Post office National Pension System - All Citizens Model

Post India National Pension System - All Citizens Model

Post India National Pension System - All Citizens Model.National Pension System (NPS) is a voluntary retirement savings scheme laid out to allow the subscribers to make defined contribution towards planned savings thereby securing the future in the form of Pension. It is an attempt towards a sustainable solution to the problem of providing adequate retirement income to every citizen of India.

Post India National Pension System - All Citizens Model.​At the time of normal exit from NPS, the subscribers may use the accumulated pension wealth under the scheme to purchase a life annuity from a PFRDA empaneled life insurance company apart from withdrawing a part of the accumulated pension wealth as lump-sum, if they choose so. PFRDA is the nodal agency for implementation and monitoring of NPS.​

Post India National Pension System - All Citizens Model


2. Who can open a NPS account under All Citizen Model

A citizen of India, whether resident or non-resident, subject to the following conditions:


Applicant should be between 18 – 65 years of age as on the date of submission of his/her application and should comply with KYC norms prescribed.


3. Benefits of NPS Account


i) Low Cost:-

NPS is considered t​o be the world’s lowest cost pension scheme. Administrative charges and fund management fee are also lowest.​


ii) Simple:-

All applicant has to do is to open an account with any one of the POPs being run through all Head Posts Offices across india and get a Permanent Retirement Account Number(PRAN)


iii) Flexible:-

Applicant can choose his/her own investment option and Pension Fund or select Auto choice to get better returns.


​iv) Portable:-

Applicant can operate an account from anywhere in the country and can pay contributions through any of the POP-SPs irrespective of the POP-SP branch with whom the applicant is registered, even if he/she changes his/her city, job etc and also make contributio​n through eNPS. The accou​nt can be shifted to any other sector like Government Sector, Corporate Model in case the subscriber gets the employment.

Tax benefit to employee* :-

Individuals who are employed and contributing to NPS ​would enjoy tax benefits on their own contributions as well as their employer’s contribution as under: -

Employee’s own contribution -

Eligible for tax deduction up to 10% of Salary (Basic + DA) under Section 80 CCD(1) within the overall ceiling of Rs. 1.50 lacs under Sec 80 CCE.

​Employer’s contribution –

​The employee is eligible for tax deduction up to 10% of Salary (Basic + DA) contributed by employer under Sec 80 CCD(2) over and above the limit of Rs. 1.50 lacs provided under Sec 80 CCE.

Tax benefit for self-employed:

Eligible for tax deduction up to 10 % of gross income under Sec 80 CCD (1) with in the overall ceiling of Rs. 1.50 lacs under Sec 80 CCE. Subscriber is allowed deduction in addition to the deduction allowed under Sec. 80CCD(1) for additional contribution in his NPS account subject to maximum investment of Rs. 50,000/- under sec. 80CCD 1(B)

I. Types of Accounts :-


Tier -I Account -


The applicant shall contribute his/her savings for retirement into this condition; & restricted withdrawal account. This is the retirement account and applicant can claim tax benefits against the contributions made subject to the Income Tax rules in force.


Tier-II Account –


​This is a voluntary savings facility. The applicant will be free to withdraw his/her savings from this account whenever he/she wishes. This is a not a retirement account and applicant can’t claim any tax benefits against contributions to this account.


II. Contributions :-


The subscriber can contribute the amount through cash, local cheque, demand draft or Electronic Clearing System (ECS) at his/her chosen POP-SP. However, for cash transactions exceeding Rs.50000/- subscriber needs to submit the copy of the PAN card as per the Anti-Money laundering (AML) rules. Also, No outstation cheques shall be accepted.


Minimum Contributions (For Tier-I):-


♦ Minimum contribution at the time of account opening and for all subsequent transactions- Rs 500

♦ Minimum contribution per year - Rs 1,000 excluding charges and taxes ​

♦ ​Minimum number of contributions in a year - 01


Charges and Penalty for non-compliance of mandatory minimum contributions:-


​♦ ​If the subscriber contributes less than Rs. 1,000 in a year, his/her account would be frozen and the facilities provided by CRA such as online view of account etc. will be restricted.

♦ In order to reactivate the account, the subscriber would have to pay the minimum contributions of Rs. 500/-

♦ A frozen account shall be closed when the account value falls to zero.


Minimum Contributions (For Tier-II):-


♦ ​Minimum contribution at the time of account opening - Rs.1000/- and for all subsequent transactions a minimum amount per contribution of Rs.250/-

♦​There is no minimum contribution requirement for the financial year and also there is no cap on maximum contribution


Post India National Pension System - All Citizens Model

III. How to open NPS Account :-

Procure your Permanent Retirement Account Number (PRAN) application form:-


♦ "As a Subscriber between the age brackets of 18 to 65 years of age, you can procure your PRAN application form from any of the Point of Presence - Service Providers (POP-SP) you wish to register with. You can also procure the PRAN application form from our website by clicking here."

♦ "You have to ensure that your PRAN application form is filled up i.e. photograph, signature, mandatory details, scheme preference details etc and also submit KYC documentation with respect to proof of identity and proof of address. For detailed information on NPS, please refer to the offer document prescribed by the Pension Fund Regulatory and Development Authority (PFRDA)."


Submit PRAN application form to your nearest Point of Presence - Service Provider (POP-SP):-


​You can go to your nearest POP-SP and submit the PRAN application along with the KYC documents. PRAN card will be sent to your correspondence address by CRA.


Track your PRAN application:-


At the time of submission of the PRAN application, POP-SP shall give you a receipt number. You can track the status of your PRAN application by entering the receipt number in the following link: https://cra-nsdl.com/CRA/pranCardStatusInput.do


Submit your first Contribution Slip:-


You are required to make your first contribution (minimum of Rs 500) at the time of applying for registration to any POP-SP. For this, you will have to submit NCIS (Instruction Slip) mentioning the details of the payment made towards your PRAN account.


The applicant has to ensure that subscriber registration application form is duly filled up i.e. photograph, signature, mandatory details, scheme preference details etc and also submit Know Your Customer (KYC) documentation with respect to proof of identity and proof of address. The applicant is advised to read the instructions given at the back of the form. NRIs should have an account with a bank based in India to open an account under NPS and also should have a local address. The contributions made by the NRI would be subject to regulatory requirements as prescribed by RBI from time to time and FEMA requirements. Once the application form is duly filled in applicant can go to the nearest POP-SP and submit the PRAN application along with the KYC documents. PRAN card will be sent to applicant’s correspondence address by CRA. The list of POP –SP (Service Provider branches) is available on the CRA website www.npscra.nsdl.co.in and on the website of the concerned POP. To know the nearest POP-SP branch of your choice applicant may visit https://www.npscra.nsdl.co.in/pop-sp.php.


After the account is opened, CRA shall mail a “Welcome Kit” containing the subscriber’s unique Permanent Retirement Account Number (PRAN) Card and the complete information provided by the subscriber in the Subscriber Registration form. This account number will be the primary means of identifying and operating the account. The applicant will also receive a Telephone Password (TPIN) which can be used to access an account on the call Centre number (1-800-222080). Applicant will also be provided an Internet Password (IPIN) for accessing an account on the CRA Website (www.npscra.nsdl.co.in) on a 24X7 basis.


Withdrawal /Exit :-


1. Upon attainment of the age of 60 years : -


At least 40% of the accumulated pension wealth of the subscriber needs to be utilized for purchase of annuity providing for monthly pension to the subscriber and balance is paid as lump sum payment to the subscriber. In case the total accumulated corpus is less than Rs. 2 Lacs, the subscriber may opt for 100% lumpsum withdrawal.


However, the subscriber has the option to defer the lump sum withdrawal till the age of 70 years. Subscriber has also got the option to continue contributing upto the age of 70 years. This option is required to be exercised upto 15 days prior to completion of 60 years.


2. At any time before attaining the age of 60 years: –


​The subscriber may exit from NPS before attaining the age of 60 years, only if he has completed 10 years in NPS. At least 80% of the accumulated pension wealth of the subscriber needs to be utilized for purchase of annuity providing for monthly pension to the subscriber and the balance is paid as a lump sum payment to the subscriber.


In case the total accumulated corpus is less than Rs. 1 Lac, the subscriber may opt for 100% lumpsum withdrawal


3. Death of the subscriber: –


​In such an unfortunate event, option will be available to the nominee to receive 100% of the NPS pension wealth in lump sum. However, if the nominee wishes to continue with the NPS, he/she shall have to subscribe to NPS individually after following due KYC procedure Under National Pension System, PFRDA has entrusted the responsibility of receiving, processing and settlement of all withdrawal claims made to Central Recordkeeping Agency (CRA) and CRA has created a special NPS claim processing cell (NPSCPC) for this purpose for handling all types of withdrawal claims. The CRA will monitor the performance of NPSCPC on the withdrawal processing as per the instructions provided by PFRDA in this regard. At present the NPSCPC is fully functional.


The subscribers can submit their claims online for withdrawal from NPS


Finance Cap :


​​Minimum Initial Contribution wi​th Registration Rs. 500 (excluding taxes).

Minimum Subsequent Contribution    ​Rs. 500 (excluding taxes).

Maximum Contributions      No limit.

Minimum Contributions in a Financial Year   

Rs.1,000 in Tier I.

Minimum transactions in a Financial Year One.


Transactional Charges :


Registration Charges Rs. 200 (excluding taxes).


0.25 % of the Contribution amount subject to minimum of Rs.20 (excluding taxes) and maximum of Rs.25,000 (excluding taxes).

All Service Charges 

 Rs.20 (excluding taxes).

Payment mode ​Cash, Cheque, DD subject to realization.

Post India National Pension System - All Citizens Model

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. www.Tradtips.com suggests its readers to consult with their investment advisers before making any financial decision.)

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