15 years of NPS: Everything you want to know about the ubiquitous retirement scheme

Having been introduced on May 1, 2009 for all citizens of India; National Pension System (NPS) has recently completed 15 years of its existence.

The Government of India introduced NPS from Jan 1, 2004 (except for armed forces) before rolling it for the general public five years later.  The scheme is aimed at providing pension cum investment as security for old age to the citizens of India. It enables citizens to effectively plan their retirement through safe and regulated market-based return.

Let us give a lowdown on the ubiquitous retirement saving scheme. 

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What is NPS and who regulates it? 

It is a pension cum investment scheme launched which provides old age security to Citizens of India. It gives a long-term saving avenue to effectively plan your retirement through safe and regulated market-based return. It is regulated by Pension Fund Regulatory and Development Authority (PFRDA). 

Established by PFRDA, National Pension System Trust (NPST) is the registered owner of all assets under NPS.

Who can subscribe to it?

Any individual citizen (resident as well as non-resident) who fall in the age group of 18 to 70 years can join NPS.

What are the key objectives of NPS?

NPS has three key objectives:

A. Provide old age income

B. Reasonable market-based returns over the long term

C Extending old age security coverage to all citizens

Can an NRI open an account in NPS?

Yes, NRI can also open an NPS account. Contributions made by NRI are subject to regulatory requirements as prescribed by RBI and FEMA from time to time. However, OCI (Overseas Citizens of India) and PIO (Person of Indian Origin) card holders and HUFs are not eligible for opening of NPS accounts.

How can one open an NPS account?

In order to open an account, you need to do one of the two:

I. Visiting point of presence service providers (POP- SP).

II. Through eNPS.

When you visit POP-SP, you need to follow these steps:

I. At a point of presence - service provider (POP-SP)

A. Procure your Permanent Retirement Account Number (PRAN) application form from any of the POP-SP.

B. Submit PRAN application form to the nearest service provider along with the KYC documents. The PRAN card will be sent to your correspondence address by CRA.

C. Track your PRAN application. 

D. Submit your first contribution slip.

II. These are the steps to follow to open an NPS account online

A You must have a permanent account number (PAN).

B. Bank / Demat /Folio account details with the empanelled Bank/Non-Bank for KYC verification for subscriber registration through eNPS.

C. Your KYC verification will be done by the Bank/Non-Bank POP selected by you during the registration process.

D. Fill up the details online.

E. Upload scanned copy of PAN card and cancelled cheque.

F. Upload scanned photograph and signature in JPEG format.

G. You will be routed to a payment gateway for making the payment towards your NPS account.

H. Contributions are credited to PRANs on a T+2 basis.

What happens after NPS enrollment?

Upon successful enrolment, a Permanent Retirement Account Number (PRAN) is allotted to the subscriber under NPS. Once the PRAN is generated, an email alert as well as a SMS alert is sent to the registered email ID and mobile number of the subscriber by NSDL-CRA (Central Record Keeping Agency).

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Subscriber contributes on a regular basis towards NPS during the working life to make a healthy corpus that can be used for  retirement. 

At the time of retirement or exit from the scheme, the corpus is given to the Subscriber with the mandate that some part of it must be invested in an annuity to give a monthly pension after retirement.