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National Pension Scheme or NPS is a government-sponsored pension scheme that was launched in January 2004 for government employees. But, in 2009, the scheme was opened to all sectors. This scheme came into action to address the concern of the senior citizen's financial instability.

Under this scheme, one can save funds systematically during their working years and can use that amount for fulfilling future needs. Indian Citizens from the age group 18-65 years (with a minimum contribution of Rs. 500) can opt for the NPS.

What Are The Features of The National Pension System?

1. The National Pension Scheme allows individuals to make systematic investments via two types of accounts: Tier-I account and Tier-II account.

The difference between the two is the type of restrictions on the withdrawal of the invested amount. Tier-I Account being a basic and general pension account comes with limited withdrawals from the account of the holder. One cannot withdraw the entire sum till his/her retirement. However, in Tier-II Account, the subscriber is free to withdraw the entire money from the Tier-II account. The investments in Tier-II accounts are allowed only when an active Tier I account in the subscriber’s name exists.

National Pension System

2. The NPS also offers flexibility to the individuals by giving two investment options to choose from: 

Active Choice: Under this option, individuals are allowed to decide how the money should be invested in different assets.

Auto choice or lifecycle fund: This is the default option that invests money automatically in line with the age of the subscriber.

3. Under this scheme, individuals have an option to withdraw their contributions partially, which allows them to meet financial needs before retirement during emergencies. As per the rules regarding partial withdrawal, a subscriber can make withdrawals of his/her Tier I scheme contribution up to a maximum limit of 25%.

Under NPS, any individual can open a pension account through eNPS by following one of the following options:

Important: NPS or Pension Plans – Which One Should You Opt For

Option 1 - Registration using Aadhaar Offline e-KYC

  • An individual needs to have an active mobile number that is registered with the Aadhaar Card.
  • Then, upload the Aadhaar Paperless Offline e-KYC ZIP file. 
  • Enter the ‘Share Code’ of 4-characters created at UIDAI website.
  • All your demographic details (Name, Gender, Date of Birth, Mobile no., Address, and Photo) will be fetched from Aadhaar Offline e-KYC Zip after successful authentication.
  • Upload a scanned copy your PAN card and Cancelled Cheque in *.jpeg/ *.jpg/ *.png /*.pdf (unsigned) format having file size between 4KB - 2MB.
  • Upload your scanned signature in *.jpeg/ *.jpg/ *.png format having file size between 4KB - 5MB.
  • After this, you will be routed to a payment gateway for making the payment towards your NPS account from Internet Banking.
  • You will have an option to eSign or Print and Courier the registration form to CRA. 
  • Contributions are credited in PRANs on T+2 basis (subject to receipt of clear funds from Payment Gateway Service Provider).

Top 10 Pension Plans in India

Option 2 - Register using your PAN (KYC verification by Bank/Non-Bank POP)

  • For registering using this option, you must have a 'Permanent Account Number' (PAN)
  • Bank / Demat /Folio account details with the empanelled Bank/Non-Bank for KYC verification for subscriber registration through eNPS.
  • The Bank/Non-Bank POP selected by you during the registration process will do your KYC Verification. The name and address provided during registration should match with POP records for KYC verification. If the details don't match, the request is liable for rejection. In case of rejection of KYC by the selected POP, the applicant is requested to contact the POP.
  • Fill up all the mandatory details online.
  • Upload scanned copy of PAN card and Cancelled Cheque in *.jpeg/ *.jpg/ *.png format having file size between 4KB - 2MB.
  • Upload your scanned Photograph and Signature in *.jpeg/ *.jpg/ *.png format having file size between 4KB - 5MB.
  • Then, you will be routed to a payment gateway for making the payment towards your NPS account from Internet Banking.
  • You will have an option to eSign or Print and Courier the registration form to CRA. 
  • Contributions are credited in PRANs on T+2 basis (subject to receipt of clear funds from Payment Gateway Service Provider)

While planning for the future, one of the major aspects that most people ignore is their post-retirement requirements. Planning it in advance not only help the individuals to fulfil their expenditure requirements but also allows them to sail through their post-retirement life with minimum hassles.

Naval Goel is the founder of PolicyX.com. He is an Associate Member of the Indian Institute of Insurance`, Pune. He has been authorized by IRDA to act as a Principal Officer of PolicyX.com Insurance Web Aggregator.
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