The National Pension Scheme is a long-term and voluntary investment scheme for retirement under Pension Fund Regulatory & Development Authority (PFRDA) as well as Central Government.
What is National Pension Scheme (NPS)?
National Pension Scheme is a social security drive by the Central Government. This pension scheme is available to employees from private, public and even unorganized sectors excepting those from armed forces. In this scheme, people can invest in a pension account from time to time during their job. The subscribers can withdraw a specific percentage of corp uses upon retirement. You will get the rest of the amount as monthly pensions after retirement as an NPS account holder.
Earlier, only the Central Government employees are covered in this scheme. Today, the PFRDA has opened it to all citizens of India on voluntary basis. NPS holds great value for everyone working in private sector and need regular amount of pension post retirement. It is a portable scheme in all jobs and locations with tax benefits available under Section 80CCD and 80C.
Who can invest in NPS?
NPS is suitable to anyone who is looking for something to plan for their retirement early on without taking much risk. In your retirement years, you will definitely need a regular pension which will undoubtedly be a boon, especially for those who retire from jobs of private sector. This type of systematic investment can make a significant difference to your life after retirement. In fact, salaried people can make the most of deductions under Section 80C and consider this scheme.
There are two different types of accounts under NPS – Tier 1 and Tier II. You cannot withdraw the Tier 1 account before retirement or 60 years except in certain conditions. On the other side, Tier II is a savings account. Tier II subscribers can withdraw anytime they need. There are both app and online facilities to check account statement and balance in NPS.
Checking Account Details Online
- First of all, visit the official CRA website – cra-nsdl.com.
- Login to your NPS account and submit your User and Password.
- Select Transaction Statement and Holding Statement. You can check your accumulated NPS account balance.
- See details of transactions and contributions on transaction statement.
Check NPS Balance/Statement through UMANG App
You can access NPS services on UMANG app. It is a government initiative to offer several services in a single platform. The Ministry of Electronics & Information Technology and National eGovernance Division have developed this platform. You can access both NPS and EPFO services on UMANG app.
Download UMANG app and access NPS where you can enter user id and password. You can access a lot of services in NPS with this app, such as checking transaction statement, current holding, and recent contributions. You can also change address and investment scheme.
NPS is flexible enough to let you design your own portfolio according to your risk taking capacity and choice. NPS offers two different investment options – Active Choice and Auto Choice. The investor can put his money in pension fund under Active Choice to work in various categories of assets – corporate/government debt, equity, and alternative investment fund. You can invest in any asset class.
If you select Auto Choice, your fund is automatically invested according to life cycle fund system made by industry experts. You can choose from different options – Moderate Life Cycle Fund, Aggressive Life Cycle Fund, and Conservative Life Cycle Fund.
An employee can have tax benefits on his own contribution, i.e. around 10% of salary (including DA), under Income Tax Act Section 80CCD(1) in the overall bracket of Rs. 1.5 lakh under Section 80CCE and Section 80C.
Under Section 80CCD(2), the contribution of employer to NPS is exempted. In addition, people can claim up to Rs. 50000 as additional deduction under Section 80CCD (1B), along with Rs. 1.5 Lakh under Section 80C.
A self-employed individual can also contribute up to 10% of his gross income in NPS under Section 80CCD (1).
You need to contribute at least Rs. 6000 in a financial year if you have Tier 1 account. Your account will be frozen if you don’t contribute the minimum required amount. To unfreeze the account, visit POP and pay minimum amount along with Rs. 100 as penalty. And the government will not have any contribute to your NPS account.
You can’t even open several accounts in NPS. Actually, you don’t have to open another NPS account either. NPS is portable in all locations and sectors.