National Pension System or NPS is the Central Government's voluntary retirement savings scheme. It encourages individuals to invest in a pension during their employment. Two charges are applicable for NPS: CRA (Central Recordkeeping Agency) and POP (Points of Presence).
In this blog, we have offered an overview of the charges associated with the National Pension Scheme. It will also explore how an NPS calculator can help you ascertain the costs.
National Pension Scheme Fees & Charges
Here are the fees associated with subscribing to a National Pension Service in India-
Point Of Presence (POP) Charges for NPS in India
The table given below highlights the various POP charges for NPS-
POP Charges for NPS | Charges | The Method Through Which Charges Are Deducted |
Account Opening | ₹400 | This charge is collected upfront. |
Contribution Processing | 0.50% subject to min ₹30 and Max ₹25,000 | This charge is collected upfront. |
Non-Financial Transaction Processing | ₹30 | This charge is collected upfront. |
Persistency (Applicable for Active Retail Customers with more than 6 months tenure with POP) | - ₹50/- per annum for annual contributions of 1000 to ₹2999
- ₹75/- per annum for annual contributions of ₹3000 to ₹6000
- ₹100/- per annum for annual contributions above ₹6000.
| This charge is collected upfront. |
Central Recordkeeping Agency (CRA) Charges for NPS in India
The table given below highlights the various CRA charges for NPS-
CRA Charges for NPS | Charges | The Method Through Which Charges Are Deducted |
PRA Opening Charges | ₹50 | Cancellation of Units. |
Annual PRA Maintenance Costs (per account) | ₹225 | Cancellation of Units. |
Charges Per Registration | ₹5 | Cancellation of Units. |
Other Intermediary Charges for NPS in India
Discussed below are the other intermediary charges of NPS:
TRUSTEE BANK-
Charges for NPS | Charges | The Method Through Which Charges Are Deducted |
Transactions Emanating from RBI Locations (per transaction) | ₹0 | Deduction of NAV |
Transactions Emanating from Non-RBI Locations (per transaction) | ₹15 | Deduction of NAV |
PENSION FUND MANAGER (PFM) CHARGES-
Charges for NPS | Charges | The Method Through Which Charges Are Deducted |
Investment Management Fees | Slabs of AUM managed by the Pension Fund: - Up to 10,000 Cr. – 0.09%*
- 10,001 – 50,000 Cr. – 0.06%
- 50,001 – 1,50,000 Cr. – 0.05%
- Above 1,50,000 Cr. – 0.03%
| Deduction of NAV |
CUSTODIAN-
Charges for NPS | Charges | The Method Through Which Charges Are Deducted |
Asset Servicing Charges | - 0.0075% p.a. (Electronic Segment)
- 0.05% p.a. (Physical Segment)
| Deduction of NAV |
NPS TRUST-
Charges for NPS | Charges |
Reimbursem*nt of Expenses | 0.005% per annum |
NPS Payment Gateway Service Charges for NPS in India
Here are various NPS payment gateway service charges applicable for transactions on the eNPS platform-
Payment Mode | Rate of Quotation Per Transaction | Charges |
Debit Cards | Free | Not Applicable |
Credit Cards | Percentage of Transaction Value | 0.75% |
UPI | Free | Not Applicable |
Internet Banking | Flat Rate as Per INR | |
Prospective investors can use NPScalculators offered by platforms such as Groww to plan their investments. It also helps determine the maturity amount based on their monthly contribution, age, and expected return.
Steps to Use an NPS Calculator:
STEP 1: Submit the sum you wish to invest monthly in the pension scheme and toward your retirement corpus.
STEP 2: Then, you need to furnish your current age.
STEP 3: Using the slider, enter your expected rate of return.
STEP 4: You will instantly see the desired results on your screen.
Conclusion
In conclusion, the National Pension System Trust is a specialized Pension Fund Regulatory and Development Authority branch that reports to the Indian government's Ministry of Finance.
NPS investment is a sound financial decision for individuals who plan to retire early and have a low-risk appetite. Salaried individuals can also claim an income tax deduction.
Happy Investing!
Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.
FAQs
NPS contributions through the Deviot cards are charged 0.80% of the total transaction amount, excluding GST. In the case of NPS contribution with a credit card, the charges are 0.90% of the total transaction amount excluding GST. Besides the payment gateway charges, some other charges are levied on NPS contributions.
How much does it cost to deposit in NPS? ›
You need to deposit at least Rs. 1,000 per annum to keep the account active. The NPS Tier I account matures at the age of 60 and you can extend it till the age of 75. NPS Tier I account is also used as a tax-benefitting scheme as it is eligible for tax deduction on contributions up to Rs.
What are the charges for NPS in SBI? ›
Charges Levied for National Pension Scheme SBI
| Charges (Per Subscriber) | Amount In INR (Excluding GST) |
|---|
| Ad Valorem on Initial Contribution Amount | 0.25% on the contribution amount (where minimum amount is 20 and maximum is 25,000) |
| Ad Valorem on Subsequent Contribution Amount |
| Charges on Services Other Than Contributions | 20 |
2 more rowsMutual funds have varying expense ratios. NPS has a cost-effective 0.1% fee. Mutual funds are flexible; NPS has lock-in till retirement. NPS has limited flexibility; mutual funds offer easier access.
How can I avoid pop charges for NPS contribution? ›
Individuals who are registered in NPS under a Corporate can shift from a POP to eNPS post-retirement. For this the subscriber has to continue with the NPS account post-retirement. Individuals who have generated their NPS account using the eNPS route, and have shifted to a POP in the interim, can shift back to eNPS.
How do I pay my NPS every month? ›
Download the NPS Mobile App from Google Play Store using the given link. You can do the contribution transaction even without logging in to the App. Enter Permanent Retirement Account Number (PRAN), date of birth, captcha and click on 'Verify PRAN' An OTP will be sent to the registered mobile number / email address.
Is NPS better than PPF? ›
NPS being market-linked, can offer you higher returns at higher risk. PPF on the other hand is a traditional scheme with guaranteed returns. If you are looking to fund family goals like your child's education or marriage or buying a home, a safer investment like PPF should be ideal.
Can I invest more than 50000 in NPS? ›
Contributions made towards Tier 1 are tax deductible and qualify for deductions under Section 80CCD(1) and Section 80CCD(1B). This means you can invest up to Rs. 2 lakhs in an NPS Tier 1 account and claim a deduction for the full amount, i.e. Rs. 1.50 lakh under Sec 80CCD(1) and Rs. 50,000/- under Section 80CCD(1B).
Which NPS scheme is best? ›
PENSION COMPANY PLAN Filter
| Scheme | NAV | 6M |
|---|
| ADITYA BIRLA SUN LIFE PENSION FUND SCHEME TAX SAVER TIER II | 13.31 | 7.60% |
| HDFC PENSION MANAGEMENT COMPANY LIMITED SCHEME A - TIER I | 18.49 | 7.70% |
| NPS TRUST A/C-KOTAK MAHINDRA PENSION FUND SCHEME TAX SAVER TIER II | 13.14 | 7.30% |
| NPS TRUST - A/C LIC PENSION FUND SCHEME TAX SAVER TIER II | 13.14 | 8.20% |
39 more rowsThe main difference between the two accounts is the withdrawal rules. Tier 1 account has a lock-in period, wherein you can only withdraw your investment at the age of 60 years. Whereas, in the case of a Tier 2 account, there is no such condition on withdrawal, and you can withdraw your investment anytime.
Risk & Safety: NPS is market linked and a bit risky, but it is strictly regulated by the PFRDA so there is almost no chance of malpractices. PPF is entirely government backed so there is almost risk free returns. Returns: NPS can give up to 10% in some cases whereas PPF provides low but stable returns around 7-8%.
How does NPS work with examples? ›
For example, if your current age is entered as 35 and the retirement age is 60, then the total investing period will be 25 years. Enter your monthly contribution towards NPS, it can be as low as Rs. 1,000. The interest earned is on monthly compounding basis.
Which is better NPS Tier 2 or mutual funds? ›
Choose NPS Tier-2 if:
Retirement is Your Focus: Tier-2 offers tax benefits on withdrawal at retirement. Lower Fees Appeal to You: Tier-2 has significantly lower expense ratios than most mutual funds. You Have Long-Term Goals: Tier-2 allows up to 50% investment in equity for long-term growth.
What is NPS and how it works? ›
NPS was introduced by the Central Government to help the individuals have income in the form of pension to take care of their retirement needs. The Pension Fund Regulatory and Development Authority (PFRDA) regulates and administers NPS under the PFRDA Act, 2013.
Who is best pension fund manager in NPS? ›
Pick a Fund Manager
- HDFC Pension Fund. Started on 01 Aug 2013. ...
- SBI Pension Fund. Started on 15 May 2009. ...
- ICICI Prudential Pension Fund. Started on 18 May 2009. ...
- LIC Pension Fund. ...
- Axis Pension Fund Management Limited. ...
- UTI Retirement Solutions Fund. ...
- Kotak Mahindra Pension Fund. ...
- Aditya Birla Sunlife Pension Fund.
It gives the total contribution made, total pension amount as on a particular date and return generated during that period. This section also mentions the scheme details with percentage of allocation to each Pension Fund Manager (PFM).
Which bank is best for NPS? ›
NPS scheme: Reliance to HDFC Bank — here are the top five stocks held by National Pension System equity funds
- SBI Pension Funds Private Limited. ...
- LIC Pension Fund Limited. ...
- UTI Retirement Solutions Limited. ...
- ICICI Prudential Pension Funds Management Company Limited. ...
- Kotak Mahindra Pension Fund Limited.
While NPS Tier I is well-suited for retirement planning, Tier II NPS accounts act as a voluntary savings account. Tier I NPS investment is a long-term one and the amount cannot be withdrawn until retirement. This is not the case with Tier II NPS accounts.
