Who shall be responsible for protecting my interests as a NPS subscriber?A) The Pension Fund Regulatory and Development Authority, the regulator, will protect your interest.
What is the process for enrolling in NPS?A) Eligibility: 18-55 years of age. Upon registration, you will receive a permanent retirement account
number. Minimum annual contribution is Rs.6,000. The minimum number of instalments per year is
four. There is no upper limit on the contribution per instalment or on the number of instalments.
Would my personal information be confidential?A) Yes.
Under what circumstances can my account be closed before attaining retirement age?A) The account would be closed under following circumstances: death, account value reduces to zero and
change in citizenship status.
Can I exit before attaining the age of 60 years?A) Yes, provided you annuitise at least 80 percent of your pension corpus.
What if I do not exit the system at or before 70 years?A) In that case, on attaining 70 years, your account would be closed with the benefits transferred to you.
Can someone else make contributions on my behalf?A) Yes.
What would be the penalty in case I am unable to contribute the minimum annual
contribution?
A) You would have to bear a default penalty of Rs.100 per year of default and the account would become
dormant. In order to re-activate the account, pay the minimum contributions, along with penalty due. A
dormant account will be closed when the account value falls to zero.
Are there any investment returns guarantees?A) No. NPS is a defined contribution scheme and the benefits would depend upon the amounts
contributed and the investment growth up to the point of exit from NPS.
Will I be permitted to select more than one pension fund to manage my savings?A) You have to select only one fund. However, the regulator may allow the subscribers to choose more
than one fund in future.
What if I do not select any investment option?A) All your contributions would be channeled into a life-cycle fund.
What are the risks of investing in NPS?A) As with every investment, there is a degree of risk under NPS also. The value of your investment in NPS
may rise or fall.
I am 30 years old and would like to retire at 60. I want a pension of Rs.2,000 per month at
today's prices when I retire. How much do I need to contribute?A) You would need a pension wealth of Rs.319,000 (at today's prices) at the age of 60 to get a pension of
Rs.2,000 per month. To realise this, you would need to contribute approximately Rs.16,600 every year.
What will happen to my savings after I retire at 60?A) You will have to compulsorily invest a minimum of 40 percent of your pension wealth to purchase a life
annuity from an IRDA-regulated life insurer. The remaining pension can be withdrawn in lump sum or in
a phased manner.
What will happen to my savings if I decide to exit NPS before the age of 60?A) You would be required to invest at least 80 percent of your pension wealth to purchase a life annuity
from any IRDA-regulated life insurer. The remaining 20 percent may be withdrawn as a lump sum.
Will the annuity also provide for a family (survivor) pension?A) Yes, you will have an option of selecting an annuity which will pay a survivor pension to your spouse.
On my death, can my nominee continue to operate the account in my name?A) No, the balance standing to the subscriber's account may be transferred to the nominee's account after
following regulator KYC procedure.
Can I opt not to exit in case of disability?A) Yes.
Is the scheme tax free?
Long term savings have three stages: contribution, accumulation and withdrawal. The NPS was devised
when the government was planning to move all long term savings to a tax regime called exempt-exempt-
taxed (EET), standing for exempt at the time of contribution, exempt during the period when the
investment accumulates and taxed at the time of withdrawal. So, NPS comes under the tax regime EET.
However, the government could not muster the political courage to change the taxation regime of EET on
several saving schemes. So, the pension fund regulator has taken up with the finance ministry the need to
remove the asymmetry in tax treatment between the NPS and other schemes such as the PPF. In any case,
the amount spent on buying an annuity would be exempt from tax.
Currently my private employer is enrolled with NPS and has opened my Tier-1 account as required. I am wondering what would happen after, let’s say 5 years, if I move into a new company that is not enrolled for NPS scheme? What would happen to my NPS account and corpus? How would I make minimum contribution to my current Tier-1 NPS account to avoid any penalties?
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