What is National Pension System (NPS)?
Who is eligible to subscribe for NPS (National Pension System)?
A citizen of India, whether resident or non-resident, is eligible to join the NPS, subject to following conditions.
- Subscriber should be between 18 – 70* years of age as on the date of submission of her application
- Subscriber should comply with the prescribed Know Your Customer (KYC) norms as detailed in the NPS -Subscriber Registration Form
NPS is a unique account. Existing NPS subscriber cannot open another NPS account. In case of duplication of NPS account, CRA shall reject subscriber request.
*Note: Currently, ICICI Securities Ltd. is not offering NPS to NRI
Who cannot subscribe for NPS?
Can NRI open NPS account?
What is the architecture of NPS and entities involved?
NPS architecture involves below mentioned entities:
PFRDA : PFRDA is regulator for NPS. It is responsible for registration of various intermediaries in the system such as CRA, Pension Fund Managers, etc. It shall also monitor the performance of various intermediaries and ensure that all stakeholders comply with the guidelines/regulations issued by PFRDA from time to time.
CRA: Record keeping, administration and customer service functions for all NPS subscribers will be centralized and performed by CRA Protean eGov Technologies Limited (formerly known as NSDL e-Governance Infrastructure Limited) & KFintech CRA. On basis of instructions received from subscribers, CRA shall transmit such instructions to the appointed Pension Funds on regular basis. CRA will also provide periodic & consolidated NPS statements to each subscriber.
Pension Fund/Pension Fund Managers: Pension Fund Managers are responsible for managing investments of NPS subscribers. Pension fund managers invest strictly as per PFRDA investment guidelines. They also communicate NAV of each scheme to CRA on regular basis. NPS allows you to choose from any 1 of below mentioned Pension Fund Managers:
- ICICI Prudential Pension Funds Management Company Limited
- HDFC Pension Management Company Limited
- Kotak Mahindra Pension Fund Limited
- LIC Pension Fund Limited
- SBI Pension Fund Private Limited
- UTI Retirement Solutions Limited
- Birla Sun life Pension Management Limited
- Tata Pension Management Limited
- Max Life Pension Fund Management Limited
- Axis Pension Fund Management Limited
Annuity Service Providers: Annuity Service Providers are responsible for delivering pension/annuity to NPS subscriber as per chosen annuity plan. You have choice to select any 1 of annuity service providers upon exit from NPS as per guidelines.
To view Annuity Service Providers empaneled with PFRDA you may click on below
mentioned link http://www.npstrust.org.in/content/list-annuity-service-providers-asps-empanelled-pfrda
Trust & Trustee Bank: NPS trust is responsible for taking care of the funds under NPS and is registered owner of all NPS assets. Trust holds an account as NPS Trustee Bank (Axis Bank). NPS Trustee Bank facilitates fund transfers across various entities of NPS system viz. Pension Fund Managers, Annuity Service Providers, subscriber, etc. NPS Trust is being administered by the Board of Trustees, as constituted by PFRDA.
Point of Presence (POP): POP is first point of interaction between subscriber and NPS architecture. POP is responsible for performing functions relating to registration of subscribers, undertaking Know Your Customer (KYC) verification, receiving contributions and instructions from subscribers and transmission of the same to designated NPS intermediaries like CRA etc.
Custodian: Custodian is responsible for the custody of underlying assets. Custodian is SEBI registered custodial service. Stock Holding Corporation of India (SHCIL) is currently Custodian under NPS.
What are features & benefits of investing in NPS?
- It allows you the flexibility to choose your own investment option based on your risk appetite
- It offers diversification by giving you option to invest in equities, corporate bonds and government securities either through active option or auto option
- You can also select pension fund manager as per your choice.
- It helps you earn market based returns over long term.
- It is one of the most cost-effective investment option available
- You can also avail tax benefits on your NPS investment.
Benefits of investing in NPS through www.icicidirect.com
- Subscribe and invest online in NPS through ICICIdirect.com
- Ease to invest in NPS as per your convenience
- -Option to invest in NPS either through Systematic Investment Plan (SIP) or Lump sum amount
- View contribution book, statement of transaction, NAV of pension fund on ICICIdirect.com
- Dedicated email id : npshelpdesk@icicisecurities.com to address customer’s
NPS queries What are different types of NPS account?
There are 2 types of NPS account: Tier 1 and Tier 2.
Tier 1
- It is a mandatory account for those subscribing for NPS.
- You can avail tax benefits on investment in NPS Tier 1 accoun
- It is non-withdrawable retirement account. Withdrawal is allowed upon meeting the withdrawal conditions prescribed under NPS as per regulation. Partial withdrawal is allowed up to 25% of his own contribution (excluding employer contribution) for Marriage or Higher education of children or purchase of house/flat or for prescribed illness (subject to certain conditions) if subscriber has been in NPS for at least 3 years).
Tier 2
It is voluntary saving facility as an add-on to any NPS Tier 1 account holder.
You can withdraw from NPS Tier 2 account whenever you wish
| Particulars | NPS Tier 1 | NPS Tier 2 |
| Minimum Contribution at the time of account opening | ₹ 500 | ₹ 1000 |
| Minimum amount per contribution | ₹ 500 | ₹ 250 |
| Minimum amount to be invested every financial year (Note: applicable from second Financial year from the date of PRAN allotment date) | ₹ 1000 | NA |
| Minimum no. of contribution (Note: applicable from second Financial year from the date of PRAN allotment date) | 1 per FY | NA |
What are investment choices offered in NPS?
You have choice to invest in various asset classes like equity, corporate bonds, and government securities either through Active choice or Auto choice.
Active Choice - Individual Funds (Asset class E, Asset class C, Asset class G & Asset class A)
Auto Choice – Life Cycle fund (Aggressive, Moderate (Default) & Conservative)
In Active choice, you have the option to actively decide as to how your NPS contribution is to be invested in the following asset classes:
| Sr. No | Asset Class | Particular |
| 1 | Asset Class E (Maximum allocation up to 75% of investment) | Investments in predominantly equity market instruments |
| 2 | Asset Class C (Maximum allocation up to 100% of investment) | Investments in fixed income instruments other than Government securities |
| 3 | Asset Class G (Maximum allocation up to 100% of investment) | Investments in Government securities |
| 4 | Asset Class A (Maximum allocation up to 5% of investment). Note: Investment in Asset Class A is available only for NPS Tier 1 account. | Investment in Commercial or Residential mortgage based securities, Units issued by Real Estate and/or Infrastructure Investment Trusts and/or Asset backed securities as regulated by SEBI, Alternative investment funds (AIF category I & II) registered with SEB |
Please note:
- Upto 50 years of age, the maximum permitted Equity Investment is 75% of the total asset allocation.
- From 51 years and above, maximum permitted Equity Investment will be as per the equity allocation matrix provided above. The tapering off of equity allocation will be carried out as per the matrix on date of birth.
- The overall asset class allocation under the 'Active Choice' option should be equal to 100%.
In Auto choice, you have choice to select any 1 of the below mentioned option for your
NPS investment.
| Sr. No | Life Cycle | Particulars |
| A | Aggressive Life Cycle fund (LC-75) | Maximum investment in equity is restricted to 75& |
| B | Moderate Life Cycle fund (LC- 50)-Default | Maximum investment in equity is restricted to 50% |
| C | Conservative Life Cycle fund (LC-25) | Maximum investment in equity is restricted to 25% |
What are tax benefits associated with NPS investment?
Tax Benefit (For F.Y. 2022-23)
| Tax Benefits for Salaried Individuals | ||
| Category | Section | Investment Limit |
| Own Contribution | 80 CCD (1) | 10% of Salary (up to ₹ 1,50,000) |
| Additional Contribution | 80 CCD (1B) | 50000 |
| Employer Contribution | 80 CCD (2) | 10% of Salary up to ₹ 7.5 lakhs |
| Tax Benefits for Self Employed Individuals | ||
| Category | Section | Investment Limit |
| Own Contribution | 80 CCD (1) | 20% of Gross Annual Income (up to ₹ 1,50,000) |
| Additional Contribution | 80 CCD (1B) | ₹ 50,000 |
Entire 100% of pension wealth from NPS –tier 1 account on attaining 60 years of age is tax- exempt.
Partial withdrawal (not exceeding 25% of own contribution for subscriber who has been in NPS for at least 3 years) made in accordance with the terms and conditions specified under Pension Fund Regulatory and Development Authority Act and regulations is tax-exempt
What are NPS charges?
Charges associated with NPS investment
| Charges for investment in NPS & managing funds are very less as compared to other investment products. It is very cost-effective investment option | ||||
| Agency | Service | NSDL - Charges* | KARVY - Charges* | Mode |
| CRA-NSDLCRA - KARVY | PRA Opening Charges | ₹ 40 | ₹ 39.36 | Through Cancellation of Units |
| Annual Maintenance of units | ₹ 69 | ₹ 57.63 | ||
| Charges per transaction | ₹ 69 | ₹ 57.63 | ||
| Registration (Tier 1 or Integrated Tier 1 & Tier 2) | ₹ 200 | Collected Upfront | ||
| Point of Presence (POP)- ICICI Securities Ltd. | Initial subscriber contribution/Regular/ Subsequent contribution | 0.50% of contribution subject to minimum of ₹ 30 and maximum of ₹25,000 | ||
| Service Requests as prescribed by PFRDA | ₹ 30 | |||
| Persistency > 6 months & ₹ 1000 contribution | * ₹ 50/- per annum for annual contribution of ₹ 1,000 to ₹ 2,999, * ₹ 75/- per annum for annual contribution of ₹ 3,000 to ₹ 6,000,* ₹ 100/- per annum for annual contribution above ₹ 6,000 (only for NPS-All Citizen) | Through Cancellation of Units | ||
| Custodian | Asset Serving (Per Annum) | 0.0032% of Assets under Custody | Through Cancellation of Units | |
| Pension Fund | Investment Management (Per Annum) | 0.09 % 0.03% of Assets Under Management based on AUM slab | Through adjustment in | |
| NPS Trust | Reimbursement of Expenses ( Per Annum) | 0.005% of Assets Under Management | NAV | |
| Additional service tax and other charges levied as applicable | ||||
What will happen to my NPS account in case I wish to close my ICICI direct account?
Your NPS account would not be closed on account of closure of ICICI direct account. In this scenario, you need to shift your existing NPS account to offline NPS-UOS (Unorganized sector)/Individual model.
You shall have to shift to NPS-UOS offline model by submitting duly filled Sector shifting form: ISS-1 and self-attested PRAN card copy at below mentioned address
For further investment in NPS, you will have to submit NCIS form, self-attested PRAN card copy, and cheque (Third party cheque not accepted) for contribution. Cheque should be in name of;
- NSDL Subscriber – “ICICI Securities Ltd – Collection Account – National Pension System Trust – NUOS”
- KARVY Subscriber – “ICICI Securities Ltd – Collection Account – National Pension System Trust – KUOS”
Duly filled form & documents to be sent at below mentioned address ICICI Securities Ltd, NPS Operations Dept,Shree Sawan Knowledge Park, Plot No. D-507, T.Ts Ind Area,M.I.D.C, Turbhe, Opp. Juinagar Railway Station, Navi Mumbai – 400705
You can avail the form by following below mentioned path
- www.icicidirect.com —Customer service---Important Links---Download forms —NPS
- Login in I-Direct account— Trade & Invest---NPS---Holding & Services---Forms