A primer on the New Pension Scheme (NPS)

by Manshu on September 27, 2010

in Retirement Planning

I’ve wanted to write about the New Pension Scheme (NPS) a lot sooner, but never got around to it. Reader Gaurav sent me some great material on it, and got me started.

The stuff that he sent me was an entire post in itself, but I thought I’d add to it, and create a comprehensive post on the New Pension Scheme.

First off, you can call it New Pension Scheme, National Pension System, New Pension System or NPS, anything you like. They’re all the same; I’ve seen different articles call them different names, so that might get a bit confusing, but you’ll soon get used to it.

Next up, some of the things this post will address, are:

  • What is the New Pension Scheme?
  • What are Tier I and Tier II accounts in the NPS?
  • What are the three categories in the NPS?
  • Fees and Expenses related to the NPS?
  • What is the minimum amount needed to invest in the NPS?
  • What are the tax implications of NPS?
  • How can I open a NPS account?
  • Why hasn’t this become popular?

What is the New Pension Scheme?

The NPS was introduced by the government last year to give people a way to get a pension during their old age. Employees of the government sector already get a pension, so this scheme was introduced as a social security measure that enables people from the unorganized sector to draw a pension as well.

The working mechanism is quite simple – you contribute a certain sum every month during your working years, which is then invested according to your preference. You can then withdraw the money when you retire, which is currently set at 60 years old.

When I say you invest according to your preference, I mean that there are a couple of different options that you need to select from. These options pertain to your preference on withdrawal, and asset allocation.

What are Tier I and Tier II accounts in the NPS?

The NPS is meant to be a pension scheme, so it is geared towards giving you a steady stream of income on your retirement.

That means that NPS makes it difficult to withdraw your money during your working years or till the age of 60 in this case.

Tier I and Tier II are two options under the scheme where you can invest your money, the primary difference between them is how they differ in allowing you to withdraw your money before retirement.

NPS Tier I

There is severe restriction on withdrawing your money before the age of 60, because it is necessary to invest 80% of your money in an annuity with Insurance Regulatory Development Authority (IRDA) if you withdraw before 60. You can keep the remaining 20% with you.

When you attain the age of 60, you have to invest at least 40% in an annuity with IRDA; the remaining can be withdrawn in lump-sum or in a phased manner.

Here are the details of how your money can be withdrawn in a NPS Tier I account.

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Death is another way of getting the money, but that might come in the way of other plans you have.

NPS Tier II Account

The first thing about the NPS Tier II account is that you need to have a Tier I account in order to open a Tier II account.

The Tier II account makes it easy for you to withdraw your money before retirement because there is no limit on the withdrawals you can make from the Tier II account.

You need to maintain a minimum balance of Rs. 2,000, and you can transfer money from the Tier II account to Tier I account, but not the other way around.

There is a Rs. 350 CRA (Credit Record Keeping Agency) charge which is not present in the Tier II account, but the rest of the fees remain the same.

Asset Allocation and Categories in the NPS

There is an Active Choice option, and an Auto Choice option. If you select Auto Choice then your money is invested in a certain percentage in the various classes based on your age.

Here are the three investment classes:

Class Risk Profile Description
G Ultra Safe Will only invest in Central and State government bonds.
C Safe Fixed income securities of entities other than the government
E Medium Investment in equity related products like index funds that replicate the Sensex. However, equity investment will be restricted to 50% of the portfolio.

In the Active Choice you can select how much of your money will be invested in the different classes with a cap of 50% in Class E.

Now, there are pension funds that will manage your money, and in either of these options you have to select the fund manager who will manage your fund. So even if you select the Auto Choice, you still have to tell them which fund manager you want to manage your money.

Fees and Costs related to the NPS

I talk about expenses a lot here, and the expenses on the NPS are really low. The annual fund management charge is 0.0009%, which is probably the lowest in the world.

There are some other expenses associated with the NPS, but as you will see all of them are quite low as well. Here is a list of the other expenses.

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What is the minimum amount needed to invest in the NPS?

For a Tier I NPS account you need to contribute a minimum of Rs. 6,000 per year, and make at least 4 contributions in a year. The minimum amount per contribution can be Rs. 500.

Minimum amount for opening Tier II account is Rs. 1,000, minimum balance at the end of a year is Rs. 2,000, and you need to make at least 4 contributions in a year.

What are the tax implications of NPS?

The revised Direct Tax Code proposes to make the NPS tax exempt at the time of withdrawal. Initially NPS was going to be taxed at the time of withdrawal, and that had put it at a disadvantage to other products like ULIPs and Mutual Funds. But the revised code proposes it to be exempt from tax, and that really adds to its lure.

How can I open a NPS account?

You can open a NPS account by going to the bank branches of the banks that are authorized to sell this.

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Conclusion

This is quite a good option for people who wish to invest for their retirement, and the government has done good to come up with such an option. It is still early days for the scheme so there are going to be some teething troubles, and I am sure you have come across several articles that write the NPS off completely, or suggest major changes.

While it has not gained in popularity the way you would’ve expected with the low cost structure, a primary reason of that is there is no real incentive for anyone to push this to consumers, so it has not gained any real traction.

That being said, the scheme is a good initiative, and given enough time, the chinks should be ironed out in its favor.

As a final word – a big thank you to Gaurav who sent me all the material, and pushed me to write about the NPS. Thanks Gaurav!

{ 92 comments… read them below or add one }

Sandesh Goel September 27, 2010 at 4:01 am

Very useful information indeed, and I think the NPS scheme does have potential and needs to be advertised much better.

However, I think the low fund management charges (0.0009%) is slightly misleading. For a person making minimum investment of Rs 6000, the charges for first year are almost 7% (Rs 50+350). It would be interesting to analyze how this compares with a private mutual fund and at what point the charges balance out. At first look, it definitely seems to me that one is better off investing in a diversified mutual fund for low levels of investment.

Also, it would be useful to get some details on how competently these funds will be managed. Will the equity portion be pretty much passively managed as an index fund, or can we expect better returns that diversified equity funds strive to provide?

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Manshu September 27, 2010 at 5:46 am

Very good points Sandesh.

The equity portion of the funds will be invested in index funds, so the returns will be commensurate with index returns, and not anything over that. There are a few diversified funds in India that have beaten the index in the last 5 years or so, but whether they will continue to do so in the next 30 or 40 years (retirement time-frame) is anybody’s guess.

About the charges, the fund management fee is charged by all mutual funds, which is usually in the 1 – 2.5% range, so that’s the comparison. Your comment made me wonder if the equity part of this fund when it is invested in an index fund, will that pay the fund’s usual expenses….probably not, but I don’t know for sure. Do you know about that?

What do you think?

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Sandesh Goel September 27, 2010 at 10:03 am

I believe that the fund management fees for passively managed index funds is typically 1% or lower. For NPS to beat this, the fund value invested in NPS should be larger than Rs 40000. For a smaller investment than this, private index funds seem a better choice. Correct me if I got the math wrong!!

Btw, from what I understand, the fund management expenses under NPS are capped at 0.0009%, no additional fees are payable (other than the fixed charges of Rs 350 p.a.).

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Manshu September 27, 2010 at 4:09 pm

There is more to it than meets the eye here, the CRA is the biggest part of the NPS cost at Rs. 350 annually today, but this is going to come down when the number of accounts cross 30 lakhs. At that time this will come down to Rs. 250. The 10 rupee transaction cost will also come down to Rs. 4 at that time.

So, that’s one thing that’s going on here. Secondly, we might be missing the forest for the trees here by focusing too narrowly on the expenses as costs, and by ignoring the tax implication of this, which, at least for now gives them an edge.

Then there is this whole issue of buying a mutual fund or an ETF from a broker where you have to pay distribution and demat account charges which add more to the expense and make it much more than 1%.

So, my take on this is don’t cling to the 40k number, but look at this more holistically, especially with respect to something that provides you a pension, and something you are in for the very long haul.

Of course if you are talking about a bigger investment corpus, and are looking relatively safer investment options, then this is quite good for you. On the other hand if you’re still quite young and want to invest a larger share of your savings in a diversified equity fund, then go for it.

Good discussion Sandesh, thanks for bringing up these points, I might make a mini post out of this.

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sudhakar September 27, 2010 at 8:26 pm

For info and n.a

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Gaurav Malik September 28, 2010 at 12:39 am

Thanks Manshu for the great posting. Once the DTC Kicks in NPS would be eligible for tax saving included in one lakh. So if one invests Rs 18,000 he/she can claim benefit on the amount. The added advantage is obv it will fall under the EEE category wherein the money at the time of withdrawal will also be exempt from tax.

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Manshu September 28, 2010 at 6:28 am

Thanks Gaurav, that’s a great point. I think I need to either update this post with these thoughts, or write another mini post about them as they’re quite important.

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Indian Thoughts October 14, 2010 at 2:52 am

I am reading it late… but very informative and useful article.. something thats true for every onemint article infact.

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Manshu October 14, 2010 at 3:21 am

Thanks IT 🙂 very glad to hear that!

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Devendu October 14, 2010 at 4:01 am

Can a person operate the NPS (Tier -1 and Tier- 2 schemes online i.e. without going to any Agent or POP

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Parag October 14, 2010 at 7:17 pm

Devendu,
At present, contributions and other services can only be availed using services of POP.
In future, we will have option of ECS also.

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Jeet October 17, 2010 at 4:35 am

Nice info I could get but the anxiety remains as to “How much monthly pension, one will get after completion of 60 years of age?” Any tabular chart will give an idea as well as clue to the General Public.

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Gaurav Malik October 18, 2010 at 4:40 am

Hi,
Currently there is an option of ECS and I have subscribed to it under the same option. It would be very difficult to say how much monthly pension will a person get as it has an equity angle to it…eg I have allocated 45% of my funds to the equity option so it will be difficult to put a figure to it.

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Sandesh Goel October 18, 2010 at 4:57 am

I think you can roughly compute the monthly pension by first estimating your total corpus when you are sixty and then calculating the returns you would get from a typical annuity.

e.g. if your total estimated corpus at the age of 60 is 10 lakhs, and you use all of it to buy an immediate annuity (let’s assume Jeevan Akshay from LIC with uniform payout for life option http://www.licindia.in/jeevan_akshay_plan_009_features.htm), you will get an yearly pension of INR 93500 or about INR 7800 per month.

To calculate the corpus, you can use some online calculator and assume a rate of return of 10-12%, which is reasonable for 50% allocation to equity.

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Sandesh Goel October 18, 2010 at 4:59 am
Venkat November 15, 2010 at 5:51 am

Hi,

The Tier 2 account of NPS is one of the Cheapest mutual funds you will ever get to invest in. When I say cheapest, i mean in terms of Management fees, costs and load. Every youngster who has access to open an NPS account should do this ASAP.

Transfer money into the Tier 2 account throug and ECS and beleive me in time you will see great growth and accumulation.

Regards

Venkat

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Manshu November 15, 2010 at 9:58 am

Thanks for your views Venkat.

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ninan March 5, 2011 at 7:55 am

Hi Manshu

The very purpose that NPS is not well known to many of the investors is because of the low cost and NPS is not attractive for the fund managers. I had to talk to three or four fund managers of NPS and went to their office to open an NPS account whereas for a normal MF, the guys would come home to open the same.

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Manshu March 5, 2011 at 10:37 am

Yeah, that’s right – it’s not really in anyone’s interest to push this product, but with time the pull for it is increasing and as more and more people demand for it, banks and other fin intermediaries will have to carry them and provide info on it.

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amit thakur November 26, 2010 at 3:59 am

a) what benefits accrue to the nominee in case of death of customer during the currency of the scheme i.e. when he is still subscribing towards the scheme. It may kindly be clarified whether a nominee will be entitled to any pension and lump-sum payment from the corpus fund accumulated in the name of such deceased customer.
b) It may also be advised if the nominee of a customer wil be entitled to any benefits after death of the subscriber, if such death occurs after the age of 60 years. If so, what are the benefits admissible to nominee. For example, if a subscriber subscribes for 30-35 years and starts getting pension at the age of 60 years but dies at 61, what will happen to the corpus he would have accumulated over 30-35 years? Will his nomees get it?

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Manshu November 28, 2010 at 4:46 am

a) From what I’ve read – the nominee can withdraw 100% of the amount, and if they want to continue with the NPS then they will have to subscribe individually.
b) I couldn’t find any information about the nominee getting a pension. Doesn’t mean that it isn’t there, just that I have not been able to find it.

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shylaja December 12, 2010 at 7:36 am

can I change my tier-1 account of NPS to tier-2 account.

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Manshu December 12, 2010 at 3:26 pm

You need to have a Tier 1 account in order to open a Tier 2 account Shylaja, so you will have to keep the Tier 1 account, if you wish you can keep it with the minimum balance though.

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shylaja December 17, 2010 at 10:28 am

After how many days can I withdraw amount from my Tier 2 account and how much percentage

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Manshu December 17, 2010 at 10:20 pm

There is no limit on the number or amount of withdrawals.

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ashok December 22, 2010 at 12:37 am

my question is that govt contribution is also added while calcualting 80C. that is what they are doing in my dept

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garima December 29, 2010 at 3:12 am

Hi .. the original blog says “The revised Direct Tax Code proposes to make the NPS tax exempt at the time of withdrawal.” – has the proposal been accepted??

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Gaurav Malik December 29, 2010 at 3:59 am

Hi,

Only once the DTC comes into effect will the NPS come under the (EEE) limit

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shylaja December 29, 2010 at 9:37 am

I was appointed as LDC in Central Govt on 22-9-2009, from 1-10-2009 they are deducting Tier.I contribution from my salary. The thing is recently I got another job and I resigned from my previous job on 6-12-2010. Now I want to close my Tier.I account and withdraw my amount . Pleas, let me know the procedure how to withdraw my 15 month contributed amount from my Tier.I account.

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Gaurav Malik December 29, 2010 at 12:21 pm

I am not to sure as to how can you withdraw the money as money invested in Tier 1 is strictly cannot be withdrawn. According to sources in Govt once the DTC comes into effect they would tweak around the NPS to make it more attractive and bring it on par with PPF and other instruments available currently just to increase the participation of general public. But I am not to sure how you can withdraw the money now. I think you can invest minimum amount of Rs 6000 per year as if the DTC comes into effect this amount will also come under (EEE Category) this will be beneficial in the year end tax claims….Hope this helps…..I am also investing in tier 1 scheme for the moment and not to sure how things will shape up 🙂

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abhi January 7, 2011 at 6:56 am

Great article, thanks. Any idea about taxation on Tier II ?

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shamsher malik January 25, 2011 at 8:11 pm

I want to know is NPS based on Stock Exchange or not . what is the process to open an NPS account

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Manshu January 26, 2011 at 7:13 pm

Shamsher – There is an option that allows you to decide to include shares as a percentage through mutual funds. The best way to open is to go to a bank branch – look at any one listed in this article (in the table with orange header) and get it open from there.

Now, ICICI Direct is providing an option to open NPS account as well, so you can open one from there also if you already have an account.

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shamsher malik January 25, 2011 at 8:12 pm

Explain in detail about NPS

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umesh bs January 28, 2011 at 3:08 am

Very lucid. If you can give an example how the money grows and become the big corpus at the age of 60 years. So that each one can plan accordingly.

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Manshu January 28, 2011 at 5:29 am

I actually didn’t understand the question Umesh – I’m sorry about that. Can you give me an example of what you’re looking for please?

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S.M.Kalkar January 29, 2011 at 5:01 am

I am 57 yrs old. I am left with 3 yrs of service. How much do I contribute per month for 3 yrs to get a pension of say Rs 10,000 pm ? Further I understand Tier I account is a must in NPS. Whether Tier II account opening will be of any use to me? Kindly reply at the earliest

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Manshu January 29, 2011 at 8:12 am

Based on what Sandesh has shared above I see that you need about 10 lakhs to have a 7,800 monthly annuity, so you should aim at getting to a corpus which is higher than that in the 3 years that are left.

Since there isn’t a lot of time till retirement what you already have will play a bigger role rather than the sum contributed in the NPS because it doesn’t have that much time to grow.

I don’t see much merit in getting a Tier 2 account in your case.

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Chris January 31, 2011 at 9:17 am

Apart from ICICIDirect, is anybody else providing the online opening and maintaining facility

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Manshu February 1, 2011 at 8:48 am

No Chris, not that I’m aware of.

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ravikanth.p February 1, 2011 at 3:35 am

hi sir, this is ravikanth from hyd , iam very much interested in opening the nps account, but most of the banks they are saying that we have not started yet, so pls tell me which bank is gud to open the account, and per annum how much i can invest, iam ready to invest ! one lakh per annum, so please suggest me iam in desperate to open the account, not only me all my family members are ready to open the account.

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Manshu February 1, 2011 at 8:35 am

It’s up to you to see how much you should invest – I can’t comment on that but since ICICI Direct has an online platform I think you will have better luck in trying ICICI Bank.

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ninan March 5, 2011 at 7:59 am

Yes among all the fund managers ICICI are more proactive and at least they do open the account when asked. The individual need to go to their select branch to open the account. I do have ICICI direct and nowadays I get to see an option to open NPS. This is a good sign.

When I opened the account, ICICI was advising me that for payment into the NPS, everytime I had to visit the branch but it was six months back. Something good is happening.

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Manshu March 5, 2011 at 10:36 am

That’s great – thanks for your comment.

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manika February 2, 2011 at 3:29 am

I am still not clear about the payouts. CAn any one explain giving an example

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Manshu February 2, 2011 at 6:58 pm

Manika – if you look at the orange table in the post – that explains how you can withdraw the money, and there are no limits on withdrawal on Tier 2.

Is this what you’re not clear about? Or are you not clear on how your money will grow during the time period?

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S.M.Kalkar February 2, 2011 at 9:49 pm

Mr. Manshu – Thanks for the clarification. I am sorry , I am bit late to respond to your clarification. I am not understanding your explanantion “Since there isn’t a lot of time till retirement what you already have will play a bigger role rather than the sum contributed in the NPS because it doesn’t have that much time to grow”. Do you mean to say that what money I get after retirement will fetch me more returns from FD & other investments than investments done now in NPS ? In that case is it worth opening a NPS a/c for me at this stage? Kindly clarify at the earliest.

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Manshu February 3, 2011 at 10:38 am

I was saying that NPS is better for people who have a long way to go for retirement and by saving a little every month can look at building a corpus that can be used for pension at the end of their career.

If I were in your position I’d much rather invest this money elsewhere so that at the end when I get the money I am not restricted by NPS rules on where I can invest the money, and can merge this with whatever other funds I have and invest it somewhere.

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Lachu February 8, 2011 at 7:06 am

I agree with Manshu, that the earlier the better. Regular savings, with consistent upgrades whenever incomes rise, can fetch one a very good pension.

However, keeping in mind that there may be any number of urgent fund requirements for everybody, it would not be prudent to save money meant for pensions in any other savings vehicle, which allow free withdrawals. An element of compulsion goes a long way in ensuring that adequate corpus is created to purchase an annuity at the time of retirement.

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Biswajit Sahoo February 16, 2011 at 11:54 am

I was appointed as LDC in Doordarshan Kendra on 27-02-2004, but our office are deducting CPF No NPS pl suggest me & pl tell me difference of (contributed provident fund & New Pension scheme)

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Manshu February 16, 2011 at 4:57 pm

I’m not familiar with the details of CPF so can’t really say – sorry. You can try asking this at the forum and see if someone else answers it.

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manal singh February 20, 2011 at 11:37 am

this is very sad to describe how such good schemes like new pension schemes are out of reach to the people, but one must know why this is not so popular like other investments schemes …the original fact is that government can depute employees even can make bodies but cant put up a proper strategy for development for such welfare plans , because our politicians do not get benefit from such schemes there is no way to have benefit from this schemes otherwise our so mean politicians must have intervene and would have developed a way to have some money from this schemes, no doubt scheme is awful lucrative but when it does not approach to needy people what does it mean whether its a gold or coal . founder of this scheme can derive a product good for people but they cant do it in a manner to be useful for the people because this is not in their nature, they must do something which must be lucrative for them like infrastructure, bridges, dams , tenders .. because it helps them to collect the fund in form of bribes for the approval they provide for contractors. sometimes i think what and how such a huge amount of bribed money would be used by all corrupt politicians, all this must be punished severally and should be hanged perhaps .

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Manshu February 20, 2011 at 5:07 pm

Why do you say they’re out of reach of people? They are not as easily accessible as one would like but they are not out of reach of anyone.

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raeba February 20, 2011 at 10:39 pm

I have already opened a nps account with SIB. Can I remit money to this account directly through online. Kindly clarify.
Regards.
Raeba

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Manshu February 21, 2011 at 5:17 pm

As far as I know there is ECS facility – how are you making payments right now? Going to the South Indian Bank branch?

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raeba March 30, 2011 at 11:14 pm

yes

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Kanhaiya Upadhyay February 21, 2011 at 12:42 am

I want to join New Pension Scheme (Govt. of India)

In the Almora Uttarakhand district, what is the channel for join to new pension scheme please tell me.

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Manshu February 21, 2011 at 4:57 pm

You will have to check with a bank near your place to see how to open an account or if you have an account with ICICI DIrect then you can open that online with them.

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Sushama pagar February 21, 2011 at 8:01 am

i want to open a NPS a/c with SBI , what the proceesure for that , can you give me the details???

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Manshu February 21, 2011 at 4:48 pm

Sushama – You will have to go to a SBI branch and get the details from there. I’d like to mention here that awareness is a little low here so you may not get a positive response right away.

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sushama pagar February 28, 2011 at 12:19 am

i visit d one of the SBI Branch…they are not aware about the NPS…its create a difficulty to open an accout…what should i do????

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Chandra prakash singh February 21, 2011 at 9:26 pm

Sir i want know about nps tier II account.
Sir i serving in BSF my NPS tier I account is already opened and invest monthly amt.as per central govt. Policy but i try to open my NPS TIER II account, but my dept says to me ad all serving person to this scheme therew is no any addprovision to open NPS tier II account.

Sir pse suggest me regaeding this type of account in to my email id.

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Manshu February 22, 2011 at 7:06 pm

Sorry not sure about this.

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Deb February 22, 2011 at 3:49 am

Hi–This is great information indeed. Would you have any updates on the performance of the fund managers? Thanks a lot for your wonderful posts.

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Manshu February 22, 2011 at 6:59 pm

No, sorry I haven’t seen this info but it’s a good idea and I’ll see if this is available anywhere.

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JAGDISH CHANDRA JOSHI February 22, 2011 at 4:20 am

if i want to discontinue the NPS after 4-5 years from the date of joining NPS the what is the plan of this scheme

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Manshu February 22, 2011 at 6:59 pm

You can withdraw money from the Tier 2 account, but there is no provision for that in the Tier 1 account.

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hemant birajdar February 24, 2011 at 9:39 am

i did not got the card of i pin for last 6 years

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Manshu February 24, 2011 at 7:14 pm

Can you please elaborate a little?

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shilpi thakur February 24, 2011 at 10:25 pm

Dear Manshu

Great Initiatiives and information, i had a big discussion in office on your posts 🙂

Is there any information on the total corpus invested in NPS as of today. Also how transparent these schemes are to the investors in terms fn where they are investing and kind of returns that are generated by them.

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Manshu February 25, 2011 at 5:13 pm

WOW – that’s quite incredible Shilpi – I’m really amazed and I think first time I’ve heard about a discussion of OneMint in the offline world 🙂

I don’t know about total corpus or where the fund managers invest the money, but they do publish the NAV regularly, so one can compare from there. That’s actually quite an interesting question – I’ll research that more.

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JP PATTANAIK March 1, 2011 at 3:45 am

Hi,

Its an informative article. There has not been enough publicity to push this product. Recently I went to one of the PoPs (ICICI Bank) for information and how can I open an account for this. I experienced that the staff is completely unware of this. I did not even a find person who can help me out.

I also called up to LIC Pension Fund office, learned that LIC is no more a fund manager for this scheme.

I find lots of chaos at the moment. A scheme is successful only if it is implemented properly. The scheme deserves lot more attention.

Can any one let me know if you have an NPS account and how did you open.

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dr shetti March 1, 2011 at 5:49 am

any one who wants to open can find this link useful just put details online and send adress proof documents to CAMS branches all over india http://www.camsonline.com/PensionSystemServices.aspx

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Manshu March 3, 2011 at 8:31 am

Thanks dr shetti – did you follow this procedure yourself? What happens after one sends the documents?

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drshetti March 3, 2011 at 9:08 am

i have satrted via icici direct its very easy and convnient no need to submit any documents .however one recieved only letter from CRA and not PRAN CARD . with cams they have 194 branches allover india where u can submit documents . in any case CAMS AND ICICI DIRECT are best for NPS

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Chris March 1, 2011 at 6:06 am

Hi,

I subscribed via ICICIDirect.com ( already had an account for MF/Stock) and found no issues subscribing for the NPS through the same.

-Chris

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dr shetti March 1, 2011 at 5:41 am

NPS – ONE OF BEST SCHEMES for those who are working independently/ professionals , enterpruners , jobholdres in private . INindia we dont have govt support in old age and this is only scheme which one can start in india at age of 20 yrs and continue till 60 yrs and is great scheme beacuse WE CANT WITHDRAW . its everyones experiennce that we all invest origianny for retirement but do withdraw for higher education of children, health expences or marraige of kids . NPS invests in equity , corp bonds and g ove sec as per age and hence its ONE OF BEST SCHEMES for everyone . awareness is not much beacuse agents/ bank dont earn anything on this but once people are aware this will pick up
i have opened online today with icicidirect and with 25000 per month contribution i should get 48 to 50 lacks in 10 yrs to take care of me after 60!

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Manshu March 3, 2011 at 8:33 am

Thank you for your comment Dr Shetti.

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dr shetti March 1, 2011 at 5:43 am

any one who wants to open can find this link useful just put details online and send adress proof documents to CAMS branches all over india http://www.camsonline.com/PensionSystemServices.aspx

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dr shetti March 1, 2011 at 5:47 am

NPS CORPUS CALCULATOR
we can approximately plan a corpus by following following link and putting our figures of contributions

http://www.camsonline.com/PensionSystemServices.aspx

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Manshu March 3, 2011 at 8:33 am

Great – thanks for the link!

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chrisw March 5, 2011 at 12:03 am

Thanks for the link. Though I have one from ICICIDirect, I’m planning to have one for my spouse. Any feedback on CAMS customer service?

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jaibheem GM. March 2, 2011 at 9:35 am

plese send information of NPS scheme

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PRADEEP ABRAHAM March 3, 2011 at 11:30 pm

VERY USEFULL INFORMATION FOR EVERY ONE,THANKS DR.SHETTY.

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umesh March 4, 2011 at 2:28 am

is there any change in NPS coz i have heard that what we r giving the money only that will be considered for saving not the same money given by govt.

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Manshu March 5, 2011 at 10:46 am

That doesn’t sound right. There are some additional tax benefits which are good, but what you’re saying about govt.’s part not being considered – that doesn’t sound right, and I haven’t heard anything like that.

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sumit goel March 4, 2011 at 5:10 am

hi,

i was having an NPS account in place of my pf account as it was enforced to all the new joinees in india post at the time but i worked there for nearly 5 months and an amount of approximately 1500 rs was deducted every month towards NPS or PF now i have quit that govt job and is working in a private organisation but now that account is not operative and the amount is in pending state so what can be done with that can i continue with that or that money is wasted.

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Manshu March 5, 2011 at 10:44 am

Your money is not lost Sumit. You can continue the account yourself. Actually this scheme is in fact for people who want to invest and save for retirement on their own.

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Salini Sreekumar March 6, 2011 at 6:12 am

Please can you let me know whether this NPS scheme is allowed for Overseas Citizens of India.

Thanks

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Manshu March 6, 2011 at 1:07 pm

NRIs can invest who have Indian passport. I don’t know for sure if people holding OCI cards can invest or not.

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Raj , Pune March 8, 2011 at 2:12 am

Hi,
I am little worried about putting 40% of your corpus, at maturity, in the annuity schemes which gives just 4-5%. Is there any annuity schemes where we can select the funds? Are there any annuity schemes which gives more than 8% returns?
Thanks

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Manshu March 8, 2011 at 3:13 pm

There aren’t a lot of great annuity products right now, but given the longish time frame (at least for most people), and the fact that you can open a Tier 2 account without any restriction – you can open a Tier 1 account with a min balance, and establish a Tier 2 account for most of your funds Raj.

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