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National Pension System [ NPS ]

NPS, or National Pension Scheme, is a scheme started by the Government to encourage Indian citizens, especially those not covered by a formal pension plan in the organised sector, to contribute towards their retirement corpus. Despite the Mutual Fund like benefits & an innovative structure like that of the 401k Retirement Plans in USA, this scheme is perhaps the cheapest retirement product available in India right now.

NPS is regulated by the PFRDA (Pension Funds Regulatory & Development Authority). While it started for Government Employees in 2004 with fund managers from public sector, today it stars some of the best fund management entities in its offering.

Unlike the better known Voluntary Provident Fund run by the government (EPFO) which largely invests in low yielding central & state government bonds and marginally in ETFs, this scheme offers multiple options of different risk reward profiles (or asset allocations). It even gives an investor an option of automatic asset class rebalancing as per his / her age. Due to this, so far NPS has delivered much better results than the traditional EPFO.

For all people, whether covered by EPFO or not, this is a fantastic retirement planning tool that seeks to deliver market linked returns at the lowest cost through some of the best managers in the country.

WHO CAN JOIN

A citizen of India including NRI.Age between 18 years and 65 years at...
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TYPES OF NPS

This is known as pension account and is mandatory to open.Tax benefit on...
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CONTRIBUTION

NPS gives Subscribers an option to invest according to their own choice...
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LIFE CYCLE FUND

The Auto choice comes with 3 options of Investment,depending on the...
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key benefits

While the 2 most popular reasons for investment in NPS are Tax Savings...
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REDEEMED ?

NPS assumes the retirement age for investors to be at 60 as per the...
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Particulars	Tier I	Tier II
Minimum Contribution required at the time of Account opening	Rs. 500	Rs. 1000
Minimum Subsequent Contribution Amount required	Rs. 500	Rs. 250
Minimum Contribution required per year	Rs. 1000	NIL
Minimum number of contribution required in a year	1	NIL

Asset Class	Description
E	Equity
C	Fixed Income Instruments other than Govt. Securities
G	Government Securities
AIF	Alternate Investment Funds

Investment Option	Description
Active Choice	Under this option, Subscribers are free to allocate the investment across three asset classes as per their choice Maximum allocation to asset class E is restricted to 50% and AIF to 5%
Auto Choice	Under this option, investment across three funds is made as per the pre-defined pattern known as life - cycle fund It depends on the age of the person

Percentage Allocation to different Asset Classes	Moderate Life Cycle Fund ( Existing) LC- 50			Aggressive Life Cycle Fund LC- 75			Conservative Life Cycle Fund LC- 25
Age	Equity ( E )	Corp. Bonds ( C )	Govt. Bonds ( G )	Equity ( E )	Corp. Bonds ( C )	Govt. Bonds ( G )	Equity ( E )	Corp. Bonds ( C )	Govt. Bonds ( G )
Upto 35 years	50%	25%	25%	75%	10%	15%	25%	45%	30%
36	48%	26%	26%	71%	11%	18%	24%	43%	33%
37	46%	27%	27%	67%	12%	21%	23%	41%	36%
38	44%	28%	28%	63%	13%	24%	22%	39%	39%
39	42%	29%	29%	59%	14%	27%	21%	37%	42%
40	40%	30%	30%	55%	15%	30%	20%	35%	45%
41	38%	31%	31%	51%	16%	33%	19%	33%	48%
42	36%	32%	32%	47%	17%	36%	18%	31%	51%
43	34%	33%	33%	43%	18%	39%	17%	29%	54%
44	32%	34%	34%	39%	19%	42%	16%	27%	57%
45	30%	35%	35%	35%	20%	45%	15%	25%	60%
46	28%	36%	36%	32%	20%	48%	14%	23%	63%
47	26%	37%	37%	29%	20%	51%	13%	21%	66%
48	24%	38%	38%	26%	20%	54%	12%	19%	69%
49	22%	39%	39%	23%	20%	57%	11%	17%	72%
50	20%	40%	40%	20%	20%	60%	10%	15%	75%
51	18%	41%	41%	19%	18%	63%	9%	13%	78%
52	16%	42%	42%	18%	16%	66%	8%	11%	81%
53	14%	43%	43%	17%	14%	69%	7%	9%	84%
54	12%	44%	44%	16%	12%	72%	6%	7%	87%
55	10%	45%	45%	15%	10%	75%	5%	5%	90%
55 and beyond	10%	45%	45%	15%	10%	75%	5%	5%	90%