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    NPS TERMS AND CONDITIONS


    A citizen of India, whether resident or non-resident, can avail the facility of National Pension System (“NPS”), subject to the following conditions:

    1. The applicant should be between 18 – 70 years of age as on the date of submission of his/her application to the Point of Presence Point of Presence-Service Provider(“POP-SP”).
    2. The applicant should comply with the Know Your Customer (“KYC”) norms as detailed in the subscriber registration application form. All the documents required for KYC compliance need to be mandatorily submitted
    3. The applicant has to ensure that subscriber registration application form is duly filled up i.e. photograph, signature, mandatory details, scheme preference details etc and also submit KYC documentation with respect to proof of identity and proof of address of the applicant.
    4. The applicant has no objection in authenticating with Aadhar based system and giving consent under the Aadhar Act 2016
    5. After the account is opened, CRA shall mail a “Welcome Kit” containing the subscriber’s unique Permanent Retirement Account Number (“PRAN”) Card and the complete information provided by the subscriber in the subscriber registration form. The PRAN will be the primary means of identifying and operating the account. The applicant also receives a Telephone Password (“TPIN”) which can be used to access the account on the Customer Care number (1-800-222080). The applicant will also be provided an Internet Password (“IPIN”) for accessing an account on the CRA website (www.npscra.nsdl.co.in) on a 24X7 basis
    6. Tier-I account: The applicant shall contribute his/her savings for retirement into this non-withdrawable account. This is the retirement account and applicant can claim tax benefits against the contributions made subject to the Income Tax rules in force.  Tier-II account: This is a voluntary savings facility. The applicant will be free to withdraw his/her savings from this account whenever he/she wishes. This is a not a retirement account and applicant can’t claim any tax benefits against contributions to this account.
    7. The subscriber can contribute the amount through cash, local cheque, demand draft at his/her chosen POP-SP. However, ICICI Bank will not accept cash beyond Rs.50000. No outstation cheques shall be accepted for any contributions.

    Minimum Contributions (For Tier-I)

    • Minimum contribution at the time of account opening and for all subsequent transactions – Rs. 500
    • Minimum contribution per year - Rs 1,000 excluding any charges and taxes
    • Minimum number of contributions in a year - 01 

    Non-compliance of mandatory minimum contributions:

    • If the subscriber contributes less than Rs. 1000 in a year, his/her account would be frozen and further transactions will be allowed only after the account is reactivated
    • In order to reactivate the account, the subscriber would have to pay the minimum contributions.

    Minimum Contributions (For Tier-II)

    • Minimum number of contributions in a year -01
    • Minimum contribution at the time of account opening – Rs. 1000/- and for all subsequent transactions a minimum amount per contribution of Rs. 250/-

    Non-compliance of mandatory minimum contributions:

    Under NPS, the manner in which your money is invested will depend upon subscriber’s own choice. NPS offers a number of funds and multiple investment options to choose from. In case subscriber does not want to exercise a choice, his/her money will be invested as per the "Auto Choice" option, where money will get invested in various type of schemes as per subscriber’s age. The NPS offers two approaches to invest subscriber’s money:

    • Active choice – Individual Funds (Asset Class E, Asset Class C and Asset Class G)

    Subscriber will have the option to actively decide as to how his/her NPS pension wealth is to be invested in the following three options: 
    Asset Class E - Investments in predominantly equity market instruments. 
    Asset Class C- investments in fixed income instruments other than Government securities. 
    Asset Class G - investments in Government securities.

    Subscriber can choose to invest his/her entire pension wealth in C or G asset classes and up to a maximum of 50% in equity (Asset class E). Subscriber can also distribute his/her pension wealth across E, C and G asset classes, subject to such conditions as may be prescribed by Pension Fund Regulatory and Development Authority (“PFRDA”)

    • Auto Choice – Lifecycle Fund

    NPS offers an easy option for those participants who do not have the required knowledge to manage their NPS investments. In case subscribers are unable/unwilling to exercise any choice as regards asset allocation, their funds will be invested in accordance with the Auto Choice option. In this option, the investments will be made in a life-cycle fund. Here, the fraction of funds invested across three asset classes will be determined by a pre-defined portfolio.

    Withdrawal/Exit

    A. Upon attainment of the age of 60/75 years:

    At least 40% of the accumulated pension wealth of the subscriber needs to be utilized for purchase of annuity providing for monthly pension to the subscriber and balance is paid as lump sum payment to the subscriber. However, the subscriber has the option to defer the lump sum withdrawal till the age of 75 years.

    In case of attainment of 60 years, exit before the age of Superannuation/attainment of 60 years, the subscribers can also initiate withdrawal requests in the CRA system which shall subsequently have to be verified by the Nodal Office (POP/Banks) in CRA system. www.cra-nsdl.com

    B. At any time before attaining the age of 60/75 years:

    At least 80% of the accumulated pension wealth of the subscriber needs to be utilized for purchase of annuity providing for monthly pension to the subscriber and the balance is paid as a lump sum payment to the subscriber.

    C. Death of the subscriber:

    The entire accumulated pension wealth (100%) would be paid to the nominee/legal heir of the subscriber and there would not be any purchase of annuity/monthly pension.

    Under NPS, PFRDA has entrusted the responsibility of receiving, processing and settlement of all withdrawal claims made to CRA and has created a special NPS Claim Processing Cell (“NPSCPC”) for this purpose for handling all types of withdrawal claims.

    The Withdrawal process is now online.

    NPS offers Indian citizens a low cost option for planning their retirement. NPS perhaps is one of the world’s lowest cost retirement savings product. Following are the charges under NPS:2

    Intermediary Charge head Service charges Method of Deduction

    CRA

    PRA Opening charges

    Rs. 40/-

    Through cancellation of units at the end of each quarter.

     

    Annual PRA maintenance cost per account

    Rs. 95/-

    Charge per transaction

    Rs. 3.75/-

    POP(Maximum Permissible Charge for each subscriber)

    Initial subscriber registration and contribution upload

    Rs. 200/-

    To be collected upfront

     

    Any other transaction not involving a contribution from subscriber

    0.25% of contribution Min. Rs. 30 Max. Rs. 25,000 Non-Financial Rs. 30

    Trustee Bank

    Not Applicable

    Nil

    -

    Custodian (On asset value in custody)

    Asset Servicing charges

    0.0075% p.a for Electronic segment & 0.05% p.a. for Physical segment

    Through NAV deduction

    PF charges

    Investment Management Fee

    within the prescribed upper ceiling of 0.01% p.a.

    Through NAV deduction

    Any Indian Citizen, resident or non-resident and Overseas Citizen of India (OCI) between the age of 65-70 years can join NPS and continue or defer their NPS Account up to the age of 75 years. Those Subscribers who have closed their NPS Accounts are permitted to open a new NPS Account as per increased age eligibility norms. The exit conditions for such subscribers is also defined.

    Category Premature Exit / Voluntary Retirement
    (Exit before 60 years/Superannuation)

     

    		 Normal exit
    (60 years or beyond /Superannuation )    		 Unfortunate Death
    before normal exit / 60 years or Superannuation

    Government Sector

    1. Complete (100%) Lump sum withdrawal allowed if the corpus is equal to or below ₹ 2.5 Lakh.

    2. If the corpus higher than ₹ 2.5 Lakh, at least 80% of the accumulated pension wealth has to be utilized for purchase of an Annuity providing for monthly pension to the Subscriber and the balance 20% is paid as lump sum to the Subscriber.

    3. Subscribers can opt and encouraged to continue in NPS under All Citizens Model post carrying out Inter Sector Shifting (ISS).

    1. Complete (100%) Lump sum withdrawal allowed if the corpus is equal to or below ₹ 5 Lakh.

    2. If the corpus is more than ₹ 5 Lakh, at least 40% of the accumulated pension wealth of the Subscriber has to be utilized for purchase of an Annuity providing for monthly pension to the Subscriber and the balance 60% is paid as lump sum to the Subscriber.

    3. In case of death after 60 years / superannuation) 60% lump sum will be paid to the nominees and 40% for default annuity by dependents.

    1. Complete (100%) withdrawal for corpus to nominees/legal heirs if the corpus is less than or equal to ₹ 5 Lakh. However, the nominees can opt for annuity if desired.

    2. If the corpus is higher than ₹ 5 Lakh, at least 80% of the accumulated pension wealth of the Subscriber has to be utilized for purchase of default Annuity by dependents and the balance 20% is paid as lump sum to the nominee/legal heir.

    3. If none of the dependent family members (spouse, mother & father) are alive, the Corpus i.e. 80 % has to be returned to the surviving children of the Subscriber and in the absence of children, to the legal heirs.

    Non – Government Sector

    1. 5 Years mandatory subscription.

    2. Complete (100%) Lump sum withdrawal if the corpus is equal or less than ₹ 2.5 Lakh.

    3. If the corpus more than ₹ 2.5 Lakh, at least 80% of the accumulated pension wealth of the Subscriber has to be utilized for purchase of an Annuity and the balance 20% is paid as lump sum to the Subscriber.

    1. Complete (100%) Lump sum withdrawal is allowed if the corpus is less than or equal to ₹ 5 Lakh.

    2. If the corpus is more than ₹ 5 Lakh, at least 40% of the accumulated pension wealth of the Subscriber has to be utilized for purchase of an Annuity and the balance 60% is paid as lump sum.

    3. In case of death after 60 years / superannuation, lump sum is paid to the nominees. However, the nominees can opt for annuity if they desire so.

    1. The entire accumulated pension wealth of the Subscriber payable to the nominee or legal heirs if the Subscriber dies before or after attaining 60 years. However, the nominees can opt for annuity if they desire so.

    Unfortunate death of NPS Subscriber post payment of the lump sum but annuity not issued.

    1. Default annuity is to be bought by the dependents in the case of Govt sector. If none of the dependent family members (spouse, mother & father) are alive, the Corpus has to be returned to the surviving children of the Subscriber and in the absence of children, to the legal heirs.

    2. For Non-Govt sector, annuity as per the choice is to be availed by spouse/dependents. Complete (100%) lump sum withdrawal or annuity or lump sum withdrawal & annuity as per the choice is to be availed by spouse/dependents.

    Subscribers who join NPS after 60 years

    In case of Non Govt Sector

    1. Normal exit is allowed after completion of 3 years. The Subscriber will be required to utilize at least 40% of the corpus for purchase of annuity and the remaining amount can be withdrawn in lump sum. Complete (100%) withdrawal allowed as lump sum if the corpus is less than or equal to ₹ 5 Lakh.

    2. In case of exit before completion of 3 years, the Subscriber will have to utilize at-least 80% of the corpus for purchase of annuity and the remaining corpus can be withdrawn in lump sum. Complete (100%) withdrawal allowed as lump sum if the corpus is less than or equal to ₹ 2.5 Lakh.

    3. In case of unfortunate death of the Subscriber, the entire corpus will be paid to the nominee of the Subscriber as lump sum or nominee can opt for annuity.

    In case of Govt Sector

    1. In case of Govt Sector, the exit rules will be applicable as per the terms and condition of the employment.

    Note : Default Annuity Scheme shall provide for Annuity for life of the Subscriber and his or her spouse (if any) with provision for return of purchase price of the Annuity and upon the demise of such Subscriber and spouse (if any), the Annuity be re-issued to the family members in the order specified here under at a premium rate prevalent at the time of purchase of such annuity by utilizing the purchase price required to be returned under the Annuity contract and all the family members in the order specified below are covered,

    1. Living dependent mother of the deceased Subscriber;

    2. Living dependent father of the deceased Subscriber

    After the coverage of all the family members specified above, the purchase price shall be returned to the surviving children of the Subscriber and in the absence of children, the legal heirs of the Subscriber, as may be applicable.

    B. Exit & withdrawal due to disability and in-capacitation

    Government sector Subscribers

    If the employer certifies that the Subscriber has been discharged from the services of the concerned office on account of invalidation or disability, in such case, exit shall be handled as superannuation.

    Non – Govt. sector Subscribers

    lf Subscriber is physically incapacitated or has suffered a bodily disability leading to his incapability to continue NPS subject to the Subscriber submitting a disability certificate from a Government surgeon or Doctor (treating such disability or invalidation of Subscriber) stating the nature and extent of disability and also certifying that:

    1. the affected Subscriber shall not be in a position to perform his regular duties and there is a real possibility of the affected Subscriber, being not able to work for the remaining period of his life.; and

    2. Percentage of disability is more than 75 % in the opinion of such Government surgeon or doctor (treating such disability or invalidation of Subscriber).”

    It means such cases shall be handled similarly as exit cases at the age of superannuation or at the age of 60 years.

    C. Option of Family Pension for Government sector Subscribers provided by the employer

    If the Subscriber or the family members of the deceased Subscriber, upon his death, avails the option of additional relief on death or disability provided by the Government, the Subscriber has to transfer NPS corpus to the Nodal Office. The Subscriber or family members of the Subscriber availing such benefit shall specifically and unconditionally agree and undertake to transfer the entire accumulated pension wealth to the Government.

    D. Deferment/Continuation under NPS

    Category Continuation of NPS account Deferment of Withdrawal
    Non-Govt. Sector

    1. Subscriber can opt to continue in NPS till 75 years of age and also deposit contributions to avail exclusive tax benefits.

    2. All the facilities and options of normal NPS account like access to CRA system, option to switch fund managers and assets class etc. provided.

    3. If Subscriber after attaining the age of 60 years/Superannuation has not initiated exit request or has not exercised the option of continuation under NPS, then Subscriber shall be automatically continued under NPS till he/she attains the age of 75 years, as if he/she has exercised the option of Continuation. In case of Corporate Subscribers, the Subscriber shall be automatically continued under NPS till he/she attains the age of 75 years, after 90 days of superannuation.

    4. Subscribers can exit from NPS and start pension anytime during the period of continuation.

    1. Subscriber can defer his withdrawal with multiple options

      • Defer only Lump sum withdrawal

      • Defer only Annuity

      • Defer both

    2. Subscriber can opt to defer the lump sum up to the 10 years.

    3. Annuity can be deferred for 3 years.

    Govt. Sector

    1. Subscriber can opt to continue in NPS till 75 years of age and also deposit contributions to avail exclusive tax benefits.

    2. All the facilities and options of normal NPS account like access to CRA system, option to switch fund managers and assets class etc. provided.

    3. Subscribers can exit from NPS and start pension anytime during the period of continuation.

    1. Subscriber can defer his withdrawal with multiple options

      • Defer only Lump sum withdrawal

      • Defer only Annuity

      • Defer both

    2. Subscriber can opt to defer the lump sum up to the 10 years.

    3. Annuity can be deferred for 3 years.

    Note :

    1. If the Subscriber has opted for deferment, Subscriber will not be able to contribute. However, if Subscriber has opted for continuation, he/she will be able to contribute in NPS.

    2. CRA Account maintenance charges need to be borne by the Subscribers post deferment/continuation, if the charges were borne by the employer earlier.

    E. Allocation of corpus among lump sum & annuity at the time of exit

    Types of Exit

    Criteria for calculation of Lump sum/Annuity

    		  

    Premature Exit / Voluntary Retirement / Normal Exit (60 years/Superannuation)

    The corpus in the PRAN as on the date of initiation of withdrawal request shall be criteria for allocating the same for the lump sum or annuity and both as the case may be.

    		  

    Death

    The corpus lie in PRAN as on the date of death shall be criteria for allocating the same among the lump sum or annuity and both as the case may be.

    		  

    Additional Information

    • The percentage of the corpus mentioned in the table for buying annuity is minimum whereas for the lump sum is maximum. It means the entire corpus can be used for buying annuity whereas the lump sum component has the maximum cap as the case may be.

    • Subscriber can buy Annuity from any one of the empanelled Annuity Service Providers (ASPs) by PFRDA. The list of ASPs empanelled and their contact details are available at https://npscra.nsdl.co.in/annuity-service-provider.php

    • Subscriber can check the Annuity rates (pension amount) offered by different ASPs from the Annuity Calculator available on https://cra-nsdl.com/CRAOnline/aspQuote.html

    F. Option for NPS Subscribers who have partially exited from NPS

    The eligible NPS Subscribers who have withdrawn lump sum from NPS but annuity not issued can exit from NPS by availing Annuity or redeposit the amount withdrawn as lump sum and continue the same PRAN.
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