NPS was made available to All Citizens of India from May 01, 2009.

NPS provides old age income, reasonable market based returns over the long term and extends old age security coverage to all citizens.

Why Start Investing in NPS

  • Wealth creation for your retirement
  • Save additional tax on investments up to ₹ 50,000
  • Enjoy regular pension income on retirement

What are the Benefits of NPS

  • It is voluntary - A Subscriber can contribute at any point of time in a Financial Year and also change the amount he wants to set aside and save every year.
  • It is simple - Subscriber is required to open an account with any one of the POPs (Point of Presence).
  • It is flexible - Subscribers can choose their own investment options and pension fund and see their money grow.
  • It is portable - Subscribers can operate their account from anywhere, even if they change the city and/or employment.
  • It is regulated - NPS is regulated by PFRDA, with transparent investment norms and regular monitoring and performance review of fund managers by NPS Trust.

What are the Investment Choices Available

NPS offers you two approaches to invest in your account:

  • a. Active choice
  • b. Auto choice

In Active choice, Subscriber selects the allocation percentage in assets classes, however, in Auto choice, funds are automatically allocated amongst asset classes in a pre-defined matrix, based on the age of the subscriber. After selection of pension fund manager, Subscriber also has to exercise the choice of investment.

What is Active / Auto Choice in NPS

Active Choice:
Unlike traditional investment products, NPS offers you with the flexibility to design your own portfolio. Depending on your risk appetite, you can design your portfolio by allocating Funds amongst available four asset classes. This is called Active Choice. Following are the four asset classes are available under Active choice:

  • Equity or E
  • Corporate Debt or C
  • Government Securities or G
  • Alternative Investment Funds or AIF

Auto Choice:

At times designing your portfolio can be a little delicate and time consuming. NPS gives you the flexibility to opt for a dynamic and automatic allocation of your portfolio in case you do not want to exercise an Active choice. This option is called the Auto choice.

In Auto choice, your money will be invested in asset classes - E, C and G - in defined proportions based on your age. As individual’s age increases, exposure to Equity and Corporate Debt is gradually reduced and that in Government Securities is increased. Depending upon the risk appetite of subscriber, there are three different options available within Auto Choice-Aggressive, Moderate and Conservative.

  • Aggressive (LC-75) – Maximum Equity exposure is 75% up to the age of 35
  • Moderate (LC-50) - Maximum Equity exposure is 50% up to the age of 35
  • Conservative (LC - 25) – Maximum Equity exposure is 25% up to the age of 35

Type of NPS Accounts

  • Tier-I account: This is a non-withdrawable retirement account which can be withdrawn only upon meeting the exit conditions prescribed under NPS.
  • Tier-II account: This is a voluntary savings facility available as an add-on to any Tier-1 account holder. Subscribers will be free to withdraw their savings from this account whenever they wish. Tier II is not eligible for tax benefit.

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