NATIONAL PENSION SYSTEM

Don’t Just Save Tax, Create Wealth !!

Digital centers to
boost adoption
and activation
 About NPS

• National Pension System (NPS) is a voluntary savings scheme that helps you gain additional Tax
benefits over and above 80C.

• It is designed to create a dedicated retirement corpus through systematic savings during your working
life.

• Its administered and regulated by Pension Fund Regulatory and Development Authority (PFRDA).

All citizens of India between age of 18 to 70 years can enter the

investments and avail the benefits of NPS.

• 1st January 2004- NPS was launched exclusively for Government employees.

• 1st May 2009- Opened for all citizens under “All Citizen Model”.

• December 2011- Corporate Sector Model was launched

Investments in securities markets are subject to market risks. read all related documents carefully before investing.
SEBI Registration & Disclaimer https://www.hdfcsec.com/article/disclaimer-1795.
 Types of NPS Accounts

Particulars Tier 1 Account Tier 2 Account Contribution made through

Company/Employer from 10% of
Type of Account Mandatory Account Voluntary Account your basic is termed as
“Employer Contribution.”
Tax Benefits Yes No

"Can be a Mix of
- Only Voluntary
Contributions - Only Employer Only Voluntary Contribution made by self is
- Both Employer and termed as “Voluntary
Employee" Contribution”.
Withdrawal Facility Limited- Subject to Conditions Yes

Minimum contribution for A/c

INR 500 INR 1000
A/c Opening
Minimum number of Annual
1 1
contributions

Frequency of Contributions Unlimited Unlimited

Investments in securities markets are subject to market risks. read all related documents carefully before investing.
SEBI Registration & Disclaimer https://www.hdfcsec.com/article/disclaimer-1795.
 Tax Benefits on Investments

Types of Contribution Tax Benefit Cap on Tax Benefit

Voluntary contribution over and Additional deduction for NPS

above 80CCD (1) (Applicable to contribution beyond ` 1.5 lacs
` 50,000 tax benefit,
OLD TAX REGIME)
but no limit on contribution
Sec 80CCD 1(B)

Tax deduction up to 10% of

Employer Contribution over and
salary (basic + DA) by employer, Employer contribution to EPF + NPS
above 80C (Applicable to both-
beyond ` 2 lacs + Super Annuation
OD & NEW TAX REGIME)
limited to ` 7.5 lacs
Sec 80CCD(2)

Investments in securities markets are subject to market risks. read all related documents carefully before investing.
SEBI Registration & Disclaimer https://www.hdfcsec.com/article/disclaimer-1795.
 Partial Withdrawals

• Partial withdrawals are allowed on completion of 3rd Year in NPS

• Maximum of 25% can be taken three times during the entire tenure as Tax Free

• Accessible to the total amount invested as Voluntary Contributions

• Withdrawal is allowed Subject to conditions-

- Children higher education

- Marriage of Children
- Purchase /construction of house
- Critical illness (including Covid 19)
- Disability of more than 75%
- Skill Development or re-skilling any other self-development activities
- Establishment of own venture or start up.

Investments in securities markets are subject to market risks. read all related documents carefully before investing.
SEBI Registration & Disclaimer https://www.hdfcsec.com/article/disclaimer-1795.
 Pre- mature Exit

• Premature exit from NPS is allowed before attaining the age of 60 —provided they
remained with NPS for 5 years.

• At least 80% of the accumulated wealth must

be utilized for purchase of an Annuity.

• The balance 20% is paid as a lump sum to the Subscriber – Tax Free.

• In case the total corpus in the account is less than or equal to `2.5 lakh, the Subscriber can
avail the option of complete* withdrawal. Subject to tax.

Investments in securities markets are subject to market risks. read all related documents carefully before investing.
SEBI Registration & Disclaimer https://www.hdfcsec.com/article/disclaimer-1795.
 Maturity and Superannuation

Up to 60% of the total

corpus can be withdrawn
Minimum 40% must be as lump sum and Tax
used for buying annuities Free.
Can extend investment
from an approved ASP.
up to age of 75 years.

100% Withdrawal is
allowed* if the corpus value Fresh contributions are
less is than or equal to ` 5 allowed during such a period
lakhs. Entire withdrawal of deferment.
shall be Subject to tax.

Investments in securities markets are subject to market risks. read all related documents carefully before investing.
SEBI Registration & Disclaimer https://www.hdfcsec.com/article/disclaimer-1795.
 Withdrawal In case of Death

Before Maturity After Maturity

Nominee / Legal heir would
Nominee/ Legal Heir can
receive the proceeds as per the
withdraw the 100% of
selected annuity plan (pension).
corpus.

*Such transfers do not have a Tax implication as per the succession act
Investments in securities markets are subject to market risks. read all related documents carefully before investing.
SEBI Registration & Disclaimer https://www.hdfcsec.com/article/disclaimer-1795.
 Annuity Service Providers

Annuity Service Providers (ASPs) are be appointed by PFRDA to maintain the annuity contribution of subscribers through their various schemes and they are responsible for
delivering a regular monthly pension (annuity) to the subscriber post maturity. Below are the 11 ASPs.

• HDFC Life Insurance Co. Ltd • Star Union Dai-ichi Life Insurance Co. Ltd

• ICICI Prudential Life Insurance Co. Ltd • Canara HSBC OBC Life Co. Ltd

• India First Life Insurance Co. Ltd • Max Life Insurance Co. Ltd

• Kotak Mahindra Life Insurance Co. Ltd • Bajaj Allianz Life Insurance Co. Ltd

• Life Insurance Corporation Of India • TATA AIA Insurance Co. Ltd

• SBI Life Insurance Co. Ltd

Click here to check the Annuity Quotes https://cra-nsdl.com/CRAOnline/aspQuote.html

Investments in securities markets are subject to market risks. read all related documents carefully before investing.
SEBI Registration & Disclaimer https://www.hdfcsec.com/article/disclaimer-1795.
 Options Available Post Exit from Current Organization

• Employee can transfer NPS account to next organization by sharing PRAN no. with respective HR Team of next organization if they have NPS option.

• Employee can continue account as an individual by depositing amount in their existing NPS account in case next organization does not have NPS.