Frequently Asked Questions

The National Pension System (NPS) is a voluntary, long-term retirement savings scheme designed to enable systematic savings. It is regulated by the Pension Fund Regulatory and Development Authority (PFRDA) and aims to provide retirement income to all citizens.

Any Indian citizen, whether resident or non-resident, between the ages of 18 and 70 years can join NPS.

Yes, an NRI between the age of 18 – 60 years, as on the date of submission of his/her application and complying with the extant KYC norms, can open an NPS account. An NRI can open their NPS Account with a POP Bank where he/she has his/her NRI Account (NRE/NRO).

Yes, individuals can invest in NPS even if they have investments in other schemes.

To open your NPS Account, a mobile-linked Aadhaar Card and DigiLocker, bank account details, and scanned copies of cancelled cheque, PAN Card and signature specimen are required. UPI or Internet Banking is required for initial contribution.

No, an individual can have only one Permanent Retirement Account Number (PRAN) under NPS.

At the time of account opening, initial contribution of ₹500/- or more is required for Tier-I Account, and ₹1,000/- for Tier-II Account. Annual contribution of at least ₹1,000/- mandatory for the Tier-I NPS Account (the primary NPS Account), and each contribution must be ₹500/- or more. There are no minimum annual contribution requirements for the Tier-II NPS Account. But each contribution must be of ₹250/- or more.

Failure to do will lead to freezing of the account. To unfreeze, subscriber must make the minimum annual contribution. There is no penalty if account frozen due to non-payment of minimum annual contribution.

The government does not contribute to NPS Account. Central and State governments contribute only as an employer, in the case of Central and State government employees.

NPS contributions are managed by the Pension Fund Managers (PFMs), which the subscriber selects at the time of opening his/her NPS Account.

The investment choices available in NPS are – Active and Auto. In the Active Investment Choice, the subscriber can specify how much of his/her contributions are invested across the asset classes (which are equities, corporate bonds, government securities, and alternate investment funds). In the Auto Investment Choice, subscribers select one of the three predefined portfolio structures (LC-75 Aggressive, LC-50 Moderate, and LC-25 Conservative, differentiated based on the level of equity exposure), where the asset allocation gets automatically adjusted based on the subscriber’s age. In case of Government NPS, available investment choices are the Default CG/SG Scheme, Scheme G, LC-25, and LC-50.

Yes, subscribers can change their investment choices (asset allocation) 4 times in one financial year.

Yes, subscribers can change their pension fund manager once a financial year.

Yes, subscribers can have different pension fund managers and investment choices for Tier I and Tier II accounts.

Tax benefits u/s 80C, 80CCD(1B), and 80CCD(2) are available on contributions to the Tier-I NPS Account only. Partial Withdrawals from the Tier-I NPS Account are tax-exempt. The lumpsum withdrawal on exit from NPS is tax-exempt. No tax is applicable on the annuity plan purchased with NPS corpus.

Normally, subscribers can access their NPS funds when they retire and exit the scheme. However, subscribers can take out Partial Withdrawals after 3 years of joining the scheme. If a subscriber wants complete flexibility on withdrawals before exit, he/she can invest in the Tier-II NPS Account.

Yes. Subscriber can delay or defer withdrawal and stay invested in NPS up to the age of 75 years. NPS Subscriber can choose to defer only lumpsum withdrawal or defer only annuity plan purchase or defer both lumpsum as well as annuity.

A subscriber can exit the scheme anytime. Such a subscriber can withdraw only up to 20% of the accumulated corpus, and the rest must be used to purchase an annuity plan. If the accumulated corpus is less than or equal to ₹ 2.5 lakh, he/she can withdraw the full amount.

If a subscriber dies before the maturity date, the accumulated corpus is given to the nominee/legal heir. The nominee can either withdraw the entire amount or use part or entirety of it to purchase an annuity plan. The conditions might slightly vary, depending on the NPS model the subscriber is part of.

Subscriber can initiate an online withdrawal request on his/her CRA platform. Or the subscriber can submit a physical withdrawal request to his/her Point of Presence (PoP).

Documents required to make withdrawals include a duly filled form, PRAN Card, KYC documents, and Bank Account details.

An annuity plan is a financial product where an individual pays a bulk amount to an insurance company in exchange for a regular income stream or pension for a specified period or for life. It may cover nominees post the death of the annuitant.

ASPs are Insurance companies registered with the Insurance Regulatory and Development Authority of India (IRDAI) and empanelled by the PFRDA. ASPs provide annuity plans to subscribers when they exit from NPS.

Annuity Service Providers (ASPs) offer a variety of annuity plans which are combinations of duration of the guaranteed pension, provision of pension for nominee(s), and return of purchase price. The plans and their prices can vary across ASPs.

The annuity income or pension received is taxable as per the individual's income tax slab in the year of receipt.