National Pension Scheme NRI

The scheme expanded the ambit in October 2019 to include the OCI and PIO cardholders in the scheme. Since the NRIs reside abroad for professional or other reasons, the National Pension Scheme NRI bears distinctive features tailored to their needs. In addition, NPS accounts can be operated online without geographical barriers. 

National Pension Scheme NRI Eligibility

You must fulfil the following criteria t0 benefits from the National Pension Scheme NRI:

• You must be between 18 and 70 years of age, with a provision to stagger the account till 75, during which you may continue to contribute. 

• You must own an NRE (Non-Resident External) repatriable or NRO (Non-Resident Ordinary) non-repatriable savings account in any Indian bank. 

• A PAN and Aadhaar card is mandatory as you have options for NPS registration using either of the cards. 

• You can open both the Tier 1 and Tier 2 accounts simultaneously or choose to open only the former based on your plans. 

How to Open National Pension Scheme NRI Account?

To invest in the NPS, you must first subscribe to the scheme by following the below-mentioned steps:

• Visit the e-NPS official portal to register for the scheme.

• Choose the following in sequence:

• Individual Subscriber

• NRI as your residential status

• Tier 1 Account type (primary account)

• Provide your PAN/ Aadhaar Card details and select your preferred Point of Presence- Service Provider (POP-SP), which will ensure your KYC compliance. 

• Upload a scanned copy of your PAN/Aadhaar Card, Canceled Cheque, recent Photograph, and Signature in JPG or PNG format between 4KB and 2MB size. 

• Choose the bank account between NRE (Repatriable) and NRO (Non-repatriable) and provide details of the chosen account. 

• Upload the scanned copies of the form duly signed along with your Passport.

• Provide your communication address - permanent or overseas address. However, remember that communicating with your overseas address entails charges. 

• Once you complete all the above steps, pay the requisite amount online.

• Now a unique 12-digit PRAN (Permanent Retirement Account Number) is generated to seal your NPS subscription.  

• Authenticate your application under signature for which you need PRAN allotment. You have two options to perform the task.

• Select the e-sign option and authenticate using the online OTP-based PAN/ Aadhaar verification.

• Select the “print and courier” option to sign the form manually, paste your photograph, and send it to your linked bank within 90 days of PRAN allotment. 

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Features and Benefits of National Pension Scheme NRI

NPS has emerged as an attractive investment option for the NRIs due to its planned features and benefits. Let us take a closer look at how it impacts your choice.

• Location Agnostic: You can access NPS for NRIs from anywhere regardless of your global location as long you are a citizen of India. It implies that you must close the account as soon as your citizenship status changes.

• Voluntary Investment: Your contribution is not bound by the rules applicable to resident subscribers. How much you contribute is your free choice.

• Flexible Options: You invest in equities, corporate bonds, government securities, and mixed assets according to your preferences. In doing so, you must fall back on the following:

• Active Choice: You control the asset allocation in diverse classes with the help of your chosen fund manager. 

• Auto Choice: The fund manager allocates asset classes based on your risk profile in suitable investment horizons to optimize returns. 

• You even select the fund manager of your choice from the available listed pension fund service providers.

• Regulated Compliance: NPS is administered and regulated by the PFRDA (Pension Fund Regulatory Development Authority), ensuring strict compliance. 

• Partial Withdrawal: You can withdraw from the Tier 1 account under specific conditions before maturity. Accordingly, you can withdraw up to 25% of the corpus after continuous subscriptions of 10 years to meet financial emergencies. 

• In addition, you must adhere to 5-year gaps between two withdrawals. However, these rules do not apply to the Tier 2 account, where you can withdraw freely. 

• Tax Benefits: You can claim generous tax deductions for your NPS contributions and withdrawals under various IT Act, 1961 Sections. (*Tax benefit is subject to changes in tax laws.)

National Pension Scheme NRI Contributions

After registering with the NPS, you are responsible for maintaining a contribution flow to your Tier 1 account. However, you are not bound by specific limits unlike resident subscribers. You must know the rules for contribution despite your NRI status. 

Here’s what you can contribute monthly to the primary account:

• Tier 1 Account

• Initial contribution at account opening: Rs. 500

• Minimum Annual contribution: Rs. 1000 (no upper limit)

• Tier 2 Account

• Initial contribution at account opening: Rs. 1000

• Minimum Annual contribution: Not applicable (no upper limit)

You can contribute to the NPS account online. However, you must ensure that the contributions to the NPS account are routed through the NRE or the NRO account linked to the NPS. 

National Pension Scheme NRI Withdrawal

Your NPS matures as you turn 60 when you are free to withdraw the amassed corpus following mandated rules. Here’s what you can do with your funds once it matures:

• Maximum 60% withdrawal in a lump sum and purchase annuity from a PFRDA insurer with the residual of 40%

• Defer your withdrawal until 75 years and continue contributions

• Withdraw entirely if the accumulated corpus is lesser than or equal to Rs. 5 Lac

• Defer the annuity purchase up to 3 years

In Conclusion

Subscribing to the National Pension Scheme NRI is a rewarding option to plan for life after retirement ensuring future financial freedom. Your NRI status is no hindrance to your NPS subscription as the scheme is not confined to geographical boundaries. You can hold your NPS subscription to build a retirement corpus and continue until your retirement without hassle.

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