National Pension Scheme for NRI

The National Pension Scheme is a government-sponsored pension programme in India. It is a voluntary, post-retirement investment fund initiated by the Central Government. The NPS offers social security in the form of pension.Subscribers make voluntary contributions into their Pension Account to accumulate a post-retirement corpus. This scheme covers business owners and employees of all sectors, except those from the armed forces. Non-Resident Indians also have the option to open an account under the National Pension Scheme .

NRIs between the age of 18-60 years may open an NPS Account, 9after having complied with KYC norms
It is important to note here that Overseas Citizens of India (OCIs) and Persons of Indian Origins (PIOs) aren’t included in the definition of NRI and are thus not eligible to open an NPS Account.

• PAN Card
• A bank account of one of the two types - Non-Resident External (NRE) Account or Non-Resident Ordinary (NRO) Account

Thus, the source of contributions made in the NPS Account shall be an NRO Account or an NRE Account.

If you are an NRI meeting the eligibility criteria mentioned earlier and wish to contribute to the National Pension Scheme, you may open an account with the help of the following steps:

1. Download the “NRI NPS Form” from a trusted website or procure the form from a participating bank.
2. Fill up the form and submit it to the respective bank branch in India.
3. The bank shall verify your particulars and forward the form to the Central Record-keeping Agency (CRA) directly.
4. Make the initial deposit by meeting the minimum contribution amount, via cheque. All subsequent transactions can be made online.
5. After receipt of the initial deposit amount (which shall be made via cheque), the application shall be digitised.
6. Thereafter, the CRA shall generate a Permanent Retirement Account Number (PRAN) which shall be notified via email or SMS. PRAN is a unique12 digit code issued to every NPS account-holder.

• Professional Management The investment corpus accumulated under the scheme is managed by a professional expert. The delegated manager is duly appointed by the Pension Fund Regulatory and Development Authority (PFRDA). The fund manager or the portfolio manager looks after the investments made on behalf of the investors. Investors thus benefit from active and competent management of their funds.
• Market-Linked Returns The returns are market-linked as this scheme mobilises money from the public and invests in a diverse range of securities like shares, bonds and bills. The NPS offers two options with respect to portfolio allocation - Auto option and Active option. Active choice enables investors to create their own asset matrix, subject to a maximum of 50% exposure in equity.
• Flexibility of Tier-I and Tier-II Accounts NPS Tier-I account is the default account meant for post-retirement savings. It restricts withdrawals till subscriber attains retirement age. NPS Tier-II account is an additional account meant for independent non-retirement related savings offered to Tier-I account-holders. It offers numerous benefits like easy and  unrestricted withdrawal of funds, quick transfer of money from to the Tier-I Account, no annual maintenance charges, etc.
• Tax Benefit Contributions made to the NPS account are eligible for tax deduction u/s 80C of the Income Tax Act. Moreover, 60% of the matured sum can be withdrawn tax-free.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.