Benefits of National Pension Scheme and How to Open an Account Online

The National Pension Scheme (NPS) is a retirement saving scheme offered and regulated by the Pension Fund Regulatory and Development Authority (PFRDA). Any individual of age 18 years and above with a maximum of 60 years can apply for NPS. In fact, even NRIs are eligible for NPS investment.

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Funds put in NPS are invested into share markets and bond markets and are managed by fund managers appointed by the Pension Fund Regulatory and Development Authority (PFRDA) itself.

An NPS account is identified by a PRAN (Permanent Retirement Account Number) which is a 12-digit unique ID number.

While there is no maximum limit on NPS investments, the minimum requirement is Rs. 1,000. However, there is no such limit on Tier 2 accounts.

NPA Advantages

The following are some of the major benefits of investing in NPA:

1. NPA is an excellent option for those who won’t receive pension post retirement.
2. You can enjoy tax deduction under the Section 80 CCD (2) of the Income Tax Act at a limit that’s lowest of the three:

• 10% of the salary (sum of basic salary and dearness allowance[DA])
• Gross total income
• Amount provided by the employer

3. As per the 2016 Budget, 40% of the income obtained from NPS is completely tax-free at the time of retirement. However, the remaining amount is taxed on the basis of the applicable tax slab.
4. You can enjoy the benefit of automatic portfolio allocation.

Opening an NPS Account

You can easily open an NPS account online by registering yourself with the eNPS facility here. However, for that you must have:

• Aadhaar and PAN.
• A bank account.
• Online payment service via credit/debit card or Internet Banking.
• Scanned image of your signature a recent photograph.
• A physical passport size photograph (used after the account is opened).

Non-government employees who want the benefit of a pension scheme can greatly benefit from NPS. Registration of the same is really easy and the benefits are many.