How to Open NPS Account: A Step-by-Step Guide – News18
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The National Pension System (NPS), or New Pension Scheme, is open to all Indian citizens, including Non-Resident Indians (NRIs), between the ages of 18 and 70.
NPS is regulated by the Pension Fund Regulatory and Development Authority (PFRDA) and offers diversified market-linked returns.
The National Pension System (NPS), or New Pension Scheme, is a government-backed retirement savings scheme in India designed to provide financial security in old age. It is open to all Indian citizens, including Non-Resident Indians (NRIs), between the ages of 18 and 70. If you are wondering how to open an NPS account, this guide will walk you through the process, benefits, and important considerations.
Why Open an NPS Account?
Before diving into the process, let’s understand why opening an NPS account can be beneficial:
Tax Benefits: Investments in NPS are eligible for tax deductions under Section 80CCD(1), 80CCD(1B), and 80CCD(2) of the Income Tax Act, under the old tax regime.
Retirement Corpus: It helps in building a sizable corpus for a financially secure retirement.
Market-Linked Returns: NPS investments are managed by professional fund managers, ensuring better returns over time.
Flexible Contributions: Investors can decide the amount and frequency of their contributions.
Types of NPS Accounts
NPS offers two types of accounts:
1. Tier-I Account (Mandatory): A long-term retirement account with withdrawal restrictions.
2. Tier-II Account (Optional): A voluntary savings account with more flexibility and liquidity.
How to Open an NPS Account
There are two ways to open an NPS account: online (e-NPS) and offline (through POPs – Points of Presence).
Opening NPS Account Online (e-NPS)
1. Visit the e-NPS Website
– Go to the official NPS website: [https://enps.nsdl.com](https://enps.nsdl.com) or [https://enps.kfintech.com](https://enps.kfintech.com).
2. Choose the Registration Mode
– You can register using your Aadhaar, PAN, or offline Aadhaar XML.
3. Enter Personal Details
– Fill in your name, date of birth, contact information, and nominee details.
4. Select Your Pension Fund Manager (PFM)
– Choose from the available fund managers such as SBI Pension Funds, LIC Pension Fund, UTI Retirement Solutions, etc.
5. Select the Investment Mode
– Choose between Active Choice (where you select asset allocation) or Auto Choice (pre-defined allocation based on your age).
6. Make the Initial Contribution
– A minimum of Rs 500 for Tier-I and Rs 1,000 for Tier-II accounts is required.
7. Generate PRAN (Permanent Retirement Account Number)
– After successful registration, you will receive a PRAN, which is your unique NPS account number.
8. E-Sign and Submit
– Use Aadhaar-based OTP or upload a scanned copy of the signed registration form.
Opening NPS Account Offline
1. Visit a Point of Presence (POP)
– Find the nearest POP (banks, financial institutions, post offices) that facilitate NPS registration.
2. Fill Out the NPS Form
– Provide your personal details, nominee details, and choose your pension fund manager.
3. Submit KYC Documents
– Provide identity proof, address proof, and a passport-sized photograph.
4. Make Initial Contribution
– Pay a minimum of Rs 500 for a Tier-I account or Rs 1,000 for a Tier-II account.
5. Receive PRAN Kit
– Once processed, you will receive your PRAN card and welcome kit by post.
Documents Required to Open NPS Account
– Aadhaar Card or PAN Card
– Passport-size Photograph
– Address Proof (Utility bill, Passport, Voter ID, etc.)
– Bank Account Details (for withdrawals and transactions)
How to Check NPS Account Balance?
Once your NPS account is active, you can check your balance online:
– Log in to the [NSDL CRA website](https://cra-nsdl.com) or [KFintech CRA](https://nps.kfintech.com).
– Use your PRAN and password to access your account.
– Check the contribution status, NAV, and investment details.
How to Withdraw from NPS?
Withdrawals from NPS are subject to specific conditions:
On Retirement (60 years or above): 60% can be withdrawn lump sum, and 40% must be used to buy an annuity.
Before Retirement (Before 60 years): Only 20% can be withdrawn, and 80% must be used for annuity.
Partial Withdrawal: Allowed after 3 years for specific reasons like education, medical emergencies, or home purchase (up to 25% of contributions).
Opening an NPS account is a simple and efficient way to secure your retirement with tax benefits and flexible investment options. Whether you choose to register online via e-NPS or offline through POPs, ensure you make informed decisions about your pension fund manager and investment choices. Start investing today for a financially independent future!
FAQs
1. Can I open an NPS account if I already have an EPF account?
– Yes, you can have both EPF and NPS accounts simultaneously.
2. What is the minimum yearly contribution required?
– Rs 1,000 per year for Tier-I accounts.
3. Can I change my Pension Fund Manager?
– Yes, you can switch your PFM once a year.
4. How safe is NPS?
– NPS is regulated by the Pension Fund Regulatory and Development Authority (PFRDA) and offers diversified market-linked returns.
By following this guide on how to open an NPS account, you can take the first step toward a financially secure retirement. If you found this guide helpful, share it with others looking to open an NPS account!
