Back to Blog How Does NPS Work for Government Employees? June 2, 2022 The National Pension Scheme (NPS) is one of India’s most popular retirement benefit plans. The Pension Fund Regulatory and Development Authority of India (PFRDA) is responsible for regulating the NPS scheme. Investing in this plan secures your retirement while offering tax benefits under Sections 80C and 80CCD. There is also a lock-in period with the NPS, but withdrawal is permittedunder certain circumstances. The NPS rules and regulations for government and non-government employees differ significantly. Here is everything you need to know about NPS if you work for the government. NPS Account Opening Online Rule If you are a Central Government employee, NPS is mandatory for you if you joined the service on or after 1st April 2004. However, this condition does not apply to you if you work under the armed forces. NPS is also mandatory for State Government employees (except those employed under the West Bengal government). As soon as you join the service, your employer wants you to submit an NPS application form to the Pay and Accounts Officer (PAO) and Drawing and Disbursing Officer (DDO). The enrolmentis then processed through the nodal officer. NPS Contribution for State Government Employees and Central Government Government employees can contribute to online NPS at the rate of 10% of the salary plus dearness allowance. The employer will make a matching contribution in this case. However, the employer contributions rates have been revised and increased to 14%. The rate revision was made effective from 1st April 2019. Benefits of NPS for Central Government Employees: Higher returns: The salary you contribute towards NPS is invested in equity, alternative investment funds, corporate bonds, and government securities. It provides safer and better returns than any other scheme available due to the diversification of money in different asset types. The NPS interest rate can range between 9% and 12%. Tax benefits: NPS allows you to claim tax advantage under section 80C of the Income Tax Act. You can claim tax exemptions of up to ₹1.5 lakhin a financial year. NPS Withdrawal Rules: Premature exit before the age of 60 years: If your accumulated corpus is equal to or less than ₹2.5 lakh, you will be provided with a lump sum payment. If you have an accumulated corpus of more than ₹2.5 lakh, you must invest at least 80% of it in an annuity plan. The remaining 20% will be paid in one single sum to you. Normal exit after the age of 60 years: You are allowed to withdraw the lump sum amount if the accumulated corpus is less than or equal to ₹5 lakhs. In case the corpus is over ₹5 lakhs, you must invest at least 40% of it in an annuity plan. The remaining 60% will be paid as a lump sum. To Sum It Up NPS is mandatory for all government employees. In case you work in the private sector, you can also start contributing to NPS and enjoy the benefits of relatively safer returns. Featured Posts NPS New Rules 2026: A More Flexible Path to Retirement PlanningA Simple Guide to NPS Registration and Online Account OpeningNPS Vatsalya: Building Financial Security for the Next GenerationPlanning for Retirement with NPS: This Blog Might Be For You!NPS Returns and Retirement Planning: What Every Investor Should Know
Back to Blog Benefits & Features of Investing in NPS June 1, 2022 The National Pension System (NPS) is a voluntary pension system in India. Its objective is to make your retired life comfortable by offering you a regular income. NPS encourages subscribers to get into the habit of saving for life post-retirement. The pension funds registered under NPS are regulated by the Pension Fund Regulatory and Development Authority (PFRDA). The National Pension System is also a tax exempt-exempt-exempt (EEE) instrument like Employee Provident Fund (EPF) and Public Provident Fund (PPF). Many professionals, including employees of the private and government sectors, are attracted to the NPS tax-saving scheme. It is because the entire amount in your pension fund is exempt from tax on maturity, and you are not liable to pay any taxes on the whole pension withdrawal amount. Benefits of Investing in NPS Flexible NPS is a flexible retirement savings scheme. Subscribers have a range of investment options and pension funds to choose from. They can plan the growth of the investments reasonably and track the growth of the pension corpus. Moreover, subscribers can switch between different fund managers and investment options conveniently. Well Regulated The PFRDA regulates the NPS. The investment norms are transparent. Moreover, the NPS Trust monitors and reviews the performance of fund managers regularly. NPS does not have high account maintenance costs. In fact, it is the lowest among similar pension products available to investors. When you are saving for long-term returns, administrative and account management costs play a vital role. If they are high, they can eat up a significant amount from the corpus during the 30 to 40 years investment period. Death Benefit One of the benefits of NPS investment is that it takes care of your family even after your demise. Your spouse or children may live for a good number of years after you are no more. To help you meet your financial obligations after death, NPS allows you to choose a pension plan that continues to pay a monthly pension to your spouse. Your nominee/legal heir can also withdraw the corpus from your pension account. Automated Risk Reduction with Age NPS has a built-in risk reduction strategy. So, it protects your retirement corpus from market volatility as your retirement date is nearing. The funds in your NPS account are exposed to debt and equity investments. When you opt for the auto asset allocation model, you determine a starting equity-debt mix as per your risk appetite. After you cross 35 years of age, your exposure to market-linked products is reduced with more allocation toward FD-like instruments. Portable When you change your job or relocate to a new city, you can port your NPS. It is a hassle-free arrangement for individual subscribers. So, there is no need for you to leave behind the corpus you build. Tax Benefit The tax benefit on NPS is one of the key reasons for its popularity. The scheme allows you to claim deductions worth ₹1.5 lakh under Section 80C. Moreover, if you’ve exhausted the limit in Section 80C with other investments, such as ULIP, you can still claim deductions on your NPS investment. Section 80CCD (1B) lets you claim a deduction of ₹50,000. Thus, the National Pension Scheme tax benefit is ₹2 lakhs cumulatively. The pension income, partial withdrawals, and maturity withdrawals are also tax-free. However, it is vital to know that there are no NPS tier 2 tax benefits. Your withdrawals from this account are taxable as per the income tax slab rate you fall under. Ease of access Applying to the NPS scheme for tax benefits is easy. You can either submit an online application form or visit any registered POP (Point of Presence) to obtain the registration form. KFintech has tie-ups with hundreds of POPs and thousands of corporates in India, making the account opening process smoother. You can also make further contributions and manage the account online. Summing Up If you want to live a stress-free, happy life after retirement, an investment in NPS is a great idea. You can build a retirement corpus and claim tax benefits for NPS under 80CCD. Features like flexibility, portability, ease of use and access, built-in risk reduction strategy, and several tax benefits make it an attractive retirement saving tool. Featured Posts NPS New Rules 2026: A More Flexible Path to Retirement PlanningA Simple Guide to NPS Registration and Online Account OpeningNPS Vatsalya: Building Financial Security for the Next GenerationPlanning for Retirement with NPS: This Blog Might Be For You!NPS Returns and Retirement Planning: What Every Investor Should Know
Back to Blog Should You Invest in the NPS? May 31, 2022 What is NPS? The NPS is essentially a market-linked retirement planning tool in which you can invest to create a corpus for your retirement. When you invest in the NPS, your money gets invested in market-linked securities, including equities, debt, or both, and a professional pension fund manager manages these investments. The NPS investors can choose between the Active Mode and Auto Mode. In the Active Mode, the investors can manage their investments themselves by switching between debt and equity. In the Auto Mode, the fund manager has the complete freedom to handle the investments on behalf of investors. As per the current rules, the minimum investment in NPS is ₹500 every year. At your retirement age, you can withdraw a certain percentage of the accumulated corpus, and the remaining amount will be used to provide you with a regular income after your retirement. Depending upon the scheme chosen by you, you can get long-term returns between 9 to 12 percent by investing in NPS. Why to Invest in NPS? As you can see, the primary objective of the NPS investment scheme is to provide you with tax-free annuity benefits at the time of your retirement. You can invest in the NPS to get good returns from the market and create a corpus for your retirement. It also provides tax benefits of up to ₹50,000 under Section 80C of the Income Tax Act. Here are a few reasons why we should invest in NPS: It works as a source of earnings after your retirement: As we’ve mentioned before, NPS allows you to withdraw a percentage of your accumulated corpus as you approach retirement. The remaining amount is used to provide you with annuity benefits in the form of regular income after your retirement. You can use these earnings to meet your daily expenses when you don’t have any other source of income. It is a low-risk investment instrument: Although NPS invests in market-linked securities, it entails lower risk than other money-market instruments, such as stocks, mutual funds, etc. NPS is a government-owned scheme, and hence, the equity cap ranges between 50 to 75 percent. This percentage keeps on decreasing as an investor approaches their retirement, making it a relatively safer instrument. Guaranteed returns: Although a portion of the NPS is invested in equities and doesn’t offer assured returns, the overall returns from the scheme are guaranteed. Moreover, the returns offered by NPS are higher than other fixed-income instruments, such as Fixed Deposits and Public Provident Fund (PPF). Are There Any Limitations? While NPS is a useful retirement planning scheme, it has a few limitations. You should not invest in the NPS if you want to invest in 100% equities or if you do not want to lock your funds for a long period. Moreover, NPS offers a fixed income for the lifetime along with a lump sum on maturity. The Final Words NPS is a very useful tool to create a corpus for your retirement and ensure a regular income during your golden years. It also offers considerable tax benefits. However, you should not invest in the NPS only for tax benefits. Also, you should keep its limitations in mind while deciding to invest in it. Featured Posts NPS New Rules 2026: A More Flexible Path to Retirement PlanningA Simple Guide to NPS Registration and Online Account OpeningNPS Vatsalya: Building Financial Security for the Next GenerationPlanning for Retirement with NPS: This Blog Might Be For You!NPS Returns and Retirement Planning: What Every Investor Should Know
Back to Blog What is the National Pension Scheme (NPS)? Does it Help in Saving Tax? May 27, 2022 Most people plan for what they wish to do in the near future. While that vision may not be not crystal clear, they have a vague idea of what they would like to do, five or ten years down the road. For instance, they know where to buy a house, which car to buy, which school the child has to go to, etc. However, the one aspect that many don’t consider is retirement planning. With inflation always being a consideration, it can be difficult to cope with retirement if you don’t have a proper plan. One of the first steps to take on your journey towards retirement planning is understanding what the NPS scheme is. The National Pension Scheme is one of many vehicles that can help you reach your retirement goals and set you on the right track. What is the National Pension Scheme? The National Pension Scheme, offered by the Government of India, is a social security investment initiative. Employees from the private sector, state government, central government, as well as self-employed professionals can apply for the pension program. The objective of the scheme is to encourage savings or contributions in a pension account periodically during employment. Subscribers can withdraw a percentage of the corpus after retirement and use it to meet their expenses. An NPS account holder receives the remaining amount as a pension every month after retirement. The NPS scheme is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). Initially, it was only for Government employees. However, the PFRDA now offers it to all resident and non-resident Indians on a voluntary basis. Employees working in the private sector can significantly benefit from the NPS scheme since it gives them a regular pension after retirement. Moreover, employees can port their NPS account across jobs and locations and avail of tax benefits under Section 80C and Section 80CCD. Who Should Apply for the NPS Scheme? Anyone who wants to start planning early for their retirement but has a low-risk appetite should invest in the NPS. When you retire from your jobs, especially if you are working in the private sector, the regular pension you receive each month after retirement will be a boon. Having a systematic investment like the NPS can significantly change how you live life post-retirement. That being said, salaried individuals can consider the scheme to make the most out of their 80C deductions. What are the Tax Benefits of NPS? After you learn what an NPS account is, you must study the various tax benefits it offers. You are eligible for deductions against NPS investments in your Tier-1 account. So, make sure you use the right NPS account for your investments and tax deductions. Section 80C tax benefits The National Pension Scheme is an important investment that you can invest in for tax savings under Section 80C of the Income Tax Act. The maximum deduction you can claim under this section is ₹1.5 lakhs. If you have not made any other eligible investments, you can invest the entire amount in NPS and claim the deduction. Section 80CCD (1B) tax benefits This section offers additional tax benefits for NPS investors. It permits deductions of up to ₹50,000 for your investments. Since the deduction is in addition to the deductions you can claim under Section 80C, the total deductions you can claim after investing in NPS is ₹2 lakhs. You can do this by claiming ₹1,50,000 under Section 80C and ₹50,000 under Section 80CCD (1B). Section 80CCD (2) tax benefits This tax benefit is eligible for employer contributions. Therefore, it is suitable for salaried individuals and not for self-employed individuals. Private sector employees can claim 10 per cent of their salary under this section, whereas government employees can claim 14 per cent. Here’s an example to help you understand the tax deductions a private-sector employee can claim with NPS. Basic Salary₹7,00,000Section 80C Deductions₹1,50,000Section 80CCD (1B) Deductions₹50,000Section 80CCD (2) – 10%₹70,000Total tax deductions you can claim₹2,70,000 How much to invest in the National Pension Scheme for tax benefit? A self-employed or salaried individual can claim tax deductions of up to ₹50,000 from their contributions to the NPS account in a financial year. Section 80C of the Income Tax Act permits a maximum deduction of ₹1,50,000. Even if you have exhausted this limit, the National Pension Scheme lets you claim an additional deduction of ₹50,000. As a result, you can claim total deductions worth ₹2 lakh on your income tax liability. Summing up If you want to plan early for your retirement and your risk appetite is low, consider investing in an NPS scheme. Its tax benefits can help reduce your taxable income quite a lot. However, don’t consider tax deductions as the only benefit of the investment. A National Pension Scheme helps in building a corpus for your retirement with its low cost and flexibility. Featured Posts NPS New Rules 2026: A More Flexible Path to Retirement PlanningA Simple Guide to NPS Registration and Online Account OpeningNPS Vatsalya: Building Financial Security for the Next GenerationPlanning for Retirement with NPS: This Blog Might Be For You!NPS Returns and Retirement Planning: What Every Investor Should Know
Back to Blog Learn How to Open a National Pension System (NPS) Account – Online or Offline? May 26, 2022 Are you wondering how to open a National Pension Scheme account? This article has all the information you’ll need to understand how to open an NPS scheme online and offline. What is the National Pension Scheme? National Pension Scheme or NPS is a contribution-based pension program offered by the Central Government. It is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). The objective of the scheme is to provide a retirement fund to all salaried and self-employed professionals. How to Start an NPS Scheme? There are two ways to open an NPS account: Online, by logging into the KFintech NPS website.Offline, by visiting a post office or a bank branch in your town or city. How to Open a National Pension Scheme Account Online? To open an NPS account online, you need to visit the KFintech NPS website. There are two routes through which you can register yourself for an NPS account. The first is Aadhaar-based verification, and the second is PAN-based verification. Make sure your Aadhaar number is linked to your mobile number since you will receive an OTP to complete KYC authentication. In case you’re using your PAN Card, ensure that the details are linked to your savings account. Your bank will complete the KYC and application process on your behalf. Go to KFintech NPS website and click on ‘Join NPS’Fill in the required details and create the accountFill up all the mandatory details onlineUpload supporting documentsMake the initial contribution while opening the account (Minimum amount of Rs.500 for Tier I and Rs.1000 for Tier II) How to Start an NPS Scheme Offline? If you don’t want to proceed with the online NPS account opening procedure, you can visit the nearest Point of Presence Service Provider (PoP-SP) to obtain the registration form. This service provider must be registered under PFRDA. The PFRDA has appointed certain financial institutions and banks to offer NPS scheme services to subscribers. These PoPs offer NPS-related services, including subscriptions to the scheme and changing fund managers. To apply for the scheme, you need to fill out the application form and complete KYC verification by providing documents, such as address proof, Voter ID, PAN Card, Aadhaar Card, etc. In case you are wondering how many NPS accounts can be opened, the answer is one. It is your choice whether you want to open the account online or offline, but in all, you can only have one NPS account. Final words The National Pension Scheme is one of the first vehicles an individual should invest in if they want to plan early for their retirement. The scheme is flexible, has lower risk levels, provides assured returns, and offers many tax benefits under Section 80C and Section 80CCD of the Income Tax Act. Interested individuals can complete the formalities to open an NPS account online or offline. Featured Posts NPS New Rules 2026: A More Flexible Path to Retirement PlanningA Simple Guide to NPS Registration and Online Account OpeningNPS Vatsalya: Building Financial Security for the Next GenerationPlanning for Retirement with NPS: This Blog Might Be For You!NPS Returns and Retirement Planning: What Every Investor Should Know
Back to Blog NPS Investment – A Step Towards Retirement Planning May 25, 2022 Most people dream of living a peaceful and stress-free life after retirement. To achieve this dream, you must plan your retirement early on. Retirement planning involves the allocation of savings to manage post-retirement financial goals. One needs time to build a substantial corpus, and you should possibly plan for at least 20-30 more years after retirement for you and your family’s financial security. You need to ensure a steady source of income, which is why NPS is the best retirement option. This pension plan offers financial stability by providing a regular income source after you retire from your professional service. What is NPS? NPS or National Pension Scheme is a social security initiative by the Indian Government to encourage individuals to build a retirement corpus. The program is open to all Indian citizens within the age bracket of 18 years to 60 years. A person can apply for the scheme if he or she is 60 years old at the time of application submission. There are several NPS benefits for employers, employees, and the self-employed. If employees and self-employed individuals deem fit, they can subscribe to the NPS independently. But employers can also offer PF or NPS to their employees. The NPS has a minimum contribution of at least ₹1000 per year, but it is advisable to contribute more to enjoy a reasonable pension post-retirement and make the most of the NPS retirement benefits. Is NPS a Good Option for Retirement? The many NPS employee retirement benefits listed below will help you decide whether you should invest in the scheme or not. NPS is an affordable and transparent scheme. You can check your investment value regularly. A significant portion of the NPS contribution is allocated to equity schemes. Equities provide higher returns than traditional tax-saving products like PPF. NPS has an interest rate of 9% to 12% and is best suited for individuals who wish to accumulate funds and live a financially secure life after retirement. If the performance of the investment is not at par with your expectations, you can change the pension scheme under NPS. Tax deductions are another NPS benefit that an individual can enjoy. The NPS employer contribution and employee contribution are eligible for tax deductions of up to ₹1,50,000 under Section 80C of the Income Tax Act.The scheme is voluntary and lets subscribers contribute as and when convenient during a financial year. Withdrawal Rules After 60 Years of Age What most people don’t know is that you are not eligible to withdraw the entire NPS contribution after your retirement. It is mandatory to leave at least 40% of the corpus, which is used to give you a monthly pension. You can withdraw the remaining 60%, and fortunately, it does not add to your tax liability. Conclusion The retirement benefits for NPS employees are plenty. They include higher returns, tax benefits, premature withdrawals, flexibility, and ease of use. The scheme is regulated by the Pension Fund Regulatory and Development Authority of India, which means that there is transparency and reliability for the investors. Featured Posts NPS New Rules 2026: A More Flexible Path to Retirement PlanningA Simple Guide to NPS Registration and Online Account OpeningNPS Vatsalya: Building Financial Security for the Next GenerationPlanning for Retirement with NPS: This Blog Might Be For You!NPS Returns and Retirement Planning: What Every Investor Should Know
Back to Blog How Much Monthly Pension Can I Get From NPS? May 19, 2022 The National Pension Scheme or NPS is a retirement scheme launched by the Government of India in 2004. Initially only available to government employees, in 2009, it was made accessible to Persons of Indian Origin (PIO), Overseas Citizens of India (OCI) cardholders, and all working citizens between the ages of 18 and 65 years. You can begin contributing with a minimum monthly amount of ₹500 or an annual lump sum payment of ₹6,000 (NPS tier-1 account) under this scheme. The NPS offers monthly pay-outs after one’s retirement so they have a means of income during those years. While calculating the monthly pension, many confuse NPS with the Employees’ Pension Scheme (EPS). In reality, both are different and use different methods for pension calculation. For example, EPS pay-out is determined using a fixed formula. It factors in your service period, salary at the time of retirement, and a few more. On the other hand, the amount and type of annuity investment are crucial in the NPS calculation formula. Factors Influencing the NPS Pension Payout The three key factors that impact your NPS returns are: NPS contribution amount Unlike EPS, NPS does not put restrictions on the maximum contribution amount. Thus, you can earn a higher amount as pension during your retirement, with higher monthly contributions in your working years. Return on investment When you choose NPS, your funds are invested in different asset classes: equity, corporate bonds, government securities and alternative investment funds. The scheme allows you to allocate your funds in these asset classes based on your risk appetite. In case you opt to allocate more of your funds towards equity (maximum 50%), the expected rate of return on NPS investment will be higher. Annuity factor An annuity is a crucial factor when calculating your returns from NPS. Once you attain the age of 60 years, you will have to invest at least 40% of your accumulated corpus to purchase the annuity. However, you may opt for a higher investment depending on your budget. Remember, the higher the annuity investment, the higher the pension and vice versa. You can purchase the annuity from the NPS annuity provider through which you want to receive a pension. Different Types of Annuities Available Under NPS There are a total of five different types of annuities available with NPS. They are: Annuity for life plan with ROP (Return of Purchase Price)Joint life annuity plan with ROPFamily income plan with ROPAnnuity for life plan without ROPJoint life annuity plan without ROP Among these, you can choose the annuity plan that is most suitable for you and your needs. Each of the annuity plans come with their own salient features and it is important that you understand that the same annuity will not work for different people with different investment needs. If you are still confused about the NPS return rate, you can use the National Pension Scheme return calculator. To sum it up Here are some things you should keep in mind when you want to invest in NPS. First, the NPS investment and annuity plan return determine your pension amount. Second, none of the factors mentioned above are under one’s control. So, the best you can do is use the NPS calculator online and invest sensibly and reap the benefits of a pension. Featured Posts NPS New Rules 2026: A More Flexible Path to Retirement PlanningA Simple Guide to NPS Registration and Online Account OpeningNPS Vatsalya: Building Financial Security for the Next GenerationPlanning for Retirement with NPS: This Blog Might Be For You!NPS Returns and Retirement Planning: What Every Investor Should Know
Back to Blog NPS and Annuity: Everything to Know May 18, 2022 The National Pension Scheme (NPS) is a government-backed pension plan available for public, private, and unorganized employees. It is a voluntary plan that matures at the age of 60. At maturity, you can withdraw 60% of the scheme’s value in a lump sum and cater to your immediate financial needs. However, the remaining 40% has to be used to purchase an annuity plan. If you are using or wish to use NPS for your retirement financial security, there are some things you must know about NPS annuity plans. What is Annuity in NPS? As stated above, 40% of your scheme’s value must be used to buy an annuity policy at maturity. An annuity is a legal agreement between you and your service provider. As per the contract, you pay an upfront amount to purchase the plan, and receive a regular income for the rest of your life or the chosen term. How to Choose the Best Annuity Service Provider in NPS? In order to ensure that you get the best annuity policy for your hard-earned savings, there are many Annuity Service Providers (ASPs) in India that you can choose from. Each ASP can offer unique features. They also add returns to your fund’s value that are given to you along with your regular pay-outs at the chosen intervals. You can select the best annuity plan for NPS out of the available options per your preference and needs. What is the Current Annuity Rate in NPS? The annuity rate in NPS can differ for each annuity service provider. It also varies as per the type of plan and the value of the annuity. However, you can visit the official government’s NPS website to find out the latest interest rates at the time of purchase. What Types of Annuity Plans are Available under NPS? The precise annuity features can be different for each annuity service provider for NPS. However, you can pick from one of the following plans: Annuity for life for the subscriber: This type of annuity plan offers a regular income to the NPS subscriber for life. Post-death of the annuitant/subscriber, the plan terminates automatically. Annuity with life for the subscriber with the return of purchase price: This type of plan offers a regular income to the NPS subscriber for life. Post the demise of the annuitant/ NPS subscriber, the nominee or legal heir of the annuitant can claim the entire amount used for purchasing the annuity plan. Annuity with life for the subscriber with the return of purchase price on the diagnosis of a critical illness: This type of annuity policy offers a regular income to the NPS subscriber for life. Additionally, the annuitant can claim the entire annuity amount to cover the medical expenses of a critical illness. However, if the annuitant is not diagnosed with a critical illness during the policy term and passes away, the nominee or legal heir can claim the entire amount used for purchasing the annuity plan. Joint-life annuity for subscriber and secondary annuitant with return of purchase price: This type of plan offers a regular income to the NPS subscriber for life. NPS annuity after the death of the primary annuitant/ NPS subscriber is given to the secondary annuitant of the policy. After the death of the secondary annuitant, the nominee or legal heir can claim the entire amount used for purchasing the annuity plan. Benefits of NPS Annuity Plans Here are some benefits of NPS annuity plans: An annuity policy can offer regular income post-retirement. An annuity plan helps to secure the spouse and legal heirs of the NPS subscriber. Annuity plans are low-risk, so there is no fear of losing money. Each annuity service provider for NPS offers add-ons and benefits that can help to increase the fund’s value over time. Conclusion When it comes to choosing an annuity plan with NPS, make sure to compare your options and pick the best annuity service provider. This is an excellent way to secure your retirement as well as offer your spouse and dependents adequate funds in your absence. Featured Posts NPS New Rules 2026: A More Flexible Path to Retirement PlanningA Simple Guide to NPS Registration and Online Account OpeningNPS Vatsalya: Building Financial Security for the Next GenerationPlanning for Retirement with NPS: This Blog Might Be For You!NPS Returns and Retirement Planning: What Every Investor Should Know
Back to Blog What is POP? How do you know your NPS POP? March 30, 2022 The National Pension System, or NPS is a retirement and social security plan introduced by the Government of India in 2004. Though initially introduced for government employees only, it was made accessible to all Indian citizens in May 2009. With the NPS, money invested is pooled together to form an investment fund. This investment fund is then reinvested by professional fund managers who are vetted by the Pension Fund Regulatory and Development Authority. Investments are done in the equity market in a diversified portfolio that comprises government bonds, bills, corporate shares and debentures. You can decide how much of your investment goes in to equities, but it is capped at a maximum of 75%, making the NPS a relatively safer investment plan, and suitable for building a stable retirement corpus. On retirement, you are allowed to withdraw 60% of the corpus as a lump sum, which is non-taxable. The remaining 40% is used to purchase annuities which provide you a monthly return as pension. Since the government has made the NPS available for all citizens of the country, there is now a need to provide everyone with a method that can be used when people want to operate, change or track their NPS accounts. This is where Points of Presence, or PoPs, come into play. What are PoPs? Points of Presence, or PoPs, are service providers present all across the country to ensure that you are able to operate your NPS account smoothly without any hindrance. PoPs are also appointed by the PFRDA, forming a network of branches, which are known as PoP Service Providers (PoP SP). Apart from providing you with facilities like opening a Permanent Retirement account, and being able to contribute to your NPS fund, PoPs also serve a plethora of other purposes. What are the functions of PoPs? The primary function of a PoP, or a PoP SP, is to enable you to register a Tier I or a Tier II account, as per your convenience. A PoP is responsible for accepting your duly filed Composite Subscriber Registration Form (CSRF) and verifying the form for your date of birth, bank, details of the scheme and the nominations. The PoP also serves the purpose of verifying your customer documents as per existing, prescribed norms. A PoP is also responsible for collecting your NPS Contribution Instruction Slip (NCIS) along with your application form, ensuring that mandatory and relevant details are given by you in your NCIS. They also remit the funds, after deducting their charges and taxes, to the Trustee Bank within one banking day from the date of your application. While you submit your NCIS, the PoP shall also perform the due diligence of checking your Permanent Retirement Account Number (PRAN), along with your payment details and other documents. Your contribution details are then uploaded to the Central Recordkeeping Agency system bank in correspondence to your PRAN. A Point of Presence also serves the purpose of changing your personal details as per your requirement, within one banking day of your application. You can also change your investment scheme or your fund manager, through your PoP, if you are not happy with the performance of your fund. In case you are unhappy with the overall performance of your NPS account and choose to withdraw your account, the PoP will facilitate it on the same day, provided your application is processed within banking hours. In case your application is processed after banking hours, the same is processed the next banking day. Your PoP SP is also responsible for changing your location and issuing prints of your account statement, as and when needed. In case you lose your PRAN card, you can also apply for another one from your PoP. In case you have any grievances pertaining to your National Pension System account, you can submit them to your respective PoP, which would then receive and upload the same on the Central Grievance Management System (CGMS) of the CRA. In short, all services that are prescribed by the PFRDA are provided by the PoPs or the PoP SPs. How do you know your PoP? In case you have difficulties locating a Point of Presence close to you, you can check your transaction statement, if you have one, and it should have your PoP listed. You can also locate your closest PoP by clicking here https://nps.kfintech.com/index/allcitizens/ If you are looking for a suitable solution to a stable retirement plan, you can choose to go with NPS with KFintech CRA, by clicking here nps.kfintech.com Featured Posts NPS New Rules 2026: A More Flexible Path to Retirement PlanningA Simple Guide to NPS Registration and Online Account OpeningNPS Vatsalya: Building Financial Security for the Next GenerationPlanning for Retirement with NPS: This Blog Might Be For You!NPS Returns and Retirement Planning: What Every Investor Should Know
Back to Blog Why NPS is better than other long term retirement plans? March 29, 2022 What is NPS? The National Pension System, or NPS, is a retirement plan introduced by the Government of India in 2004, and is regulated by the Pension Fund Regulatory Development Authority (PFRDA). With this retirement plan, money invested by you and others is pooled together and then reinvested into the market by professional fund managers vetted by the PFRDA. These investments are made in a diverse portfolio that consists of government bonds, bills, corporate shares and debentures. They accumulate over time and provide you with market based returns on your investments, which you can withdraw on your retirement. Who should invest in NPS? While NPS is available to all Indian citizens between the ages of 18-70, its end goal is to provide you with financial security on your retirement. Hence, it is best suited for people who are looking for a stable retirement plan and have a relatively low tolerance towards market risks. Moreover, NPS also provides tax rebates of upto Rs. 2 lakhs under Sections 80C and 80CCD of the Indian Income Tax Act. NPS allocates a portion of the accumulated corpus to equity investments, which are exposed to market fluctuations, returns and risks. The percentage of your investments that goes towards these can be decided by you, within a few limitations. It is important that you decide the right option for you depending on your investment goals, earnings and living expenses, and most importantly, your risk tolerance. NPS vs EPF While both Employees’ Provident Fund (EPF) and NPS are managed by the government, there are some factors that make them different, and may be a differentiating factor when it comes to choosing which one you want to invest in. The similarity between these retirement plans is that they both invest your money across debts and equities. The difference between them is that you do not get to choose your fund manager with EPF. In the case of NPS though, not only can you choose the fund manager, but you can also switch between fund managers if you are not happy with the performance of your funds. NPS can be said to be a more evolved retirement plan that takes into consideration your age and risk appetite. It allows you to decide on the assets you want to invest in based on your return expectations. NPS vs ELSS ELSS is a form of equity mutual fund which allows you the benefit of saving taxes, on investments upto Rs. 1.5 lakh under Section 80C, just like NPS. However, with the NPS, you also have the option to save an additional Rs 50,000 under section 80CCD (1B). Also, on maturity, you have the provision to withdraw 60% of the entire corpus as a lump sum entirely devoid of taxes, while the remaining amount is used to purchase annuity. Since ELSS is entirely based on equity, it carries a substantial amount of risk, while NPS caps equity allocation at 75% which makes it comparatively safer than ELSS. Furthermore, NPS also allows you to invest in assets like corporate bonds and government securities, which are safer than equities. Therefore, if you are looking for a retirement plan which is secure and also lowers your taxes, NPS can be a good option. NPS vs PPF Public Provident Fund, or PPF, is another savings scheme that was introduced by the Government of India, and was designed to provide fixed returns, and is not limited to pensions, unlike the NPS, which is exclusively a pension savings scheme. Since NPS is market based and carries a certain amount of risk, the average returns are higher in the long term. While it cannot be guaranteed that NPS is better than PPF, it can definitely be said that NPS can help you create a higher corpus in the long run which can help you secure your finances better. NPS vs Mutual Funds The National Pension System operates in a similar manner to that of a mutual fund, and invests your money in equities. However, unlike equity mutual funds, which are entirely based on equity market investments, NPS has a capping of 75% in the equity market, which makes it relatively safer to invest in. Furthermore, the tax savings on investments of up to Rs. 2 lakh, with NPS, also adds to the benefits, while any returns from mutual funds are subject to taxes. If you are looking to create a corpus that provides you with regular income on retirement, NPS should be the ideal choice because of the lower risk and tax benefits.To conclude, every investor has different goals for their investments and a specific mindset. You should always consult your financial advisor before you make any investment decision. If you are looking to have a stable and smart retirement plan that provides you with multiple benefits, you can choose to go with NPS by KFintech here at nps.kfintech.com. Featured Posts NPS New Rules 2026: A More Flexible Path to Retirement PlanningA Simple Guide to NPS Registration and Online Account OpeningNPS Vatsalya: Building Financial Security for the Next GenerationPlanning for Retirement with NPS: This Blog Might Be For You!NPS Returns and Retirement Planning: What Every Investor Should Know