NSDL e-Governance Infrastructure Limited

National Pension System

(NPS)

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Taking through the presentation

• Planning for your retirement

1.

• NPS – An Overview
2.
• Features of NPS
• Tax Benefit
• Scheme preference
3. • Ease of access

• Withdrawal and exit options

4.

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How do you see your Retired life?

Life with financial constraints

Dependent on children

or
A dignified life

Time to pursue interests and hobbies

Can you afford this?

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 Challenges in retirement savings

 In 20s: We think its too early

 In 30s: Setting up a family

 In 40s: Children education and housing takes the priority

 In 50s: There is a sense of urgency for retirement savings

 By 60: It’s too late

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Start early, benefit more…

Early Age Late

starter starter
Monthly
Contribution
Total
Investment
@ 60

Value of
Investment
@ 8%

Both invested the same amount

Early starter ends up being richer by Rs. 18.32 L
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 Solution ?

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 Introduction

 Initiative to provide old-age income security

 Formation of Pension Fund Regulatory and

Development Authority (PFRDA)

 Started with Government employees

 Made available for all citizens of India from

May 2009

 NPS subscribers in CRA system in excess

of 1.2 crore

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 Features of NPS
 Open for all Indian citizens between 18 – 60
years

 Unique and Portable Permanent Retirement

Account Number (PRAN)

 Tier I & Tier II

 Nomination facility

 Tax Benefit under 80C as well as 80CCD(1B)

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Ease of access

Access to bi-lingual Interactive View details / Change of

Voice Response (IVR) using T- contact details, scheme
PIN preference using I-PIN

Instant reset of T-PIN & Online Online complaint resolution

reset of I-PIN through OTP platform

Easy access to information through dedicated

website and Facebook

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Stakeholders in NPS

Central Recordkeeping
Agency
Point of Presence Pension Fund Manager

Subscribers

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 CRA – Roles and Responsibilities

PRAN
 Issuance of PRAN Kit generation
PRAN Kit
desptach
 Maintenance of the KYC Documents

Contribution
 Provision to change Subscriber Details credit Change of
details
 Issuance of Annual Statement
Monthly
 Alerts to subscribers e-Statement
Quarterly
Balance
 Central Grievance Management System

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Unique tax benefit for NPS

Additional Tax benefit of Rs. 50,000 u/s 80 CCD (1B)

Investment With NPS Without NPS

Tax Slab - 10% 20% 30%

Amount Rs. 50,000 Rs. 45,000 Rs. 40,000 Rs. 35,000

After 20 years of Investment

Corpus at @ 8% Rs. 22.8 lacs Rs. 20.5 lacs Rs. 18.3 lacs Rs. 16 lacs

Corpus at @ 10% Rs. 28.6 lacs Rs. 25.7 lacs Rs. 22.9 lacs Rs. 20 lacs

Diff in Corpus - 12% 25% 43%

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Choice of PFMs
For Government Sector

Additional PFMs for Non-Government Sector

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Investment Option
Active Choice Subscriber decides allocation pattern amongst E, C and G

Asset Class Cap on Investment

Equity (E) 50%

Corporate Bonds (C) 100%

Government Securities (G) 100%

Auto Choice Funds managed on the pattern of a lifecycle fund

Age (in Years) Asset Class E Asset Class C Asset Class G

Upto 35 50% 30% 20%
36 48% 29% 23%
37 46% 28% 26%
- - - -
55 and Above 10% 10% 80%

 Investment Option can be changed once in a financial year

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Partial Withdrawal

 Withdrawal will be allowed subject to

 Subscriber should be in NPS for 10 years

 Amount should not exceed 25% of the contributions made

by the subscriber

 Withdrawal can happen only against specified reasons

Withdrawal option are limited to ensure

sufficient terminal corpus

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 Exit Process

Lumpsum amount of
Rs. 12 Lacs
Corpus Rs. tax-free
18 Lacs
At the Rs. 30 Lumpsum amount of
age of 60 lacs Rs. 6 lacs
(Can be deferred till the age of 70)
Rs.
12 Lacs
Monthly Pension of around Rs
7,197*

No Service tax of 1.4%

*100% Annuity to Spouse with ROP
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Exit before the age of 60 years

At least 10 years under NPS / resignation from Govt job

• 20% of Lump sum withdrawal and balance 80% need to be

annuitized

In case of death of the subscriber

• For Government subscriber: 20% of Lump sum withdrawal

and balance 80% need to be annuitized (currently 100%
payout to claimant as per PFRDA circular)

• For Non-Government subscriber: 100% payout to claimant

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Annuity Service Providers

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Withdrawal Process overview

Generate claim ID
* 6 months prior to
Initiate request
retirement age
* Subscriber initiates
Authorise request
request online
* Nodal Office / POP
* Generated by Nodal * System generated authorises the request
Office/POP form and documents
submitted to Nodal
Office/POP

Withdrawal amount remitted directly to

subscribers’ bank account

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Subscriber Charge Structure
Charges Method of
Intermediary Charge Head (excluding Tax) Recovery
Initial Registration charges Rs.125
Any contribution 0.25% of the
amount, subject to
Upfront
POP minimum of Rs.20/-
collection
Any other transaction not
involving a contribution from
subscriber Rs.20
One time Account opening
charge Rs.50
Redemption
Annual Maintenance Charge Rs. 190 of units on a
CRA
Transaction quarterly
(contribution, change in basis
scheme preference, switch
and withdrawal) Rs.4

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 Effect of charges on corpus
 Investing Rs. 25,000 per annum for 25 years

 Charges for Option A is 0.25% and Option B is 2.25%

 Return on Investment (CAGR) for both the investment

options is 10%

Corpus under Option A will be 23.6 Lacs

Corpus under Option B will be 17.6 Lacs

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Scheme wise return
Available at NPS Trust Website
http://www.npstrust.org.in/index.php/navreturns/returns

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Benefits of NPS

Simple

Transparent
Cost Flexible
Structure

Benefits
Of NPS
Tax Savings Portable

Strong
Regulation

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 www.npscra.nsdl.co.in facebook.com/nps.NSDL

Tel: 022-24994200
Helpline-:1800 222 080
Email: [email protected]

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Two Tier Structure

Tier I Tier II
Investment
Pension Account
Account

Mandatory Optional

Anytime withdrawal
Multiple Tax Benefit
without exit load

Tier I is mandatory for opening Tier II

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PRAN CARD VIEW

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Statement of Transaction

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Statement of Transaction

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Online Reset

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Online Reset

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Online Reset

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