NATIONAL PENSION SYSTEM STRUCTURE

 

Under NPS account there are two types of account – Tier I & Tier II.

Tier – I is the individual pension account, which is the default pension account having all the tax incentives under income tax act.

Tier – II is an optional investment account available to a subscriber having an active Tier I account. This account has no withdrawal restrictions and tax benefits. Tier – II is not pension account.

Tier – I	Tier – II
Individual pension account	Optional account – Required an active Tier – I
Withdrawal as per rules/regulation only	Unrestricted withdrawals
Minimum contribution Rs. 500	Minimum contribution to open Rs. 1000
Minimum contribution per year Rs. 1000	Minimum contribution Rs. 250
Tax benefit are available	No tax benefit on ctribution or gain.
Any citizen aged between 18-65 is eligible	NRI/OCI are not eligible
Choose any pension fund/investment pattern	Choose any pension fund/investment pattern

 An applicant can exercised following choices:

Choice	Function
Point of presence	Service Provider
CRA	Record Keeper
Pension Fund	Fund Manager

Investment Choice – Asset allocation pattern:

Active Choice:

1.       Equity  (E) – Maximum 75%

2.       Corporate Bonds (C) – upto 100%

3.       Government Securities (G) – Upto 100%

4.       Alternate Assets (A) – Maximum 5%

Auto Choice :

1.       Conservative Life Cycle Fund (LC25)

2.       Moderate Life Cycle Fund (LC50) – Default

3.       Aggressive Life Cycle Fund (LC75)

Subscribers can subsequently request to change the choices exercised as under:

Choice	Frequency
Point Of Person	No Restriction any Time
CRA	Twice in a year
Pension Fund	Once in  year
Investment Choice	Twice in a Financial Year.

If minimum contribution is not received the account is categorized as frozen and will get activated upon making a contribution to the account. The Nps account will be closed only when a subscriber submits a request for exist from NPS to a service provider.

Series 2.