NEW PENSION

SCHEME

By Satya
Regd. No.- 11011011

INDEX
Introduction
Features of NPS
Benefits under NPS
Who can join ? Who cannot join ?
Accounts under NPS
How much a subscriber needs to contribute ?
NPS structure
Investment options and Structure
Getting your money out ?
Taxation benefits
Central Record-keeping Agency (CRA)
Conclusion

INRODUCTION

Its a pension system recently launched by Govt.

of India from 1st April, 2009.
You can regularly invest your money in this and
get a lump sum at your retirement and a fixed
monthly income for the lifetime. It will work
almost the same way as Private Pension
Schemes.
NPS is now available for all citizens of India with
effect from May 1, 2009.

SALIENT FEATURES OF NEW

PENSION SCHEME
Applicable to Govt. servants joining service on or
after 1-jan-2004.
The scheme will be a defined contribution scheme
as against the present defined benefit scheme.
Existing pension scheme and GPF will no longer
be applicable for new entrants or Govt. servants.
Contains to Tiers: Tier I and Tier II
PFDRA to be appointed to regulate and develop
the pension market.

SALIENT FEATURES ..
Central record keeping agency(CRA) and pension
fund managers to be appointed.
Defined contribution based pension system.
Offers investment options to employees.
How money is invested will depend upon your
own choice.
Available to all citizens of India on voluntary
basis and is mandatory for employees of central
government.

BENEFITS OF NPS
It is voluntary- NPS is open to every Indian
citizens. Also u can choose the amount you want
aside and save every year.
It is simple- anyone can easily open an account
with any one of the POP and get a PRAN.
It is flexible
It is portable
Withdrawn any time before 60 years of age.
Tax benefits (Under section 80 CCD)


WHO CAN JOIN ?
A citizen on India,
whether resident or
non resident.

You should be between

18-55 years of age.
You should comply
with the KYC norms as
detailed in subscriber
registration form.

WHO CANNOT JOIN ?

Individuals who are not granted an order of

discharge by court.
Pre existing account holders under NPS

ACCOUNTS UNDER NPS

Tier I

It is compulsory.
Cannot be withdrawn during service.
Matching contribution by Government.
Payment only at the time of exit or after 60 years.
Employees contribution @ 10 % of pay + DA .


Tier II

It is optional.
No ceiling on the contribution by govt. employees.
No contribution by the Government.
Can be withdrawn at any time.
Active tier-I account is necessary to open it.

HOW MUCH DOES A SUBSCRIBER

NEED TO CONTRIBUTE
You are required to make your first contribution at
the time of applying for registration at any POP.
You are required to make contributions subject to
the following conditions:
Minimum amount per contribution is Rs.500
Minimum contribution per year is Rs.6,000
Minimum no. of contribution in a year is only
four times.

INVESTMENT OPTIONS AND

STRUCTURE
The NPS offers you two approaches to invest your
Money:

Active choice- Individual Fund

Auto choice- Lifecycle Fund

ACTIVE CHOICE- INDIVIDUALS

FUNDS
You will have the option to actively decide as to how
your NPS pension wealth is to be invested in the
following three options:

Asset class E Investment in equity market

instruments
Asset class C Investment in fixed income
instruments other than Govt. Securities.
Asset class G Investments in Govt. securities.

AUTO CHOICE LIFE CYCLE FUND

It is a easy option for investment in NPS.
This option is basically for those participants or
Individuals who dont have the required
knowledge of their NPS investments.
In case you are unable to exercise any choice as
regards assets allocation, I that case your fund
will be the invested in accordance with the auto
choice option.

DIFFERENCE
Employees Pension
Scheme:

Limited investment
options.
Only 1 account.
In this scheme the
contribution of
employees is 8.33% and
Government
contribution is 1.16%.

New Pension Scheme:

More investment options.

Contains two accounts Tier 1 and Tier 2.

Not mentioned any specific rate under NPS.

TAXATION BENEFITS
Yes, Under Section 80CCD of the Income Tax Act
investments of up to Rs 1 lakh in the NPS can be
claimed as tax deductions. Readers should
remember that this Rs 1 lakh limit is not over
and above the Rs 1 lakh limit available under
Section 80C.
In fact, the combined limit of investments made
under Section 80C, 80CCD and section 80CCC
(for investments made into pension plans of
insurance companies) is Rs 1 lakh.

WHO WILL BE THE CRA ??

National securities depository limited (NSDL)

has been appointed as the CRA.
The recordkeeping , administration and customer
service functions for all subscribers of the NPS
shall be centralized and performed by the CRA.
The CRA shall also provide periodic, consolidated
PRAN statements to each subscriber.

SERVICE PROVIDED BY CRA (NSDL)

Sending annual account statement to
subscribers.
Providing new investment schemes and
confirmation report.
Also provide retirement account information.
eg. Pension wealth accumulated their PRA.
Or Amount that can be withdrawn by
subscriber in lump sum.
o Web enabled services- Like history of
transactions of PRA.

CONCLUSION

As per my views , Its a good initiative from Govt.

to introduce a Pension Scheme which will give
common people a chance to invest in Pension
schemes which is from Govt.

Negative point at this point is that the amount

received at the end would be taxable which can
have adverse affect on the return potential .

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