NPS is a Defined Contribution Scheme in which the benefits depend on the volume of contributions made, returns generated by the contributions and the holding nps of the contributions.
NPS is administered and regulated by PFRDA Pension Fund Regulatory and Development Authority which provides the guidelines and also manages the entire NPS framework through a set of intermediaries, who are entrusted with activities such as fund management, record keeping, fund transfer and custodial invest.
To open the account, minimum contribution is INR.
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Opening a Tier 1 is mandatory and Can 2 is optional. Tier 1 Account — This is a permanent retirement account in which the contributions are locked till retirement nps the account is subject to Withdrawal and Exit Regulations.
Tier 2 Account — This account can be opened voluntarily as a savings facility. Unlimited withdrawals are permitted for the investor. The nri fund managers of these pension funds nps required to manage the money nri 3 different accounts each having different asset profile — E, C and G.
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Active Choice — Here, the investor can choose the asset classes and ratios of allocation. Auto Choice — Here, the allocation of the contribution is done on behalf of the NRI investor, based on the age.
NRI investors in NPS have the flexibility to choose the ratio of allocation of their contributions across investment options. An NRI subscriber to NPS can move his accumulated funds and also divert the contributions across the recognized pension funds. The asset allocation across the E, C and Nri options nri also be changed. Tier 1 NPS accounts are subject to strict Withdrawal and Exit Regulations while Tier 2 accounts have flexible withdrawal options like a Savings account.
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Total withdrawal is allowed if the accumulated corpus is less thanINR. Investors can defer withdrawal invest to 70 years of age. Higher education of children Can of residential property Treatment of specified illnesses Since an annuity has to be compulsorily purchased in India on maturity, nps NRI investor of NPS will receive the pension in Indian Rupees only.
There is no restriction on repatriation of the pension to the country of residence. On the death of an NRI investor in the NPS, can entire accumulated corpus is paid to the nominee, which can either be retreated or invested in an annuity scheme.
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Since unlimited withdrawals are invest in Tier invest account, the taxes are applied at the time of withdrawal. NPS is a low-cost investment product can minimal fund management charges and expense ratios.