driven system to save small amounts today, to build a fund for lifes - - PowerPoint PPT Presentation

What is NPS ? NPS is a defined contribution pension scheme which is highly efficient, technology driven system to save small amounts today, to build a fund for life’s second innings. Who Can Join ? You can join, if you are any or all of the following:

• Citizen of India; Resident or Non-Resident
• Age between 18-60 years, as on date of joining
• Salaried or Self Employed
• Complies with KYC norms

0 to 18 18 to 60 60 Onwards

Age Group

NPS provides a platform for saving to create corpus, to enable subscriber for purchasing Annuity post retirement

Unmatched Lowest cost of Investment Prudentially Regulated by PFRDA Safe, Secure and Easily Portable Attractive Market Linked Returns Built on a highly efficient, technology driven platform Investments managed by experienced Pension Funds Attractive Tax Benefits for Employees and Employers

4 Subscribers Central Recordkeeping Agency Custodian NPS Trust Trustee Bank Fund Flow Annuity Service Providers

Funds Flow Information Flow

Pension Funds NAV

PFRDA

POP Online POPSP

NPS Architecture

Tier-I account: Subscribers can contribute for retirement into this non-withdrawal account. Income Tax benefits as per IT Act, 1961 for Tier I. Tier-II account: Voluntary savings facility, where the subscriber can avail fund management facility at very low costs. Subscribers are free to withdraw amount from this

• account. However, tax benefits are not available.

Currently, CSC is accepting registrations for Tier I only. Tier II will be available in next phase.

Particulars Tier I Tier II Minimum Contribution at the time

• f account opening
• Rs. 500/-

Rs.1,000/- Minimum amount per contribution Rs.500/- Rs.250/- Minimum contribution in a financial year Rs.1000/- Rs.2,000/- Minimum frequency

• f

contributions per financial year 1 1

Role of CSC under NPS

To offer advice on NPS to the prospects and to facilitate opening of NPS accounts To disseminate information about NPS To accept contributions from subscribers and timely remit the same To accept service request from the subscriber and to act on them To redress the grievances of the subscribers To process exit and withdrawal request

• Citizen to visit any CSC & ask VLE to open a NPS account.
• VLE login into his Digi Seva Portal & Click on NPS, Enter his Aadhaar no.

& authenticate him through Aadhaar/eKYC option.

• Enter the details like Nominee, Contribution amount, Choose Fund

manager, upload his Signature and collect the contribution amount from the subscriber.

• Pay the amount using the wallet, submit application and generate PRAN.
• Take the print out of the form, get it signed by the subscriber & dispatch it

to M/s Alankit Assignments Ltd, Alankit House, 4E/2, Jhandewalan Extension, New Delhi 110005 with in 3 working days.

Choice of PFMs

• 1. ICICI Pension Fund Management Company Limited
• 2. Kotak Mahindra Pension Fund Limited
• 3. Reliance Capital Pension Fund Limited
• 4. SBI Pension Fund Private Limited
• 5. UTI Retirement Solutions Limited
• 6. LIC pension Fund Limited
• 7. HDFC Pension Fund Manager Company Limited

Investment Option

❖ Investment Option can be changed once in a financial year

Active Choice

Subscriber decides allocation pattern amongst A, E, C & G

Auto Choice

Funds managed on the pattern of a lifecycle fund

Asset Class Cap on Investment Alternative (A) 5% Equity (E) 50% Corporate Bonds (C) 100% Government Securities (G) 100%

Funds to be allocate in E, C & G as per the age of the Subscriber

To Employers

• Contributions made by the employer (upto 10% of Basic + DA) is allowed as a business

expense under Section 36 (1) iv (a) of Income Tax Act 1961.

To Employees

• Employees own contribution is eligible for tax deduction under sec 80 CCD (1) of Income

Tax Act up to 10% of salary (Basic + DA). This is within the overall ceiling of Rs. 1.50 Lacs under Sec. 80 CCE of the Income Tax Act.

• Employee also gets tax deduction for the contribution made by the employer under section

80 CCD (2) of IT act upto 10% of salary (Basic + DA) which is in addition to the tax benefits available under Sec. 80 CCE. No Monetary ceiling.

• Subscriber is allowed tax deduction in addition to the deduction allowed under
• Sec. 80CCD(1) for

additional contribution in his NPS account subject to maximum of Rs. 50,000/- under sec. 80CCD 1(B). Exclusive to NPS

Interim Withdrawal

➢ Withdrawal will be allowed subject to

✓ Subscriber should be in NPS for 10 years ✓ Amount should not exceed 25% of the contributions made by the subscriber ✓ Withdrawal can happen only against specified reasons

Withdrawal option are limited to ensure sufficient terminal corpus

Normal Retirement Conditions for Withdrawal Pre mature Retirement Death of subscriber Vesting Criteria

At any point in time before superannuation

Vesting Criteria

On attaining the superannuation

Vesting Criteria

Death due to any cause

Vesting Criteria Benefit

At any point in time before superannuation (allowed to subscriber who have been in NPS for at least 10 years) Compulsory Annuitisation- minimum 80% Lump sum withdrawal- maximum 20% If Corpus< Rs. 1.00 Lac, complete withdrawal On attaining the age of superannuation as prescribed in service rules) and upto 70 years of age Annuitisation- minimum 40% Lump sum withdrawal- maximum 60% If Corpus< Rs. 2.00 Lac, complete withdrawal

• Subscriber can stay invested in the NPS upto the age of 70 years. Fresh

contributions are allowed during such a period of deferment.

• Can defer the withdrawal of eligible lump sum amount till the age of 70

years and withdraw the same in 10 annual instaments.

• Annuity purchase can also be deferred for maximum period of 3 years at the

time of exit. Death due to any cause In such an unfortunate event, option will be available to the nominee to receive 100% of the NPS pension wealth in lump sum. However, if the nominee wishes to continue with the NPS, he/she shall have to subscribe to NPS individually after following due KYC procedure.

Exit Process

At the age of 60

60% as Lumpsum

Rs.50 lacs

• RS. 30

lacs

At the age of 50

80% for Pension 20% as Lumpsum

• Rs. 25

lacs

• Rs. 20

lacs

• RS. 5

lacs

Monthly Pension of around Rs 11,883 * Monthly Pension of around Rs Rs. 11,800 *

In Case of Death: Claimant will get full amount or as applicable for exit before the age of 60

Lumpsum amount of

• Rs. 30 lacs

Lumpsum amount of Rs. 5 lacs

Corpus Corpus

• RS. 20

lacs

40% for Pension

Variants of Annuity Plans

• Pension (Annuity) payable for life at a uniform rate to the annuitant only.
• Pension (Annuity) payable for 5, 10, 15 or 20 years certain and thereafter as long as you

are alive.

• Pension (Annuity) for life with return of purchase price on death of the annuitant

(Policyholder).

• Pension (Annuity) payable for life increasing at a simple rate of 3% p.a.
• Pension (Annuity) for life with a provision of 50% of the annuity payable to spouse during

his/her lifetime on death of the annuitant.

• Pension (Annuity) for life with a provision of 100% of the annuity payable to spouse

during his/her lifetime on death of the annuitant.

• Pension (Annuity) for life with a provision of 100% of the annuity payable to spouse

during his/her lifetime on death of the annuitant and with return of purchase price on death of the spouse. If the spouse predeceases the annuitant, payment of annuity will cease after the death of the annuitant and purchase price is paid to the nominee.

Annuity Service Providers

Intermediary Charge Head Service Charge Method of Deduction

POP Initial Subscriber Registration

• Rs. 125

To be Collected Upfront Initial Contribution 0.25% Min: Rs. 20 & Max : Rs.25,000 All Subsequent Contribution All Non-Financial Transaction

• Rs. 20

Earning : VLE will get 80% - TDS of above charges upfront

➢ Aadhaar Based Registration of Subscriber. ➢ Instant PRAN allotment ➢ No Paperwork for Subscribers. ➢ PRAN kit will be delivered to the subscriber within 30 days from NSDL. ➢ Direct contribution through Payment Gateway Service Provider (PGSP) by all existing Subscribers. Online Credentials will be in the PRAN Kit. ➢ Subsequent contribution by furnishing only PRAN Number to the VLE.