- What is NPS
- How NPS Works
- Features
- Calculator
- Tax Benefit
- Investment Options under NPS
- Active Choice
- Exit & Withdrawal
- Articles
PENSION AS WELL AS INVESTMENT ACCOUNT
Tier I
Pension Account for retirement savings
Mandatory to open in order to join NPS
Withdrawal from this account is conditional
Tax deduction can be claimed on investment
Tier II
Investment Account for emergency needs
No tax deduction available on Investment
Optional for Customer. It can be opened later as well
Withdrawal from this account is permitted any time
OVERVIEW OF NATIONAL PENSION SYSTEM
Subscribers choose from Equity and Fixed Income funds to grow savings
Its administered and regulated by Pension Fund Regulatory and Development Authority (PFRDA)
Allows regular contribution to a pension fund during working life
On retirement, a part of the corpus can be withdrawn in lump sum
Balance corpus is invested in an annuity plan to secure regular income
National Pension System is a pension system introduced and driven by Government of India from 2004.
HOW DOES THE NATIONAL PENSION SYSTEM WORK ?
NPS FEATURES
Low
cost on
investment
Fully portable
across jobs
and locations
Online accessibility
of account
details
Flexible
Contribution
and withdrawal option
National Pension Scheme (NPS) Calculator
Monthly Contribution (Rs)
₹ 500
₹ 500000
Current Age
18 Years
60 Years
Retirement Age
60 Years
75 Years
Expected Return of
0 %
20 %
Rate Of Annuity
5 %
7 %
Withdrawal Ratio
60 %
Annuity
Annuity
40 %
Lumpsum
Lumpsum
Total Amount Invested
₹ 36,00,000
Total Corpus Accumulated
₹ 1,84,44,741
Lumpsum Withdrawal
₹ 73,77,896
Amount used for Annuity Purchase
₹ 1,10,66,845
Monthly Pension generated annually before taxes
₹ 55,334
Total Amount Invested
₹ 36,00,000
Total Corpus Accumulated @ 60
₹ 1,84,44,741
Amount available for Tax-Free Withdrawal
₹ 73,77,896
Amount used for Annuity Purchase
₹ 1,10,66,845
Monthly Pension generated at 6% annually; before taxes
₹ 55,334
EXCLUSIVE TAX BENEFITS OVER & ABOVE 80C LIMIT
Tax Benefits
| For Salaried Individuals | ||
| Category | Section | Investment Limit |
|---|---|---|
| Additional Contribution | 80 CCD (1B) | 50,000 |
| Own Contribution | 80 CCD (1) | 10% of Salary (upto 1.5 lakh)* |
| Employer Contribution | 80 CCD(2) | 10% of Salary (upto 7.5 lakh)# |
| For Self Employed Individuals | ||
| Category | Section | Investment Limit |
|---|---|---|
| Own Contribution | 80 CCD (1) | 20% of Gross Annual Income (upto 1.5 lakh)* |
| Additional Contribution | 80 CCD (1B) | 50,000 |
INVESTMENT OPTIONS UNDER NPS
| Asset Class | Cap on Investment |
|---|---|
| Equity (E) | 75%* |
| Corporate Bonds (C) | 100% |
| Government Securities (G) | 100% |
| Alternate Investment Funds (A) | 5% |
CHOICE OF INVESTMENT PATTERN
Active Choice
Subscriber can invest among asset classes E, C, G and A
| Asset Class | Cap on Investment |
|---|---|
| Equity (E) | 75%* |
| Corporate Bonds (C) | 100% |
| Government Securities (G) | 100% |
| Alternate Investment Funds (A) | 5% |
*Equity is capped at max 75%
*A is capped at max 5%
Auto Choice
Funds are managed as per pre-defined pattern depending on the age of the subscriber. Also known as Lifecycle fund
Below are Three Lifecycle funds under Auto Choice
- LC-75 Aggressive Lifecycle fund
- LC-50 Moderate Lifecycle fund
- LC-25 Conservative Lifecycle fund
Subscriber can switch between Investment Pattern and asset classes twice times in a year
WITHDRAWAL & EXIT OPTIONS
Partial Withdrawal
- Allowed after 3 years of account opening
- Up to 25% of Contributed amount can be withdrawn
- In the entire life span, 3 withdrawals are permitted
- Contribution deposited by Subscriber for availing tax benefit u/s 80CCD (2) shall not be available for partial withdrawal
Pre Mature Exit
- Allowed after 10 years of account opening in case of Corporate Subscriber and 5 years of account opening in case of Retail Subscriber
- Up to 20% of Corpus is allowed for withdrawal
- Balance amount gets invested in annuity
Exit on Maturity
- Exit at the age of 60 years is treated as exit on maturity*
- Up to 60% of Corpus is allowed for withdrawal
- Minimum 40% of Corpus to be invested in annuity
Death Benefit
- Upon death during fund accumulation phase, Entire Corpus can be claimed by nominee / legal heir
- If annuity scheme has been opted, then depending on the annuity option selected, corpus invested shall be paid to nominee or forfeited by the Insurance company
*For Corporate NPS Subscriber, exit on retirement age defined by the Company is treated as “Exit on Maturity”
CHARGES LEVIED BY DIFFERENT INTERMEDIARIES
The charge structure for PoPs under NPS (All Citizen and Corporate) are as below:
| Intermediary | Service | Charges | Method of Deduction |
|---|---|---|---|
| POP | (i) Initial Subscriber Registration | Upto maximum ₹400/- | To be collected upfront |
| (ii) Initial Contribution | Upto 0.50% of the contribution, subject to maximum ₹25000/- | ||
| (iii) All Subsequent Contribution | |||
| (iv) All Non-Financial Transaction | Upto maximum ₹30/- | ||
| (v) Persistency* | ₹50/- p.a. for annual contribution ₹1000/ to ₹2999/- ₹75/- p.a. for annual contribution ₹3000/ to ₹6000/- ₹100/- p.a. for annual contribution above ₹6000/- (Only for NPS All Citizen model) | Through cancellation of units | |
| (vi) e-NPS (for subsequent contribution) | Upto 0.20% of the contribution, subject to maximum ₹10,000/- (Only for NPS All Citizen and Tier - II Accounts) | To be collected upfront | |
| (vii) Trail commission for D- Remit Contributions | Upto 0.20% of the contribution subject to maximum ₹ 10,000/- (Only for NPS All Citizen and Tier - II Accounts) | Through unit deduction on periodical basis | |
| (viii) Processing of Exit/Withdrawal | Upto 0.125% of Corpus subject to maximum ₹500/- | To be collected upfront | |
| *1. Persistency charges is payable to such POPs to which the subscriber is associated for more than six months in a financial year. 2. Minimum contribution per transaction is ₹500/- and minimum annual contribution is ₹1000/- 3. GST or other taxes as applicable, shall be additional. | |||
Central Record Keeping Agency (CRA) Charges
| Charge Head | NSDL | KFintech | Frequency of deduction | Mode of deduction |
|---|---|---|---|---|
| PRAN Generation | ₹40.00 | ₹39.36 | One time | By unit cancellations by end of quarter |
| Annual Maintenance | ₹69.00 | ₹57.63 | Each year | |
| Financial Transaction Processing | ₹3.75 | ₹3.36 | On each transaction |
Other Intermediaries Charges
| Intermediary | Charge Head | Charge | Frequency of deduction | Mode of deduction |
|---|---|---|---|---|
| Custodian | Asset Servicing | 0.0032% | Per annum | Recovered through NAV deductions |
| NPS Trust | Trust Management | 0.005% |
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2025, IIFL Capital Services Ltd. All Rights Reserved
Follow us on
ATTENTION INVESTORS
Risk Disclosure on Derivatives
Copyright © IIFL Capital Services Limited (Formerly known as IIFL Securities Ltd). All rights Reserved.
IIFL Capital Services Limited - Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213, IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248.ARN NO : 47791 (AMFI Registered Mutual Fund Distributor)
We are ISO 27001:2013 Certified.
This certificate demonstrates that IIFL as an organization has defined and put in place best-practice information security processes.