National Pension System

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About NPS

National Pension System or NPS is an initiative by the Pension Fund Regulatory and Development Authority (PFRDA) to drive retirement savings amongst the citizens of India. It is a voluntary, defined contribution scheme which allows an individual to contribute during his working life, build a corpus and enjoy regular income in the forms of pensions and lump sum withdrawals post retirement.

Any citizen of the country, between the ages of 18 to 60 years, is eligible to subscribe to NPS.

The National Pension System or NPS is one of the most cost effective retirement planning investment options available to an individual today.

Solution for Corporates

National Pension System (NPS) was initially introduced for Central Government employees and subsequently made available to all citizens of India on 1st May 2009. Later, in order to facilitate the organized entities including public sector organizations, a customized version of NPS, known as NPS-Corporate Sector Model, was introduced in December 2011.

NPS-Corporate Model provides a platform for the employers to extend the old age social security benefits to their employees and co-contribute for their pension with the flexibility in the amount of contribution from employee/employer. The NPS-Corporate Model can be introduced along with any other retirement benefit scheme like EPF and SAF.

Key features

  • The employers need not be actively involved in record keeping, investment, annuity etc. as in the case of self-administration of pension functions.
  • The corporates/employers have flexibility to select the POP, PFM and investment choice centrally for all employees or leave the choice for selection of PFM and investment choice to individual employees.
  • Employers get tax benefits on their contribution to the employees' NPS account as a business expense, while employees can claim tax benefits on the employees' as well as employer's contribution to NPS.
  • Accounts are portable and employees can easily transfer their accounts to another employer or POP service provider.

Benefits of Corporate Model

Benefits to Corporates

  • An efficient platform to contribute to and build retirement savings amongst employees
  • Platform to widen tax savings options and a great employee retention tool
  • Saving expenses incurred on self-administration of pension function (viz; record keeping , investment , annuity etc).
  • Claim tax benefits for the amount contributed towards pension of Employees. From 1st Apr, 2012 up to 10% of the salary (basic and dearness allowance) of employers Contribution can be deducted as 'Business Expense' from their Profit & Loss Account.

Benefits to Employees

  • Cost effective investment product with market-linked growth potential
  • Contribution is eligible for tax exemption as per the Income Tax Act. As per finance bill 2011-12, the employee contribution to NPS upto 10% of basic plus DA is allowable deduction under section 80 CCD(1) within overall limit of ` 1 lakh. The employer's contribution to NPS upto 10% of basic plus DA is allowed deduction under section 80CCD (2) and excluded from the limit of ` 1 lakh. (
  • Offers Tier II account which is a voluntary savings facility with anytime liquidity/withdrawal option.
  • Efficient grievance management through CRA Website, Call Center, Email or Postal Mail.
  • Auto Choice option for those who do not have the required knowledge to manage their investment.
  • Release of daily NAV by PFMs to ensure subscriber can take informed decisions.
  • An option to remain invested even after retirement.

Enrollment Process

Corporate have to register through an existing POP (Points of Presence). This will facilitate employees working under various organizations to come on board NPS within the purview of their employer-employee relationship, subject to the norms as prescribed by PFRDA. Corporate may directly approach POP as an entity for its employees to join NPS. Corporate along with POP shall also be required to comply with the provisions of the Prevention of Money Laundering (PML) Act, 2002 and the rules framed there under, as may be applicable, from time to time.

Entities Eligible under the Corporate Model

Following entities can adopt NPS under the Corporate model

  • Entities registered under Companies Act
  • Entities registered under various Co-operative Acts
  • Central Public Sector Enterprises
  • State Public Sector Enterprises
  • Registered Partnership firm
  • Registered Limited Liability Partnership (LLPs)
  • Anybody incorporated under any act of Parliament or State legislature or by order of Central / State Government
  • Proprietorship Concern
  • Trust/Society

Solutions for Individuals

Benefits of NPS

Types of Accounts

Investment Options