NATIONAL PENSION SYSTEM - NPS
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National Pension System - NPS

National Pension System (NPS) is a voluntary, defined contribution retirement savings system. This retirement scheme is designed to facilitate a regular income post retirement and is based on the unique Permanent Retirement Account Number (PRAN) which is allotted to every individual that applies for the same. The Indian govt. has created this scheme with security of the individual’s income in mind and offers some wonderful benefits for NPS Account holders.

The NPS has been designed to enable systematic savings during the subscriber's working life.

Link Name

Permanent Retirement Account Number

  • Opening an account with NPS provides a Permanent Retirement Account Number (PRAN), which is a unique number and it remains with the subscriber throughout his lifetime.

    • The system is structured into two tiers:

  • Tier-I account: This is the non-withdrawal Permanent Retirement Account in which the accumulations are deposited and invested as per the option of the subscriber.
  • Tier-II account: This is a voluntary withdrawal account which is allowed only when there is an active Tier I account in the name of the subscriber. The withdrawals are permitted from this account as per the needs of the subscriber as and when claimed.

Choice For Distribution

A subscriber must choose between active choice and auto choice for distribution of his contribution. If active choice is selected, the subscriber must indicate the percentage distribution between corporate, gilt and equity. The maximum investment allowed in equity is 75%.

NPS Tax Benefit

As per the amendment made by Union Budget 2015 in tax provisions for FY 2015-16, if any customer contributes voluntarily towards the NPS system, then he would get an additional benefit of ₹ 50,000 under section 80CCD (1B) which would be over and above the ceiling limit of ₹ 1,50,000 as prescribed under section 80 CCE.

How To Withdraw


Upon attainment of the age of 60 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

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.

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. Each intermediary is entitled to recover the following prescribed charges from the subscriber towards the services rendered by them:

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