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6 Features Of The National Pension Scheme

The national pension scheme was introduced by the central government on 1st January 2004. Initially, the NPS scheme was introduced only to the central government employees, however from 1 May 2009, the scheme was made available to all the Indian citizens. The scheme was regulated by the Pension fund regulatory and development authority (PFRDA). Subscribers can also switch between different investment funds. The national pension scheme account can easily be operated from anywhere in India. This plan also involves transparent investment norms. They also help an individual plan their retirement and can be sure of receiving assured returns at retirement.

The national pension scheme is a pension system for open to all the citizens of India. The NPS invests the contributions of its subscribers into equities and debt and the final pension amount will depend on the performance of these investments. The pension that an individual will get through the national pension scheme will depend on the performance of the individual’s NPS funds. Their contributions invested in the national pension scheme is invested in assets like equity or debt.

Under the NPS, an individual can easily invest in different pension funds. The NPS offers three different types of funds where a customer can invest and get good returns at retirement. The funds which are invested by the pension fund regulatory and development authority and managed by professional funds managers. An NPS subscriber will be able to switch between different pension funds. An individual’s contribution to the pension scheme grows over some years based on the returns received from investments.

Any employee who wishes to get a permanent retirement account number and subscribing for the national pension scheme can submit their duly filled application form along with the correct documentation. Some of the objectives of the national pension scheme are providing income for old people, providing good returns for long term, increasing security for old people.

The features of the National Pension scheme are listed below:

  1. Eligibility:

Any Indian citizen between the age group 18 to 65 and do not come under any NPS sector is eligible to invest in the NPS. 

  1. Contribution towards NPS:

The minimum contribution that must be made towards the NPS scheme is Rs. 500(not including taxes). There is no upper limit to the maximum contribution which can be made. However, the minimum contribution that can be made in a Tier-1 account is Rs. 1000 in a financial year.  

  1. Modes of payment:

The payments can be made in the form of Demand Draft, cheque or cash towards the NPS scheme. 

  1. Cost for registration:

Initially, an individual must pay Rs. 500 towards registering for an nps account. 

  1. The number of contributions:

A subscriber must make at least one contribution in a financial year. 

  1. Change of scheme and fund manager:

In case a subscriber of the NPS scheme is not happy with the overall performance of the scheme, they will be allowed to change the fund manager or the pension scheme. Both the tier-1 and tier-2 accounts with these options.

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