 20+ service tax as applicable by Government

rules for first contribution.

Rs 20+ service tax as applicable by Government rules for any other transaction

like making contribution/statement of account or any other request.

21. Who are the agencies involved in the NPS:

The various agencies in the scheme as under:

1. PFRDA( Controlling Body)

2. Bank of India( Trustee Bank)

3. NSDL( Central Recordkeeping Agency)

4. CRA- FC ( viz. KARVY)

5. POP( State Bank)

6. POP-SP( Branches)

Source : SBI Bank