The National Pension Scheme (NPS) is a government sponsored pension scheme of tax saving retirement fund.
NPS is open to all I.e. any interested salaried individual can invest the recurring amount every month in their NPS account till the time they are earning a stable income. On retirement, depositors can withdraw a part of the deposited funds in a lumpsum and utilize the remaining for buying annuity to secure regular income after retirement.
In this blog let’s learn more about National Pension Scheme or National Pension Yojna covering-
- What is the National Pension Scheme (NPS)?
- How to Open an NPS Account?
- How to Invest in an NPS account?
- How to Check an NPS Balance?
- National Pension Scheme Calculator
- Summing Up
What is the National Pension Scheme (NPS)?
NPS is a voluntary contribution scheme that helps you to secure your monetary requisites after your retirement. The scheme is systematic and flexible, governed by the Ministry of Finance.
Many of the fresh starters or those who are new to the corporate industry feel confused or overwhelmed when it comes to managing their funds or payroll disbursed each month.
So, being a responsible HR professional, you can also conduct sessions with new joiners to make them financially aware and spread the word about schemes like NPS, EPF and more.
How to Open an NPS Account?
You can open your NPS account online and offline.
Offline Process
- Locate the PoP- Point of Presence (could be bank) registered with PFRDA.
- Visit the PoP center and request for the application form to open the NPS account
- Fill the form and submit in the center along with attached KYC details
- Your account will be opened, and a PRAN or Permanent Retirement Account Number will be sent along with password in welcome kit.
- You can start with your initial investment (not less than Rs. 500 or Rs.250 monthly or Rs. 1000 annually)
Online Process
In this digital era, we want everything to be easily accessible and that too on our fingertips.
Voila!
You can open your NPS account with your mobile phone in just a few clicks. But before starting the process, make sure your PAN, Aadhar and mobile number are linked.
Step 1: Navigate to the official website of National Securities Depository Limited https://enps.nsdl.com/eNPS/NationalPensionSystem.html
Step 2: Click on the button on right-middle “National Pension Scheme”
Step 3: Click to “Registration”
Step 4: Enter the relevant details like Applicant’s type, status, account type, status etc.
Step 5: You will receive OTP on your registered phone number. Now, enter your details- name, address, DOB, contact details, payment details, scheme and nomination. Upload KYC documents, photo and sign
Step 6: In just a few second, you’ll receive PRAN number as message on your contact number, complete the procedure by e-signing your registration form to complete your application
NPS Calculator
Make sure to calculate your return on investments before investing in an NPS account or scheme. Following is the formula used to calculate ROI-
A = P (1 + r/n) ^ nt
In the equation, the amount is A. The other variables are the following.
- P= Principal Sum
- R/r= Rate of interest per annum
- N/n= Number of times interest compounds
- T/t= Total tenure
Example-
Suppose you are 34 years old and contributing Rs 3000 per month. And you will need to add to the pension account for 26 more years.
Let ROI is expected at 10% every year. Then,
Total Principal invested= Rs 9.36 Lakh
Sum expected on Maturity = 44.35 Lakh
How to Invest in an NPS Account?
Investing in an NPS account is a seamless process. You can contribute to NPS account using three options-
If you want to invest your NPS account through website, log in and select ‘Contribute Online’, you will be redirected to eNPS portal. Enter your contribution details and let portal automatically calculate total payable amount after deducting applicable charges.
Make payment with payment gateway option convenient to you- Net banking/ credit/ debit card/ UPI. And you are done!
Download NPS by Protean App and feel to invest from anywhere, anytime. You just need to remember your PRAN details and payment options. The mobile app is easy to navigate with user friendly UI, so you won’t feel any difficulty making an investment.
Locate the nearest nodal office and request the delegated employee for Investment form for NPS account. Fill in the necessary details and submit them with cheaque/DD.
Don’t forget to take the acknowledgement receipt to keep records of your investment
How to Check an NPS Balance?
There are three easiest ways to check balance of your NPS account:
- National Securities Depositories Limited (NSDL) portal
- After logging in, locate ‘holding statement’ option to check the total balance of your NPS account.
- You can also check the detailed statement by clicking on ‘transaction statement’
- NSDL e-gov app
- Download app from play store or apple store as per your phone and login NPS account with your PRAN and password
- You can easily view NPS holding amount, Tier 1 and Tier 2 holding amounts and transaction details
- Even you withdraw the amount from your Tier 2 account
- Subscribe to SMS service
- Give a missed call to 9212993399 from your registered mobile number
- Within a second, you’ll receive an SMS with details of your account balance
Conclusion
Start planning your retirement from now and spread the word to your employees too. NPS scheme can be the great way to save and invest your funds to make your retirement stress free.
Stay aware!
Keep updating your financial and investment knowledge!