National Pension Scheme - What is NPS and How to Open NPS Account? - All You Need to Know

National Pension Scheme (NPS) is a beneficial scheme launched by the GOI to safeguard the interest of people reaching retirement age. Find out NPS rules, NPS account opening process and much more here.

Created On: Jun 18, 2021 19:38 IST
NPS 2021
NPS 2021

Financial security is a basic need that motivates a person to lead a stress-free life. A person who has secured good financial corpus for his retirement, gets self-reliant and free of dependency on the other earning members of the family.

In fact, planning for the retirement is an indispensable decisions if taken at an early age because a continuous supply of money remains intact for the future, even during the unforeseen rainy days of life.     

Therefore, to safeguard the financial interest of citizens reaching retirement age, and to promote systematized saving patterns, the Government of India (GOI) has launched a National Pension Scheme (NPS) initiative to provide retirement benefits to people working in both organized and unorganized sectors.

The NPS is regulated and administered by the PFRDA or Pension Fund Regulatory and Development Authority (PFRDA) under the PFRDA Act 2013.

NPS - Important Highlights

The contribution made under the NPS is accumulated till the age of retirement and the individual investor cannot exit the plan until they reach the age of superannuation.

Once an individual reaches the age of superannuation/retirement he/she can withdraw 60% (lump sum) of the contribution and the rest 40% is utilized for availing lifetime pension. It is mandatory to keep aside at least 40% of the corpus to receive a regular pension from a PFRDA-registered insurance firm.  

It should be noted that the 60% amount that can be withdrawn is tax-free now as announced by GOI.

Who is Eligible for NPS

The NPS pension programme is applicable for employees from the public, private and even the unorganised sectors except the ones employed with the armed forces.

To register for the NPS, it is also important to keep your KYC in check with the bank

NPS Registration Process

Registration for NPS can be done in both online and offline mode depending upon the convenience of the interested and eligible beneficiary:-

Individuals can register for the National Pension System (NPS) through the online platform eNPS and can obtain subscription of the scheme.

Take a look at the steps mentioned below to register for the NPS through online mode:-

Step 1 – Go to the eNPS portal’s official website.

Step 2 – Choose your subscriber type i.e. ‘Individual Subscriber’ and ‘Corporate Subscriber’.

Step 3 – Choose your residential status, Citizen of India’ and ‘NRI’.

Step 4 – Opt for account type (tier I account or tier II account)

Step 5 – Enter your PAN details and Bank Account details and try to open an account with the back with which you have already done KYC verification, it will enable ease of verification.

Step 6 – Keep a scanned copy of your PAN card along with a cancelled cheque ready as it needs to be uploaded online at the official NPS website.

Step 7 – Also Keep your scanned photograph and signature ready for the upload.

Step 8 – At the final stage it is required to make the payment for application to the NPS account via net Banking/Debit Card.

Step 9 – After making the payment, the applicant will receive Permanent Retirement Account Number (PRAN) that will be generated shortly afterwards.

It should be noted that NRIs are also eligible to apply for the NPS account.

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