National Pension System

Ensuring a secured retired life

 National Pension System

• National Pension System (NPS) is a unique pension scheme launched

What is NPS & who can by Govt. of India which allows citizens of India, from 18-70 years of
opt for it? age, to effectively plan for their retirement through safe and
reasonable market based returns

• A subscriber can contribute regularly in their pension account during

How does the NPS their working life. At retirement, he/she can withdraw a part of the
NPS corpus in lump sum and use the remaining corpus to buy annuity
scheme work ? to secure their retired life. Pension may be opted from 100%
accumulated amount as well

• On NPS account opening, a unique number called PRAN (Permanent

What happens on opening Retirement Account Number) is generated and a PRAN card is allotted
NPS account & who to each subscriber
services it? • ICICI Bank is registered with PFRDA as a Point Of Presence to offer NPS
under ‘Corporate’ & ‘All Citizen Model’ & to provide NPS service
 NPS Features & Benefits
INDEX

Portable Simple Flexible Economical Unique tax benefits

Lowest cost
Carry your Standard Choose your fund
investment Multiple tax benefits u/s
account across product manager,
product currently 80CCE, 80CCD(1B) &
employers, regulated by investment option
available in the 80CCD(2)
location etc PFRDA & annuity options
market

Single plan with Multiple benefits

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 NPS Models
INDEX
• Regulatory body: Pension Funds Regulatory & Development Authority (PFRDA)
• NPS Ecosystem: Central Recordkeeping Agency (CRA), Pension Fund Manager (PFM), Trustee Bank, NPS Trust, Custodian &
ASP

Operated through
single PRAN*

“All Citizen Model”

“Corporate Sector Model”
An individual can open NPS account, &
voluntarily contribute towards his NPS This is a separate model to provide NPS to
to build his pension corpus the employees of corporate entities,
including PSUs to additionally contribute to
It is popularly also known as their own NPS account through their
Individual or Retail model Corporate*
This model is available since 2009 This model was launched in 2011
• Employee is in full control of their NPS account for investments & service request
• Corporate facilitates corporate contribution
 Tax benefits of NPS

NPS Individual (All citizen) Model NPS Corporate Model

Individuals can avail tax Individuals can avail NPS contribution made by
deduction by contributing additional deduction of up employer, up to 10% of Salary
towards NPS of upto Rs. to Rs. 50,000 by (Basic+ DA) is deductible
1,50,000 u/s 80C contributing towards NPS from gross taxable salary

u/s 80CCD (1) u/s 80CCD (1B) u/s 80CCD (2)

• Above tax benefits for subscribers are applicable only under Tier 1
• For the employees to avail the Corporate tax benefit, the Corporate must be empaneled with a
POP
 Tax saving illustration : Investment in Corporate + Individual NPS
INDEX
Example where the Subscriber’s basic salary is ` 600,000 & is doing both Corporate & Individual NPS contribution

Income Head Without NPS With NPS

Provident Fund 72,000 72,000
Covered u/s 80C – Tax
PPF 50,000 50,000 deduction upto `1,50,000

Life insurance/ELSS/Tax Saving FD/NSC 28,000 28,000

Individual Contribution to
Individual NPS contribution U/s 80CCD(1B) 50,000 NPS
Employer contribution to
Corporate NPS contribution U/s 80 CCD(2) 60,000 NPS
up to 10% of the basic
salary
Total deductions from Gross taxable Taxable income reduced
150,000 2,60,000 by additional `1,10,000
income
from Gross taxable
For a person with a basic salary of ` 600,000, there is an additional tax savings of Rs. 34,320 a year by income
investing in NPS individually as well as through your company
 Union Budget 2020 – Impact on NPS

Clarification on National Pension System (NPS) with reference to the changes

announced in the Union Budget, 2020

The total tax benefit under employer’s contribution towards EPF, NPS and
Superannuation fund (SAF) is proposed to be capped at Rs. 7.5 lacs for tax
exemption. The employee can opt for higher contribution amount, however,
amount exceeding 7.5 lacs and subsequent growth / interest earned will be made
taxable in the hands of the employee.

This is in effect from 01.04.2020.

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 Tax benefits of NPS
• NPS is a EEE product. 100% Tax exemption on returns earned on investment
• The ‘Annuity’ as received in Retirement years is considered as income & will be taxable as
per the applicable Tax Bracket at that point of time

A Lump-sum withdrawal
allowed at normal 60% Maximum

superannuation is
NPS corpus withdrawn in lump-sum is totally ‘Tax Free’

% of NPS Corpus to be
used for purchase of
annuity from Annuity
40% Minimum

Service Provider (ASP) is NPS corpus that is used purchase Annuity from the ASP is tax exempted
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 Types of NPS Account

• Mandatory | Tax benefits applicable

• Controlled withdrawal
Tier 1 • Min. contribution of Rs. 500 at the time of account opening (Retail)
• Min. contribution of Rs.1000 in a financial year

• Voluntary | No tax benefits

• Free withdrawals/contributions anytime
• Funds investments similar to Tier 1
Tier 2
• Min. contribution of Rs.1000 during NPS account opening
• Rs 250 is the min. amount per contribution

• Tier 1 Account is mandatory for opening a Tier 2 NPS account

• Low fund management charges make NPS Tier 2 an attractive investment option
 Types of Funds in NPS

HIGH
Very High risk
appetite;
Very High Return
Risk appetite

ALTERNATE FUND
High risk appetite; Max 5% investment
High Return
EQUITY
Moderate risk appetite; Max investment up to 75%
Moderate Return
CORPORATE BOND
Low risk appetite;
Low Return
GOVT SECURITIES

LOW
LOW HIGH

*New fund Scheme A – Infrastructure Trust Bonds & Real Estate.

 Investment choices in NPS

Active Active Choice

Choice
• Subscriber decides allocation between funds
• Equity allocation allowed upto 75%
• Fund Manager can be changed once in a financial year
Auto
Auto Choice
• Subscriber selects the life cycle based investment option as per their risk appetite Choice
• Asset allocation between Equity(E), Corporate Bonds(C), Government Securities(G) and
Alternate Investments(A) depends on life cycle of subscriber
• Allocation up to 35 years 75:10:15 | Allocation at 55 years 15:10:75 | A fixed age based
investment table is followed for investment

• Scheme choices may be changed 4 times a year:

✓ ‘Active’ to ‘Auto’ option and vice versa
✓ Changes in Asset allocation
 Auto Choice
Aggressive (LC 75) Moderate (LC 50) Conservative (LC 25)
Age
Equity Corporate Bonds Govt. Securities Equity Corporate Bonds Govt. Securities Equity Corporate Bonds Govt. Securities

< = 35 Yrs 75% 10% 15% 50% 30% 20% 25% 45% 30%
36 71% 11% 18% 48% 29% 23% 24% 43% 33%
37 67% 12% 21% 46% 28% 26% 23% 41% 36%
38 63% 13% 24% 44% 27% 29% 22% 39% 39%
39 59% 14% 27% 42% 26% 32% 21% 37% 42%
40 55% 15% 30% 40% 25% 35% 20% 35% 45%
41 51% 16% 33% 38% 24% 38% 19% 33% 48%
42 47% 17% 36% 36% 23% 41% 18% 31% 51%
43 43% 18% 39% 34% 22% 44% 17% 29% 54%
44 39% 19% 42% 32% 21% 47% 16% 27% 57%
45 35% 20% 45% 30% 20% 50% 15% 25% 60%
46 32% 20% 48% 28% 19% 53% 14% 23% 63%
47 29% 20% 51% 26% 18% 56% 13% 21% 66%
48 26% 20% 54% 24% 17% 59% 12% 19% 69%
49 23% 20% 57% 22% 16% 62% 11% 17% 72%
50 20% 20% 60% 20% 15% 65% 10% 15% 75%
51 19% 18% 63% 18% 14% 68% 9% 13% 78%
52 18% 16% 66% 16% 13% 71% 8% 11% 81%
53 17% 14% 69% 14% 12% 74% 7% 9% 84%
54 16% 12% 72% 12% 11% 77% 6% 7% 87%
> = 55 Yrs 15% 10% 75% 10% 10% 80% 5% 5% 90%
 Exit from NPS
On attaining 60 years or Before 60 years or Death of the
Superannuation (as per service superannuation (subject to Subscriber due to
rules) and upto 75 years of age completion of 5 years) any cause
Compulsory Annuitization - Minimum 40%
Compulsory Annuitization –
of the NPS corpus The nominee will receive
minimum 80% 100% of pension wealth
Lump-sum withdrawal – maximum 60%
in lump-sum
If the corpus is less than Rs. 5 Lakhs then
Lump-sum withdrawals –
complete withdrawal is permitted
maximum 20%
Nominee can also
Corporate NPS account would be auto
purchase annuity with
continued on attaining 60 years or
accumulated pension
superannuation age, as applicable If corpus is Rs. 2.5 Lakh, complete wealth
Option of deferment or continuance upto withdrawal permitted
75 years of age
Exit anytime during continuance of
deferment
 Partial withdrawal from Tier I

• Subscriber can withdraw maximum 3 times from their NPS corpus after
completing 3 years in the system
• Subscriber can withdraw 25% of contribution made by them
• Withdrawals should be excluding contribution made by employer &
interest generated
• Withdrawal is permitted for the below reasons:
1. Higher education of children
2. Marriage of children
3. Treatment of specified illnesses
4. Purchase or construction of residential house or flat
5. Establishment of own venture or any start-up
 How to open NPS account
ICICI Bank Customer Non ICICI Bank Customer

❖ Step 1: Login to the below

❖ Step 1: Open ICICI MyNPS website>
Bank NPS+SA account NPS>Registration(New)
❖ Step 1: Select “PPF/NPS/Gold
Bond” from Invest and Insure Tab (ICICI Bank staff to
❖ Select “NPS” from Investment assist) ❖ Step 2: Fill online form &
and Insurance Tab ❖ Step 2: Click on “Instant NPS” -> upload docs (Pan, Cancelled
“Lets Get Started” ❖ Step 2: For NPS, cheque, photo, signature
❖ Step 2: Under “Corporate image
submit NPS
Subscriber Model” select Co. ❖ Step 3: Under “Corporate
declaration ❖ Step 3: Enter contribution
name from dropdown, enter Subscriber Model” select Co. name
personal details, nominee from dropdown, enter personal amount & confirm payment
❖ Step 3: The Savings
details, select Asset Allocation details, nominee details, select
account opens in 48 ❖ Step 4: Complete e-Sign &
Asset Allocation
❖ Step 3: Upload Photo and hrs followed by NPS PRAN will be generated. This
Signature and click on Submit ❖ Step 4: Upload Photo and Signature PRAN gets activated once
account in 24-48 hrs
and click on Submit Bank KYC is successful
❖ Step 4: Complete OTP
verification, OTP received on ❖ Step 5: Complete OTP verification,
registered mobile and email ID OTP received on registered mobile
and email ID
❖ Step 5: Instant PRAN
generated on successful doc ❖ Step 6: Instant PRAN generated on NPS+SA MYNPS NSDL
upload and verification successful doc upload and
verification

https://mynps.nsdl.com/myNPS/NationalPensionSystem.html?appType=mai
n&authId=TjRVUmNwRkU4V3RlYUx5aVJDSU5FQT09
NPS returns
Returns - Fund G1 ICICI Kotak SBI LIC HDFC UTI Birla
10 years 8.27% 8.24% 8.21% 9.84% 7.97%
5 years 8.83% 9.05% 8.91% 9.52% 9.10% 8.72% 9.10%
3 years 4.76% 4.92% 4.74% 4.93% 4.76% 4.65% 5.08%
1 year 9.65% 9.78% 9.97% 10.12% 9.66% 10.50% 10.15%

Returns - Fund C1 ICICI Kotak SBI LIC HDFC UTI Birla

10 years 8.77% 8.24% 8.56% 9.10% 8.34%
5 years 8.51% 7.71% 8.56% 8.62% 8.90% 8.11% 8.75%
3 years 6.20% 5.63% 5.90% 5.97% 6.39% 5.58% 5.94%
1 year 8.31% 8.14% 8.02% 8.50% 8.17% 8.57% 8.45%

Returns - Fund E1 ICICI Kotak SBI LIC HDFC UTI Birla

10 years 13.65% 13.63% 13.10% 12.65% 13.86%
5 years 13.23% 13.83% 12.46% 12.94% 13.44% 12.76% 12.45%
3 years 25.23% 24.52% 23.59% 25.49% 24.26% 24.77% 22.63%
1 year 25.78% 25.29% 24.54% 23.84% 23.73% 24.11% 23.90%

As on 30th June 2023 Source: www.npstrust.org

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 NPS Charges
Intermediary Charge head Service Charges Deduction Method

Initial subscriber registration and

Rs. 200
contribution upload
0.25% of contribution,
Any subsequent transactions
POP Min. Rs. 30 Max. Rs. 25000 To be collected upfront
Non-Financial Rs. 30

NSDL
PRAN Opening charges Rs 40
CRA Through cancellation of units
Annual PRA Maintenance cost per account Rs 95
Charge per transaction Rs 3.75

0.0032% of AUM for Electronic

Custodian Asset Servicing charges
segment & Physical segment
Through adjustment in NAV
PF charges Investment Management Fee 0.09% of AUM
NPS Trust Reimbursement of Expenses 0.005% of AUM