What is NPS and how to contribute

National Pension Scheme (NPS)

Overview

National Pension Scheme (NPS) is a voluntary, defined contribution retirement savings scheme. The NPS has been designed to enable systematic savings during the subscriber's working life.. It is an attempt towards finding a sustainable solution to provide adequate retirement income to every citizen of India.

How NPS Works?

• Under the NPS, an individual's savings is pooled in a pension fund.
• These funds are invested by Pension Fund Regulatory and Development Authority (PFRDA) regulated professional fund managers as per the approved investment guidelines in the diversified portfolios comprising of government bonds, bills, corporate debentures and shares.
• These contributions would grow and accumulate over the years, depending on the returns earned on the investment made.

At the time of a normal exit from NPS, the subscribers may use the accumulated pension wealth under the scheme either to purchase a life annuity from a PFRDA empanelled life insurance company or withdraw a part of the accumulated pension wealth as lump-sum, if they choose to do so.

ICICI Bank has been appointed by PFRDA to act as one of the Point of Presence (POP) for the NPS. Presently, we have designated branches to carry out the NPS activities as Point of Presence- Service Providers (POP-SP).

Eligibility

All citizens age from 18 years to 65 years of age.

Additional tax benefit

As per the amendment made by Union Budget 2015 in tax provisions for FY 2015-16, if any customer contributes voluntarily towards the NPS scheme, then he would get an additional benefit of ₹ 50,000 under section 80CCD (1B) which would be over and above the ceiling limit of ₹ 1,50,000 as prescribed under section 80 CCE.

National Pension system is a very good scheme introduced by Central Government, it is introduced in 2004 and starting 2009 every citizen is allowed to apply or open NPS account. We need to tie up with annuity service provider like LIC, HDFC Life , ICICI etc.
Video by NSDL team on NPS plan and its 4 options:

Online contributions to NPS account, how to do it?

How to open NPS account online?

References:
https://www.youtube.com/watch?v=n7r3a3rZDA0

https://www.icicibank.com/Personal-Banking/account-deposit/pension-schemes/national-pension-system/index.page?

https://www.icicibank.com/Personal-Banking/faq/account-and-deposit/new-pension-system-faqs.page