NPS or the national pension system is a scheme that is run by the Government of India and State Bank of India is one of its agents authorized to accept the contribution and also aid the general public in opening the account.
Here investors have to contribute monthly amount towards NPS account. This contribution is in turn invested in the avenues as per the choice of the investor and the ability to bear the risks.
After retirement a part of this fund can be withdrawn as lump sum and the balance can be paid as pension annuity. However investors have two options for investing in this scheme:
Tier 1: Here pension cannot be withdrawn from the account and the fund could be available on maturity basis i.e. 60 yrs
Tier 2: Here one can withdraw as per the need any time and still it will have the government contribution. But it is to be noted that opening tier 1 account is mandatory to open tier 2 Account.
Steps to open account:- NPS scheme is regulated by Pension Fund Regulatory Development. Six designated pension fund managers have been appointed who are responsible for investing the funds of the investors in avenue markets and generating returns from them.
Investors have the liberty to choose or change their fund manager if required. A NPS account could be opened by any resident or NRI, aged between 18 to 55 years. Visit nearest POP branch for opening NPS account.
After registering for NPS account, you need to fill up the prescribed form and submit the necessary Know your customer documents. Documents required are proof of identity, date of birth proof and recent photo graph.
Also one has to provide the choice of asset allocation. NPS caps the allocation of equity at 50%. One has to deposit initial contribution for both the tiers. For tier 1 – the minimum contribution is Rs. 500/- and Tier 2 minimum contribution is Rs. 1000/- .
After account is opened, Permanent Retirement account number (PRAN) is given to investor along with information brochure, internet pin and telephone pin within 15 days.
NPS account can also opened online by logging to NSDL website with following steps:
1. After landing on NSDL page. Click on icon “registration”
2. After that select the option you want to go for – both tier I and tier II option
3. Provide your PAN number and opt for the bank
4. Also your scanned photograph and signature should be ready with you for uploading and these two should be in JPEG/ JPG format within the size of 4kb- 12kb
5. Your KYC verification will be done by your bank during registration process.
6. After providing with all the vital details, the investor will be asked to make the payment of initial contribution towards your NPS account.
7. After making initial payment, PRAN number will be generated
8. After completing registration process take the print out of the online form, affix your recent photo and sign it.
9. Avoid stapling or attaching pin to the photograph just use glue and paste it.
10. Send this to NSDL.
You will receive PRAN kit to registered address and it contains PRAN card, Tpin, Ipin, subscriber master report and scheme information booklet