The National Pension System (NPS) is one of the most favoured retirement savings schemes in India. It provides tax advantages, flexibility and a structured approach to retirement savings. The evolution of digital banking has made opening an NPS account online seamless. For those of you wanting to invest in NPS to secure your financial future, this guide takes you through the steps of opening an NPS account online with ease.
What is National Pension System (NPS)?
NPS is a voluntary retirement savings scheme backed by the Government of India to ensure that a subscriber has sufficient funds at the time of retirement. The scheme is regulated by the Pension Fund Regulatory and Development Authority (PFRDA) and is available to Indian citizens, including NRIs, aged 18 to 70.
There are two kinds of NPS accounts:
- Tier I Account: A mandatory account with withdrawal limits pre-retirement
- Tier II Deposit: A voluntary savings account that offers no withdrawal restrictions.
Benefits of Opening an NPS Account Online
- Convenience: No need to visit a bank or financial institution; you can apply from home, the office or even while on vacation.
- Tax Benefits: Section 80CCD (1) Section 80CCD (2) and 80CCD ( 1B) under Income Tax Act.
- Cheap Investment: One of the lowest fund management charges in NPS.
- Choice of Fund Managers: Investors can select and change fund managers and asset allocation.
- Flexibility: The ability to invest in equity, corporate bonds, and government securities.
How to Open an NPS Account Online?
1. Choose a Suitable Platform
To start with, one of the portals for opening an NPS account is the eNPS portal (https://enps.nsdl.com/) or through Points of Presence (PoPs), which are basically banks, financial institutions or online brokers.
2. Keep Required Documents Ready
Make sure you have the following before registering:
- Aadhaar Card, PAN Card (ID linked to a bank account)
- Bank Account Details (to contribute & withdraw money)
- Mobile Number, Email ID (linked to Aadhaar or PAN)
- Scanned photograph, scanned signature (to verify identity)
3. Register on the eNPS Portal
- Go to the official eNPS portal.
- Click “Registration,” then choose to register through Aadhaar or PAN.
- If you select Aadhaar, an OTP is sent to your registered cell number for verification.
- You are required to provide your bank details for verification if you choose to PAN.
4. Provide Your Personal and Bank Details
- After Authenticating, Send Information Like:
- Name, DOB & Contact Information
- Address as per Aadhaar or PAN
- Nominee Details (optional, but recommended)
- Bank Account Information for contributions
5. Selecting Fund Manager & Type of Investment
In a National Pension Scheme, you choose a Pension Fund Manager from among SBI Pension Funds, LIC Pension Fund, UTI Retirement Solutions, etc.
You also have to decide between:
- Auto Choice: The plan is age-based, and the fund allocation is handled accordingly.
- Active Choice: You can choose the percentage of investment in equities, corporate bonds and government securities.
6. Upload Supporting Documents
It requires uploading scanned copies of your photograph and signature as per the format. Make sure the files are the correct size and format, to avoid the return of any errors.
7. Make an Initial Contribution
An initial deposit of ₹500 for Tier I and ₹1000 for Tier II is required as per PFRDA rules. The payment can be made via net banking, debit card or UPI.
8. Generate Your PRAN (Permanent Retirement Account Number)
Once the payment is successful, a PRAN (Permanent Retirement Account Number) is generated. This is a 12-digit unique number that acts as an identifier of your NPS account.
9. E-Sign the Application Form
You can e-sign the application by authenticating Aadhaar OTP as the last step. It may require sending an instrumental record of PAN-based form to the Central Recordkeeping Agency (CRA) if you go with the PAN based method.
How to Manage Your NPS Account Online?
Once the NPS account is opened, you can eNPS for transactions such as managing your investments online. Here are some of its key features:
- Contributing More: You can add to your account at any time.
- Switching Fund Managers: Change your Pension Fund Manager, if needed.
- Nominee Change: Either update nominee details or edit.
- Checking Account Balance: View your investment growth and balance statement on the web.
- Withdrawal of Funds: Partial withdrawal and exit options are as per the PFRDA guidelines.
Tax Benefits of NPS
- Section 80CCD (1): Employees can deduct up to 10% of their salary (basic + DA) and self-employed individuals can claim deduction of 20% of gross income, up to a maximum limit of ₹1.5 lakh under Section 80C.
- Section 80CCD (1B): An additional tax deduction of ₹50,000 is allowed for NPS contributions.
- Section 80CCD (2): If your employer contributes to the NPS, it is also tax-exempt (salaried employees get this benefit).
Conclusion
NPS is a long-term wealth-building tool that can be utilized by newbies as well as financially literate older people to enable them to build their retirement corpus. Whether you are a young professional having just started your professional career or an accomplished person looking to diversify your investment portfolio, NPS can be one of the best long-term wealth-building tools available. Planning early for retirement can help you secure an early, comfortable and financially secure retirement.
Investing in NPS online is a simple and intuitive process, allowing you to secure your long-term finances with tax-free investment. The above steps serve as your guide for registration, investment, and managing your account. If you intend to have a stress-free retirement then investing in NPS is a wise decision. Invest in your Retirement with NPS today!
Frequently Asked Questions
1. Who Is Eligible to Open an NPS Account Online?
All Indian citizens, including NRIs, between the ages of 18 to 70 can open an NPS account.
2. Can I have more than one NPS account?
No, a person can have only one NPS account.
3. Is NPS a Safe Investment?
Yes, it is a regulated investment scheme with diversified asset classes that ensures well-diversified risk & returns.
4. How Can I Withdraw from NPS?
In the case of NPS, partial withdrawals are allowed in the event of medical treatment, serious disabilities or education after a period of three years. Upon retirement, you can make a full withdrawal, including annuity options.
5. What If I Don’t Contribute Regularly?
The accounts that fail to contribute may be said to be dormant. You can reactivate by paying the minimum contribution plus a penalty fee.
