Central government made the New Pension Scheme mandatory for its new recruits (except defence forces)

from 1st Jan, 2004 and made it operational from Apr 1, 2008.In August 2008,Govt decided to offer New Pension Scheme (NPS) to all citizens of India on a voluntary basis. Accordingly, 22 Points of Presence (PoPs mainly banks) and 6 Pension Fund Managers have been appointed by Pension Fund Regulatory & Development Authority. Branches of PoPs designated as PoP service providers (PoP-SP) act as the initial point of contact and collection point, for all citizens desiring to obtain a Permanent Retirement Account Number(PRAN) under NPS. Features of New Pension Scheme(NPS): 1. 2. 3. 4. The scheme is voluntary and is open to all citizens of India with effect from 1.5.2009 Resident or non-resident between age of 18-55 years can subscribe. The amount can be chosen by the subscriber himself. The account is required to be opened with a point of presence POP(mainly banks) to get a Permanent Retirement Account Number(PRAN). 5. The first subscription to be made at the time of applying for registration at any POP-SP. The contribution amount will be (a) minimum Rs 600 per contribution (b) minimum per year Rs 6000 and (c) minimum no. of contributions per year shall be 4. 6. Account can be operated from anywhere in the country, even when city is changed or job is changed or pension fund manager is changed. Withdrawals: On attaining normal age of retirement of 60 years , the subscriber has to annuitize at least 40% of Pension wealth, the remaining 60% can be withdrawn in lump sum or in installment of 10% of the pension wealth every year. Amount lying at 70 years should be completely withdrawn. Pre-mature withdrawal: If withdrawal is before 60 years, annuitization will be 80% of the accumulated wealth.20% can be withdrawn in lump sum. Investment: The subscriber has two approaches for investment: 1. Active Choice- The subscriber is to decide as to where the investment is to be made. Investment in Asset Class E can be maximum 50%. 2. Auto Choice (Life Cycle Fund)- In this case the subscriber will have to give the pension fund manager(PFM),the choice where the percentage of investment in Class C or Class E or Class G assets is indicated. This ratio is different at different age levels. Charges: The PFM fee will be 0.0009%