National Pension System - Invest in NPS Scheme for Tax Savings Up to ₹62,400* Every FY
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National Pension System (NPS Scheme)

National Pension Systems (NPS) is an affordable equity investment linked to the market that is intended for retirement planning. It offers both alluring tax savings and profits based on market performance. The Government of India launched the National Pension System (NPS) as an investment and pension plan to offer all Indian citizens pensions and old age security.

On May 1, 2009, Indian citizens aged 18-70, including NRIs & OCI (except PIO cardholders & HUF), were made eligible for the NPS scheme. The Pension Fund Regulatory and Development Authority (PFRDA) administrators govern the scheme. Subscribing for NPS with Kotak Mahindra Bank is a hassle-free and lucrative option.

Features & Benefits of National Pension System (NPS Scheme)

Being a PFRDA-approved pension fund manager under NPS at Kotak Mahindra Bank, we provide users with various advantages that set it apart from other investing options. Some of its features  have been discussed below:

  • Minimal individual investment costs contribute to a substantial national pension savings scheme over time.
  • Versatile for various professions and locations, accommodating job changes for subscribers.
  • The system is closely monitored by administrators from the Pension Fund Regulatory and Development Authority (PFRDA).
  • Subscribers must possess a Permanent Retirement Account Number (PRAN) to access all NPS pension services and receive a monthly annuity post-retirement.

 

NPS offers four fund options: Equity funds, Corporate Debt funds, Government Securities funds, and Alternate Investment Funds for subscribers to tailor their investments.

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Other Features: Tax Benefits of the National Pension System (NPS Scheme)

  • Tax Benefits for Salaried Individuals

Section 80CCD (1) of the Information Tax Act allows for the deduction of up to 10% of the wage (basic and dearness reimbursements) invested in the NP form taxable income for each fiscal year. Under Section 80C, however, the total is subject to a Rs cap. 1.5 Lakh. Under section 80CCD (1B), a further reduction of Rs. 50,000 is also permissible for NPS, making the total deductible 2 Lakhs.

  • Tax Advantages for Independent Contractors (Self-Employed)

Self-employed workers can deduct up to 20% of their gross annual income from their taxable income. However, Rs. 1.5 Lakh cap is deductible. Under section 80 CCD(1B) of the Income Tax Act, self-employed workers are also eligible to claim an additional deduction of Rs. 50,000 as part of the commencement of the 2015-2016 budget.

Employees can contribute directly or through their company under an NPS account. Section 80CCD (2) allows a deduction (Basic + dearness reimbursements) of up to 10% of the wages if the investment is made through an employer. As long as the employee’s deduction stays within 10% of their monthly wages, the total amount of any deductible fee is not capped.

Types of NPS Accounts

Tier 1 and Tier 2 accounts comprise the NPS India program. Tier 1 accounts pose restrictions on withdrawals. Only current Tier 1 account holders are eligible for a voluntary withdrawal NPS Tier 2 investment account. All NPS payments online to Tier 1 are eligible for tax benefits.

  • Tier 1 Accounts -Also known as Retirement accounts include personal and employer involvement. Individual contributions may be carried over for up to 75 years. This Retirement account has limited pre-retirement withdrawals. The minimum contribution to this account starts from Rs. 500; annually, it amounts to a minimum of Rs. 1,000. People with Tier 1 accounts need to make at least one instalment annually and have unlimited contribution frequencies.
  • Tier 2 Accounts - These accounts are generally operated for investment purposes with only individual contributions. There are no additional joining or Central Recordkeeping Agency fees for new subscribers. The minimum amount to be contributed at the time of account opening is Rs. 1,000, with Rs. 250 as the minimum amount per contribution.

National Pension System (NPS) Fees and Charges

Intermediary Nature of Service Applicable Charge* Frequency of charge Mode of deduction
POP
(Kotak Mahindra Bank)
Subscriber Registration Rs. 400 One time Deducted from initial contribution
Contribution Processing 0.50% of contribution amount subject to minimum Rs. 30 and maximum Rs. 25000 per transaction On each contribution Deducted from Contribution amount
Non - Financial Transaction Processing Rs. 30 On each request By collecting upfront along with service request
e-NPS (For subsequent contribution) 0.20% of contribution amount subject to minimum Rs. 15 and maximum Rs. 10000 per transaction
(Only for NPS All Citizen and Tier - II Accounts)
On each contribution By collecting upfront along with contribution
Persistency** 1. Rs. 50 for annual contibution Rs. 1,000 to Rs. 2,999.
2. Rs. 75 for annual contribution Rs. 3,000 to Rs. 6,000.
3. Rs. 100 for annual contribution above Rs. 6,000
( only for NPS- All citizen model)
Per Annum Through cancellation of units on quarterly basis
CRA Permanent Retirement Account Opening Rs. 40 One time Through cancellation of units on quarterly basis
Permanent Retirement Account Maintenance Rs. 69 Per Annum Through cancellation of units on quarterly basis
Transaction Processing Rs. 3.75 On each request Through cancellation of units on quarterly basis
Pension Fund Manager Investment Management Slabs of AUM managed by the Pension Fund Maximum Investment Management Fee (IMF)
Upto 10,000 Cr. 0.09%*
10,001 – 50,000 Cr. 0.06%
50,001 – 1,50,000 Cr. 0.05%
Above 1,50,000 Cr. 0.03%
*UTI Retirement Solutions Ltd charges a fee of 0.07% under this slab
Annually Through adjustment in NAV
NPS Trust Scheme expenses 0.005% p.a. On Annually Through adjustment in NAV
Custodian Asset Servicing 0.0032% p.a. On Annually Through adjustment in NAV
*exclusive of GST or other Govt. taxes as applicable
** Persistency fee is payable to such POPs to which the subscriber is associated for more than 6 months in a financial year
Please note - There are no additional CRA charges for the maintenance of Tier - II account. Also, please note that the fee structure may change from time to time as may be decided by PFRDA.

NPS (National Pension System) Interest Rate

Generally, the return range is from 9% to 12% CAGR. 

Take a look at the table below to learn about the NPS Current Return Rate for the Tier I Interest Rate Category:

Asset Class 1-Year Return (%) 5-Year Return (%) 10-Year Return (%)
Equity 15.75% 15.38% 13.51%
Corporate Bonds 7.79% 7.83% 8.59%
Government Bonds 7.92% 8.76% 9.07%

Disclaimer: These investments are subject to market risks, and the returns are market-driven. Past performance is not indicative of future results. NPS investors should carefully consider their risk tolerance and investment goals.

 

Take a look at the table below to learn about the NPS Current Return Rate for the Tier II Interest Rate Category:

Asset Class 1-Year Return (%) 5-Year Return (%) 10-Year Return (%)
Equity 15.76% 15.22% 13.40%
Corporate Bonds 7.71% 8.10% 8.62%
Government Bonds 7.79% 8.38% 8.90%

Disclaimer: These investments are subject to market risks, and the returns are market-driven. Past performance is not indicative of future results. NPS investors should carefully consider their risk tolerance and investment goals.

Eligibility Requirements

National Pension Scheme Eligibility Requirements | Tier I vs. Tier II

Parameters NPS Tier I Account NPS Tier II Account

Eligibility

Indian citizens aged 18 to 70 are eligible.

Requires an active NPS Tier I account.

Lock-in Period

Funds are locked until the subscriber reaches 60.

No lock-in period offers greater liquidity.

Minimum Contribution

Rs 500

Rs 1,000 while registration post that minimum Rs. 250 for subsequent contribution.

Tax Benefits on Contribution

Deductions up to Rs 1.5 lakhs under Sec 80CCD (1). If part of corporate NPS then additionally, 10% of Basic+DA is allowed u/s 80CCD(2) with overall capping of Rs. 7.5lakhs (this includes Employer’s contribution towards PF + SAF+NPS)

No specific tax benefits on contributions.

Taxation on Withdrawal

60% lumpsum withdrawal is Tax-exempt at maturity.

Taxed at the applicable income tax slab rate.

Documents Required for NPS

KYC Documents Address Proof Documents

Aadhaar Card

Bank Account Statement

PAN Card

Valid Driving License, Aadhar Card, PAN Card,

Ration Card, bank passbook with photograph

Ration card with photograph and residential address

Passport

Certificate of the POP bank for an existing bank customer

Job cards issued by NREGA duly signed by officer of the State Government

Job cards issued by NREGA duly signed by officer of the State Government

Certificate of Identity with photograph signed by a Member of Parliament or Member of Legislative Assembly

Latest electricity/water/telephone/property/house bill in the name of the Subscriber showing the address (less than 3 months old)

How to open an NPS account


Opening an NPS account through Kotak Mahindra Bank’s "myNPS" portal is a hassle-free, paperless procedure. Choose the registration method that suits you best, and here's a brief outline of the steps and documents required for each:

  1. Aadhaar eKYC: Link your Aadhaar, upload your mobile number, email, photo, signature, a Cancelled Cheque, and submit a ₹500 payment.
  2. PAN-based Registration: Connect your PAN, upload your mobile number, email, photo, signature, a Cancelled Cheque, and make a ₹500 payment.
  3. Driving Licence Registration: Authenticate using Digilocker, upload your Driving License, PAN, mobile number, email, photo, signature, and a Cancelled Cheque, and submit a ₹500 payment.
  4. Aadhaar via Digilocker: Authenticate via Digilocker, upload your Aadhaar, PAN, mobile number, email, photo, signature, a Cancelled Cheque, and make a ₹500 payment.
  5. KYC Verification by POP: Verify through an empanelled POP, link your existing active account, upload your mobile number, email, and photo, and make a ₹500 payment.

All methods guarantee a swift, paperless online NPS scheme account opening process. Pick your preferred one and begin your journey with our "myNPS" portal.

How to open an NPS account

How to Invest in the National Pension System (NPS Scheme)

Investing in the National Pension System (NPS) is a smart financial move. To begin, follow these steps:

  1. Register: If you're new to NPS, register online, selecting a Tier 1 or Tier 2 account. Choose an investing plan based on your level of risk tolerance. It is also possible for you to design a personalised plan.
  2. KYC: Complete KYC with Aadhaar, PAN, or Driving License, depending on your preference.
  3. Kotak Mahindra Bank’s Mobile Banking App: For a seamless experience, use the Kotak Mobile Banking App to invest effortlessly.
  4. Contribution: Make an initial deposit, starting from ₹500, and set up regular contributions.

 

Kickstart your secure retirement fund with NPS. Visit Kotak myNPS today and embark on your financial adventure with confidence. Your future self will thank you.

National Pension System (NPS Scheme) investment option

By voluntarily allocating investments among the four asset classes listed below, you can create your own portfolio.

  • Equity - This is a “high risk - high return” option because the money is invested in equity. This class may make up to 75% of the subscriber’s investment.
  • Corporate Bonds - investments are made in debt products with fixed income.
  • Government Securities - This type of investment involves the use of funds allocated to Government assets.
  • Alternate Assets - Money is allocated to infrastructure and real estate funds. Because this is a high-risk investment, there is a 5% maximum limit.

Most Consistent National Pension System (NPS Scheme)

Of all the National Pension System (NPS) Schemes, “Kotak Mahindra Bank National Pension System” has been the most reliable. The NPS scheme in banks and its dependability and long-term performance have made it a popular option for many investors, as it has continuously produced steady returns.

Category Average Returns

The weighted benefits of NPS units vary; Investment-focused funds generally offer higher returns but higher risk. Annual earnings provide a consistent picture, while quarterly earnings reflect changes in short-term performance. Investors can recognise these differences and choose NPS units that best suit their long-term investment objectives and risk tolerance.

Frequently Asked Questions

1. Which investment option is better in NPS?

The selection of funds in NPS is based on individual risk tolerance. Active selection provides greater control, while auto choices are controlled based on age and risk.

2. Is NPS a good investment?

The NPS is a good pension investment fund plan due to its tax benefits and different investment types. It is appropriate for individuals who prefer long-term investments.

3. Where can I find the NPS form online?

Being a PFRDA-approved fund NPS Service provider, you can visit our official website here or access the NPS account opening form through our mobile banking app.

4. What is the National Pension Plan (NPP)?

The National Pension Plan is a voluntary contributed market-linked scheme that can help people save up for their retirement.

5. How can I log in to NPS online?

To access the National Pension System online, go to the official NPS website, enter your PRAN and password, and follow the instructions for logging in.

6. Is it safe to make NPS payments online?

NPS payments online with Kotak Mahindra Bank are generally secure, as we ensure the use of safe and encrypted methods.

 

 

How to apply for National Pension Scheme
 

 

 

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