In today’s digital age, opening a National Pension System (NPS) account has become much simpler and more convenient. This article will guide you through the process of opening an NPS account online, providing step-by-step instructions and valuable insights to help you get started on securing your retirement savings.
What is an NPS Account?
An NPS account is a voluntary, contributory pension system introduced by the Government of India. It aims to provide financial security for individuals after their retirement. By opening an NPS account, you can systematically save and invest for your retirement, ensuring a comfortable future.
Benefits of an NPS Account
Before delving into the process of opening an NPS account online, it’s crucial to understand the benefits it offers:
- Tax Benefits: Contributions made towards an NPS account are eligible for tax deductions under Section 80CCD(1) of the Income Tax Act, providing potential savings on your taxable income.
- Flexible Investment Options: NPS offers a range of investment choices, including equity, corporate bonds, and government securities, allowing you to personalize your investment portfolio according to your risk appetite.
- Safe and Regulated: NPS is regulated by the Pension Fund Regulatory and Development Authority (PFRDA), ensuring transparency, security, and efficient management of your retirement savings.
Eligibility
To open an NPS account, you need to fulfill certain eligibility criteria:
- Age: Any Indian citizen between 18 and 60 years can open an NPS account. However, the maximum entry age may vary depending on the type of NPS account you choose.
- KYC Compliance: It is essential to be KYC (Know Your Customer) compliant. Ensure you have valid proof of identity, address, and date of birth documents.
Documents Required
To open an NPS account online, you will need the following documents:
- Proof of Identity: Aadhaar Card, PAN Card, Passport, Voter ID, or Driving License.
- Proof of Address: Aadhaar Card, Passport, Utility Bill, Bank Statement, or Rent Agreement.
- Proof of Date of Birth: Birth Certificate, PAN Card, Passport, or School/College Certificate.
Make sure to have these documents readily available in digital format before proceeding with the online application.
How to Open NPS Account Online – Step-by-Step Guide
Go to the eNPS website . Click on “Click Here” to begin registration.
In the window below select New Registration. Choose individual subscriber, Tier 1 only. Enter PAN number and select a Point of Presence that you want to open an NPS Account with (preferably your banking partner). If your bank is not showing as an option in the drop down menu you may have to choose another bank or go through offline mode. Press continue.
Enter all the details as mentioned in the different tabs and click on save and continue. Under nomination details you will be asked to choose a pension fund manager and select from a mix of different asset classes and specify the proportion of investment you want in a certain asset class.
Under document upload you have to upload a scanned copy of cancelled cheque of the bank that you chose as POP. Also upload a scanned copy of PAN card.
- Under photo & Signature you have to upload a scanned photo and also upload your scanned signature.
- Under payment details you have to make the payment (minimum payment of Rs. 500/-) to activate your NPS account. Payment has to be via net-banking of the POP you selected.
- Once the payment is done you have the option to “Esign” the form. The authentication is done via Aadhar based OTP. If this process is successful the subscriber need not send a hard copy of their forms to NSDL.
- If “Esign” feature is not working for any reason, you may have to take a print and sign the form and sent it to the address mentioned on the website.
- PRAN is allotted immediately after payment is done. PRAN card is sent after verification of documents.
How to Open NPS account offline
You can find the NPS application form from the following link.
- Along with the form you have to attach the following :-
- Passport size color photograph
- PAN Card (self attested)
- Proof of address (self attested)
- Cancelled cheque of the bank you will make the payment from.
- Subscriber needs to pay the service charges to POP for subscribing to NPS scheme.
- An Initial subscriber registration charge of Rs.100/- and an ad valorem transaction charge of 0.25% of the initial contribution amount from subscriber subject to a minimum of Rs.20 and a maximum of Rs. 25,000/-.
- Any subsequent transaction involving contribution – 0.25% of the amount subscribed by the NPS subscriber, subject to minimum of Rs.20/- and a maximum of Rs.25,000/-
This amount is over and above the contribution amount. Therefore, the total cheque amount will be :- Investment amount (minimum Rs. 1,000) + Account opening charges.
Suppose the first contribution amount is Rs.50,000/- Total cheque amount would be: Rs.50,385/- Contribution amount Rs.50,000/-
Account Opening Charge: Rs.200 (Fixed) Transaction Charge: Rs.0.25% of amount invested GST @18%: Rs.58 (approx)
NPS Calculation: 0.25% of Rs.50,000=Rs.125
- The list of registered POP for submission of NPS form can be found here – https://npscra.nsdl.co.in/pop-sp.php
- The form has to be filled and signed in BLACK INK only.
- After submission of NPS forms at a registered POP, once the account is active, the subscriber shall receive their PRAN card within 20 days.
- Once the account is active, the subscriber can create an online registration and make subsequent payments online through the portal.
Now let’s dive into the step-by-step process of opening an NPS account online:
1. Creating a PRAN
The first step is to create a Permanent Retirement Account Number (PRAN) by visiting the official NPS website or any authorized Point of Presence (POP). Follow the instructions provided on the website or by the authorized POP. You will be required to fill in personal details, select a suitable pension fund manager, and provide the necessary documents for verification.
2. Selecting the Pension Fund Manager
Once you have created your PRAN, you need to choose a Pension Fund Manager (PFM) from the available options. Each PFM has its investment strategies and track record, so take the time to research and select the one that aligns with your financial goals and risk tolerance.
3. Choosing an Investment Option
After selecting a PFM, you can decide on the investment option for your NPS contributions. NPS offers two choices: Active Choice and Auto Choice. In Active Choice, you have control over the asset allocation, while Auto Choice adjusts the investment mix based on your age. Assess your risk appetite and investment preferences before making a selection.
4. Contribution and Payment
Once your PRAN is active, you can start making contributions to your NPS account. You have the flexibility to choose the contribution frequency—monthly, quarterly, or annually—and the amount you wish to invest. Online payment options such as net banking, debit cards, or credit cards make it convenient to transfer funds to your NPS account.
NPS Account Online Platforms
To make the process even more accessible, several online platforms offer the facility to open and manage NPS accounts. These platforms provide a user-friendly interface, streamlined account management, and additional features like tracking investment performance and making changes to your investment strategy.
Common FAQs on NPS
Here are some frequently asked questions about NPS accounts:
- What is the minimum contribution for an NPS account? The minimum contribution amount for an NPS account is Rs. 500 per contribution.
- Can I change my Pension Fund Manager? Yes, you can change your Pension Fund Manager once a year. However, consider the performance and associated charges before making a decision.
- What is the lock-in period for an NPS account? The lock-in period for an NPS account extends until the age of 60. However, partial withdrawals under specific circumstances are allowed before retirement.
- Can I withdraw money from my NPS account? Yes, you can make partial withdrawals from your NPS account under specific conditions such as education, marriage, or critical illness. A certain percentage of the accumulated corpus can be withdrawn.
- How is the tax treatment for NPS investments? NPS investments have a unique tax treatment. While the contributions are eligible for tax deductions, the maturity amount is subject to taxation. However, a certain portion of the maturity corpus is tax-exempt.
- What is the minimum contribution for an NPS account? The minimum contribution amount for an NPS account is Rs. 500 per contribution.
- Can I change my Pension Fund Manager? Yes, you can change your Pension Fund Manager once a year. However, consider the performance and associated charges before making a decision.
- What is the lock-in period for an NPS account? The lock-in period for an NPS account extends until the age of 60. However, partial withdrawals under specific circumstances are allowed before retirement.
- Can I withdraw money from my NPS account? Yes, you can make partial withdrawals from your NPS account under specific conditions such as education, marriage, or critical illness. A certain percentage of the accumulated corpus can be withdrawn.
- How is the tax treatment for NPS investments? NPS investments have a unique tax treatment. While the contributions are eligible for tax deductions, the maturity amount is subject to taxation. However, a certain portion of the maturity corpus is tax-exempt.
- Is it mandatory to open an NPS account online? No, it is not mandatory to open an NPS account online. You can also choose to visit a Point of Presence (POP) to open an NPS account offline.
- Can I open an NPS account for someone else, such as my spouse or child? Yes, you can open an NPS account for your spouse or child as a “Family Account.” This allows you to contribute towards their retirement savings and avail tax benefits.
- What happens to my NPS account if I change jobs? Your NPS account is portable, which means it remains active even if you change jobs. You can continue contributing to the same account or choose to open a new NPS account with your new employer.
Conclusion
Opening an NPS account online provides a hassle-free and convenient way to secure your retirement savings. By following the step-by-step process outlined in this article, you can easily create your PRAN, choose a suitable Pension Fund Manager, select an investment option, and start contributing towards your NPS account. Remember to leverage the benefits of tax deductions and explore the various online platforms available for seamless NPS account management.