National Pension System FAQs

Product FAQs- Corporate Employees

1 What is NPS?
National Pension System (NPS) is India’s simplest and perhaps the least cost pension system.
National Pension System (NPS) was introduced by the Central Government on 01 January 2004, and is
regulated by Pension Fund Regulatory and Development Authority (PFRDA).
On 1st May 2009 National Pension System was extended to all citizens of India on a voluntary basis. NRIs can
also apply. Reliance Capital ltd has been appointed as one of the Point of Presence (PoP(s)) for registering
applicants to the NPS. On registration to the NPS, the subscriber will be issued a Permanent Retirement
Account Number (PRAN) by the Pension Fund Regulatory and Development Authority (PFRDA)
2 Scheme Features:
NPS is a low cost, highly regulated, safe and convenient tool for building a retirement corpus.
Few of the benefits NPS are :
1. Low Fund Management Charges: Funds managed by well known professional fund managers at an enviable
low investment management fees of 0.0009% p.a;
2. Investments have Tax Benefits – Refer question on “What are the Tax Benefits of investing in NPS?” below.
Government has proposed that NPS be made EEE (Exempt at deposit, appreciation and withdrawal) under the
DTC.
3. Regulated : By Pension Fund Regulatory and Development Authority (PFRDA)
3 What is the eligibility Criteria for this scheme?
Anybody who is a citizen of India (Resident or Non Resident) between the age of 18-60 Years of age can open
an NPS Account.
4 What are the Tax Benefits of investing in NPS?
CTC Debit (Employer’s Contribution)
Post the Union Budget 2011-12 NPS has been given a special tax treatment wherein NPS contributions of the
Employer have been taken out of the purview of Sec 80CCE. Meaning whereby that the employer’s contribution
to NPS can be debited to CTC of the Employee (shall not exceed the limit of 10% of Basic Salary). In summary,
contribution by employee from CTC via mode “CTC Debit” (Employer’s contribution) is eligible for additional
deduction from Gross Taxable Income subject to a cap of 10% of Basic Salary.

Salary Deduction (Employee’s Contribution)

Employee’s contribution will continue to be claimed as deduction under sec 80CCE (under the max limit of Rs 1
Lakh).

Government has proposed that the investments in NPS be made EEE (Exempt at deposit, appreciation and
withdrawal) under the Direct Tax Code (DTC).

Moreover, for employees who opt for NPS contribution through Salary Process, there is no need to submit
additional proof for claiming the tax deductions. The contributions made would get automatically updated in
your salary statement and will also be included in your Income Tax computation for the Financial Year.

5 Where and how to open an account?

An individual can open his NPS account with any of the POP / POP-SP associated with PFRDA. Submit your
KYC documents with dully filled application form with initial contribution. Reliance Capital is one of the POP
appointed by PFRDA for opening NPS accounts. Reliance Capital has registered 130 branches across the
country to open subscriber accounts.
6 Who are the Pension Fund Managers?

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 The six Pension Fund Managers (PFM) from which an employee can choose to manage his/her funds are:
1) Reliance Capital Pension Fund Limited
2) SBI Pension Funds Pvt. Limited
3) UTI Retirement Solutions Limited
4) IDFC Pension Fund Management Co. Limited
5) ICICI Prudential Pension Funds Management Co. Limited
6) Kotak Mahindra Pension Fund Limited.
7 Where are the investments made by the Pension Fund Manager (Pension Fund Managers)?
The Pension Fund Manager (PFM) will invest in any of the three asset classes mentioned below depending
upon the choice made by the subscriber
Asset Class E: Equity
Asset Class C: Corporate Bonds
Asset Class G: Government Bonds
8 What Does Active choice and Auto Choice mean?

Active Choice
Subscribers can allocate their investments in Class E, C and G as per their choice with an upper limit of 50% in
Class E.
Auto Choice
Subscribers can opt for auto choice where the allocation to Class E, C and G is done as per the Life Cycle table
provided in the Offer document.

9 Can a person invest more than 50% in Asset Class E?

No, One can invest max up to 50% in asset class E.

10 Can I change my fund allocation?

Yes, you can change your fund allocation to E, C; G Classes once every Financial Year.
11 Can I change my Pension Fund Manager?
Yes, you can change your PFM once every Financial Year.

12 Where can I give my service requests?

Email your service requests quoting your PRAN Number to [email protected] or call on 022- 3320
1335/ 1594

13 What are the Fund Management Charges of Pension Fund Managers?

Fund management fees are enviably low at 0.0009% as against 1.5 to 2% charged by Fund Managers of
Mutual Fund Schemes. This works out to a mere Rs 1/- p.a. on investment of Rs.1lakh.

14 On changing the Fund Manager, will the previous funds be managed by the existing Fund Manager?
No. The entire accumulated wealth till the day of change gets transferred to the new PFM.
15 On changing the proportion (E/C/G), does it apply to the whole corpus or to the subsequent
contributions only?
Any change will lead to switch of the entire corpus accumulated till then.
16 What is the minimum contribution amount for this scheme?
The minimum contribution amount for this scheme is Rs 500. An employee has to contribute a minimum of Rs
6,000/- (i.e. 500 *12) in a financial year.
17 What happens if a subscriber fails to contribute the minimum amount?
In case a subscriber fails to contribute minimum Rs. 6000/- in a financial year, the account would become
dormant. To activate the account, the subscriber would have to pay the minimum contributions for the entire
period of dormancy along with penalty of Rs 100/- per year of dormancy.

18 Can I deposit my entire yearly contribution at one go in a year?

Yes.
19 Can I pay by ECS?
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 Yes, you can pay by ECS also. An ECS mandate has to be registered with Reliance Capital Ltd.
20 Is it necessary to be a registered subscriber of Reliance Capital Ltd. to register ECS mandate.
No. Any NPS subscriber can register ECS with Reliance Capital Ltd.

21 What are the nomination facilities under NPS?

Although nomination is not compulsory, it is always advisable to have nominees While filling up the NPS form,
you can nominate up to 3 nominees. In case a nominee being minor, you need to provide the details of the
guardian and date of birth of the minor. The nominee will have an option to receive 100% of the lump sum or
continue to subscribe to NPS on his/her own by completing the account opening formalities.
22 What returns will I earn on my investments?
Your contributions will not earn any specified rate of return. The PFM (Pension Fund Manager) will invest your
savings in a scheme of your choice. The returns earned by the PFM (Pension Fund Manager) on the scheme
selected by you will be credited to your account.
23 What are the fees and charges for subscribing to NPS?
Initial registration fee of Rs. 100/- is payable to POP for opening an NPS account. Contribution processing
charges are 0.25% of contribution amount subject to a minimum of Rs.20/-. These charges are deducted from
contributions deposited by the subscriber. For charges related to Account Maintenance and Fund Management,
please refer to Charges section in the offer document available on our website(www.reliacecapital.co.in)

24 Do POPs have the liberty to determine their charges?

No. Charges of POP are have to be within the framework defined by PFRDA.
25 What is the age of retirement?
60.
26 What will happen to my funds at the time of retirement?
You will be required to annuitize min 40% of your savings to purchase an annuity scheme from a life insurance
company of your choice. The life insurance company will pay you a monthly pension for the rest of your life.
One can purchase annuity for more that 40% also.
Remaining 60% can be withdrawn as a lump sum or in phased manner. In case of phased withdrawal, min 10%
should be withdrawn every year or at the age of 70, one has to compulsory withdraw the remaining.
27 Can I opt for retirement before the age of 60?
Yes. You will be required to use 80% of your savings to purchase the annuity. You will be able to withdraw the
balance 20% of your savings as a lump sum.

28 In case of opting for early retirement, when will I get the pension?
You will start receiving pension on your annuitized amount from the very next month.

28 Can I have a joint account for this scheme?

No.
29 Can an individual open two accounts in NPS.
No, Only one account can be opened per individual as any unique PRAN no is allotted to individual.
30 Will the annuity also provide for a family (survivor) pension?
You will have an option of selecting an annuity which will pay a survivor pension to your spouse/dependant

31 Can I track my portfolio online?

Yes, with Welcome Kit you receive online login ID and password which helps you to track your portfolio and
view your profile.

32 Can I track daily NAV (Net Asset Value) of the scheme?

Yes, you can view the daily NAV on CRA Site http://www.npscra.nsdl.co.in/modules.php?name=navSearch
33 What is the difference between Tier I and Tier II account?

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 Tier II is like a saving account where you can withdraw your funds at any point of time. It is an optional account.
There are no separate charges applicable.
34 Can an individual opt for Tier II account only.
No, One has to compulsory open a Tier I NPS account to open Tier II account.

35 How can I contribute to NPS via Salary Process?

You can contribute by opting for CTC Debit up to 10% of your basic salary. If you want to contribute more than
10% of your basic salary in your NPS Account, you may opt for additional deduction as Salary Deduction.

36 What is the difference between CTC Debit and Salary Deduction?

CTC Debit is considered as Employer Contribution and is exempt from Tax up to 10% of your basic as per the
provisions of Sec 80CCD(2) which is beyond the permissible limit of tax exemption of Rs. 1 Lakh under Section
80C, 80CCC and 80CCD(1). This makes NPS extremely tax efficient.

Salary Deduction is considered Employee Contribution and there is no upper limit on contribution through
Salary Deduction. Contribution through this mode is eligible for tax exemption under Section 80CCD (1) which
is within the Rs. 1 Lakh limit under Section 80C, 80CCC and 80CCD (1) together.

37 Is opting for Salary Deduction mandatory? Can I just opt for contributions through CTC Debit alone?
Contribution through Salary Deduction is not mandatory. You may opt only for CTC Debit. The total contribution
per month should be minimum Rs. 500/-.

38 Can I make ad hoc contributions separately into my NPS accounts (not via Salary process)?
Yes. You can make ad hoc contributions to your NPS at any time without any upper limit on the amount. You
can pay through cheque or DD in favour of “Reliance Capital Ltd. Collection A/c – NPS Trust” mentioning your
PRAN no. on back of the cheque. Cheque /DD can be couriered to Reliance Capital NPS Ops Team at Mumbai
or at any of the Reliance Capital Designated Branches. (http://www.reliancecapital.co.in/ourbusiness_nps.html)

39 How can I revise or discontinue the monthly contribution through CTC debit (Employer Contribution)?
Employee will be able to revise or discontinue NPS contribution through CTC Debit at the time of annual CTC
allocation.

40 How can I revise or discontinue the monthly contribution through Salary deduction (Employee
Contribution)?
Employee will be able to revise or discontinue NPS contribution through Salary Deduction at the time of annual
CTC allocation.

41 How will my contributions be processed?

The monthly amount deducted from the salary/CTC will be transferred by your HR Operations team to NPS
Operations Team. NPS Ops Team will process your monthly contribution. The amount will be credited in your
NPS Account in 7 working days. You will receive an SMS and Email alert once the amount is credited to your
account.
42 What will happen to this account if I leave the organization?
Your NPS Account will continue to be operative. You would be able to contribute regular contribution to this
account through your new employer if the new employer happens to have the facility in place else you could
sign an ECS Mandate with Reliance Capital for regular contributions from your designated bank account.

43 In case of queries regarding NPS application process whom should I contact?

You can send an email to [email protected] or call on 022- 33 20 1594 / 1335; alternately you can
also get in touch with your HR for any queries related to NPS.

- End of Document -

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