Regulated and administered by the Pension Fund Regulatory and Development Authority(PFRDA), National Pension Scheme is a reliable government-backed plan. Any individual aged between 18 years and 60 years can open the National Pension Scheme Account.
As National Pension Scheme allows individuals to make systematic investments, liquidity is never an issue. An eNPS account can also be opened if you have Pan Card or Aadhar Card.
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†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
In this article, you will understand more about NPS Tier-II, its features, benefits, and more.
National Pension Scheme is best suited for individuals who are unable to decide their asset allocations or do not have time to manage their investment.
An NPS is a completely government-backed scheme and any person who wants to plan their early retirement and does not wish to take high risks should undoubtedly go for it.
A salaried person who wants to take the best advantage of 80C deductions should consider National Pension Scheme.
Functions as a pension account
Withdrawn are subject to specific restrictions
The account can be opened with a minimum deposit of 500 rupees
Functions as voluntary account
Offers liquidity of funds through investments and withdrawals
Account can be opened with a minimum deposit of 250 rupees
Tier-I account needs to be active to open a Tier-II account
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Any Indian citizen who wishes to can opt for a National Pension Scheme account. once opted, the holder will have a Tier-I account by default.
The NPS holder can voluntarily opt for a Tier-II account. Once you get a Tier-II account, you can
Invest in different funds
Can withdraw money any time as there is no lock-in period
Build a huge corpus towards retirement
Invest 50% amount in equity funds
Opt for auto-choice in which funds will be allotted based on your
Income
Age
Risk profile
You can either go for an offline or online method to open a National Pension Scheme Account
The account can be opened through “Subscriber’s POP-SP”
Download Annexure-I Tier-II detail form
Fill it correctly and send it to POP-SP
Provide bank account details
Withdrawals will be directly transferred to the bank account provided
Open electronic National Pension System (eNPS)
Click the Tier-II activation tab
Fill in required details like,
Permanent Retirement Account Number (PRAN)
Date of Birth
PAN card
OTP will be generated on your registered mobile number
Next, fill in your bank account details
Validate your Aadhar card
Next, select your Pension Fund Manager
Click on the suitable investment option, that is,
Auto choice
Active choice
Upload all the necessary documents
Make a minimum payment of 1,000 rupees in the account
e-Sign the application
Your Tier-II account is successfully activated
Tier-II account under National Pension Scheme comes with the following benefits
Flexible withdrawals
No lock-in period
No exit load application
No annual maintenance charges
Easy transfer of funds from Tier-I to Tier-II as and when required
Nominee can be assigned
All Indian citizens whether residing in India or not can open an NPS account
Age limit: 18 to 65 years
Separate rules for people applying between 60-65 years of age
As per PFRDA Regulations of 2015, the reason for exit from Tier-II account must be one of the following:
40% of the account balance must be used to purchase an annuity
The annuity provides a monthly pension to the subscriber
Balance is returned in lump-sum
If the total corpus is less than equal to 2,00,000 rupees, complete withdrawal can be made
80% of the account balance must be used to purchase the annuity
The annuity provides a monthly pension to the spouse
Balance is returned in lump-sum to the nominee
If the total corpus is less than equal to 2,00,000 rupees, complete withdrawal can be made by the nominee
80% of the account balance must be used to purchase the annuity
The annuity provides a monthly pension to the subscriber
Balance is returned in lump-sum
If the total corpus is less than equal to 1,00,000 rupees, complete withdrawal can be made
| National Pension Scheme | ||
| Tier I | Tier II | |
| Eligibility | Any Indian citizen between 18 & 65 years of age | Members of Tier-I only |
| Lock-in Period | Till the age of 60 years | NIL |
| Minimum number of contributions per annum | 1 | Nil, not important to contribute every year |
| Minimum amount for account opening | Rs 500 | Rs 1,000 |
| Minimum subsequent contribution | Rs 500 | Rs 250 |
| Minimum amount contribution per annum | Rs. 6000 | NIL |
| Fund management charge | Same as Tier-II | Same as Tier-I |
| Available asset classes | Same for both | |
| Equity (E):Â Predominant investment in Equity market instruments. Maximum 75% | ||
| Corporate Debt (C):Â Scheme invests in Bonds issued by Public Sector Undertakings (PSUs), Public Financial Institutions (PFIs), Infrastructure Companies and Money Market Instruments | ||
| Government Securities (G):Â Scheme invests in Securities issued by Central Government, State Governments and Money Market Instruments | ||
| Alternative Investment Funds (A):Â In this asset class, investments are being made in instruments like CMBS, REITS, AIFs, etc. | ||
| Tax benefits | For Tier-I investments, tax is deductible within the total ceiling of 1.5 lakh under Section 80CCD (1) | No tax benefit |
| Allowed up to Rs.50,000 as deductions towards Tier-I contributions under 80CCD 1(B) | ||
National Pension Scheme is a reliable government-backed plan which creates a financial corpus for an individual even after retirement. With more amendments and improvisations being made by the government, this scheme is considered simple and easy than other pension schemes in the market.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
*All savings are provided by the insurer as per the IRDAI approved insurance
plan.
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
+Returns Since Inception of LIC Growth Fund
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.
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