Invest in NPS Under NPS Retail Model

It is every employee's innate desire to have a secured future and live a financially independent life post-retirement. One of the best ways to accomplish that is to start investing in the pension fund from a young age. You can start investing a small amount periodically throughout the working-age and build a corpus that you can use later when you retire. And, one of the best platforms to invest in your retirement fund is the NPS retail model.Under the NPS retail model, all employees, especially those working in a non-government and non-corporate organisation, can invest in NPS. The scheme is regulated by the Pension Fund Regulatory and Development Authority, and it helps the individuals earn a regular income through pension post-retirement.

• Tax-efficient investment NPS retail caters to employees' pension needs working in non-government organisations, and it is a tax-efficient pension scheme. Under the model, you are eligible to get a tax benefit up to Rs. 1.5 lakhs on your contributions made towards the NPS account under Sec80CCD (1). The deduction is within the overall ceiling of Rs. 1.5 lakhs under Section 80CCE.Additionally, you are eligible for a tax benefit up to Rs. 50,000 for contributions towards NPS account u/S 80CCD (1B). This deduction is over and above the limit of Rs. 1.5 lakhs.
• A low-cost investment scheme NPS is one of the low-cost investment schemes in the world. It has the lowest administrative and funds handling charges.
• It is a simple scheme Another significant benefit of NPS retail is that it is a simple investment scheme. You can open an account, make contributions, and do other transactions online or offline at your convenience. Also, unlike other investment schemes, you need not worry too much about making critical investment decisions.All your investments are handled by expert fund managers who make the investment decisions on your behalf and work in your interest.
• Portable When you subscribe to NPS, you are issued a PRAN (Permanent Retirement Account Number). With the PRAN you can operate your NPS account from any location you want. Also, you can enjoy seamless portability even if you switch jobs or move to a different location.
• Market-linked returns One of the important reasons why many people prefer investing in NPS over other traditional investment instruments is that it provides market-linked returns. The amount you contribute towards an NPS account is invested in different asset classes to generate higher returns. Thus, you can be sure that your retirement corpus grows over a period and you get inflation-adjusted returns in the future.

Individuals who are not employed with a corporate or government organisation can join the NPS under the retail model. All Indian citizens, including OCI (Overseas Citizens of India) and NRI (Non-resident Indians), can subscribe to NPS retail provided they meet the following eligibility criteria:

• You must be an Indian citizen. NRIs and OCI can also join NPS.
• You must be aged between 18-65 years at the time of subscribing to the NPS.
• You must comply with the KYC (Know Your Customer) documentation as required in the registration form.

To subscribe to NPS retail, you must provide the following documents:

• Duly filled registration form
• Proof of identity
• Proof residence
• Proof of valid bank account.

If you are eligible to subscribe for NPS retail, you can enrol for it either through an online or offline method.

Steps to follow for online registration

Registering for NPS retail online is convenient, easy and quick. You must visit the PoP (Point of Presence Agency) website and follow the below steps:

• Visit the PoP website
• Select NPS retail model
• Enter the necessary details in the registration form
• Choose the pension fund manager.
• Choose your preferred investment mode – active or auto mode.
• Choose the fund allocation across different asset classes as per your risk-taking capacity and financial goals.
• Enter nominee details. Ensure that you provide accurate information, name, age, relation, email, phone number, address, etc.
• Pay the initial contribution.

Steps to follow for offline registration

If you are not comfortable registering for NPS retail online, you can opt for offline registration. It involves the following steps:

• Visit the pension fund manager's branch.
• Fill the registration form. The form must be duly signed and have a photograph attached to it.
• Submit KYC documents as mentioned on the registration form
• Make the initial contributions.

When you subscribe to NPS retail, you can contribute to your NPS account through demand draft, cheque, net banking, or other payment methods as per your preference. For demand draft and cheques, you must pay through your chosen PoP.The minimum and maximum contribution you can make towards your NPS retail depend on the type of NPS account you hold.

Minimum contribution towards Tier I Account

• For Tier I account, you must make a minimum contribution of Rs. 500 when you open the account.
• The minimum amount for all your subsequent contributions in a year must be at least Rs. 500
• You must contribute at least Rs. 1000 in a year
• You must contribute towards your NPS retail Tier I account at least once a year.

Minimum contribution towards Tier II Account

If you hold an NPS retail Tier II account, you must contribute a minimum of Rs. 1000 at the time of opening the account. For all subsequent contributions, you must pay at least Rs. 2.50.For both Tier I and Tier II account, there is no maximum limit on the contributions made.

If you are not associated with a corporate organisation and are looking for a low-cost pension scheme, NPS retail would perfectly suit your needs. With a minimum contribution of Rs. 500 in a year, you can easily invest in NPS retail and build a healthy retirement corpus for the future.

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.