National Pension Scheme By Govt., To Give Best Pension Benefits To All Income Groups


National Pension System

  • Government of India established Pension Fund Regulatory and Development Authority (PFRDA) on October 10, 2003 to develop and regulate pension sector in the country.


  • NPS was launched on January 1st 20014 to provide income after retirement to all Indian citizens. It also aims to educate and aware people about pension reforms and the habit of saving money.


  • In addition to that, Central Government launched a co-contributory pension scheme ‘Swavalamban Scheme’ in the Union Budget of 2010-11 to encourage people from unorganised sector to voluntarily save for their retirement.


  • Under the scheme, the govt. will also contribute a total of Rs. 1,000 each to eligible NPS subscriber who contributes a minimum of 1,000 and maximum Rs.12,000 per annum.

NPS offers following important features to help subscriber save for retirement:


  • The subscriber will be allotted a unique Permanent Retirement Account Number (PRAN). This unique account number will remain the same for the rest of subscriber’s life. This unique PRAN can be used from any location in India.


  • PRAN will provide access to two personal accounts:




Tier I Account: This is a non-withdrawable account meant for savings for retirement.

Tier II Account: This is simply a voluntary savings facility. The subscriber is free to withdraw savings from this account whenever subscriber wishes. No tax benefit is available on this account.


Source :


Regulator And Entities For NPS


Pension Fund Regulatory and Development Authority (PFRDA): It is an autonomous body set up by the Government of India to develop and regulate the pension market in India.

  • Point of Presence (POP):

The PFRDA has authorized 58 institutions including public sector banks, private banks , private financial institutions and the Department of Posts as Points of Presence (POPs) for opening the National Pension System (NPS) accounts of the citizens.


  • Central Record-keeping Agency (CRA): The recordkeeping, administration and customer service functions for all subscribers of the NPS are being handled by the National Securities Depository Limited (NSDL), which is acting as the Central Record-keeper for the NPS.


  • Annuity Service Providers (ASPs):It would be responsible for delivering a regular monthly pension to the subscriber after exit from the NPS.




Who Can Join NPS?


1. Central Government Employees


NPS is applicable to all new employees of Central Government service (except Armed Forces) and Central Autonomous Bodies joining Government service on or after 1st January 2004. Any other government employee who is not mandatorily covered under NPS can also subscribe to NPS under “All Citizen Model” through a Point of Presence – Service Provider (POP-SP).


2. State Government Employees


NPS is applicable to all the employees of State Governments, State Autonomous Bodies joining services after the date of notification by the respective State Governments. Any other government employee who is not mandatorily covered under NPS can also subscribe to NPS under “All Citizen Model” through a Point of Presence – Service Provider (POP-SP).


3. Corporate


A Corporate would have the flexibility to decide investment choice either at subscriber level or at the corporate level centrally for all its underlying subscribers. The corporate or the subscriber can choose any one of Pension Fund Managers (PFMs) available under “All Citizen Model” and also the percentage in which the funds are allocated in various asset classes.


4. Individual


All citizens of India between the age of 18 and 60 years as on the date of submission of his / her application to Point of Presence (POP) / Point of Presence-Service Provider (POP-SP) can join NPS.


5. Unorganised Sector Workers


A citizen of India between the age of 18 and 60 years as on the date of submission of his / her application, who belongs to the unorganized sector or is not in a regular employment of the Central or a state government, or an autonomous body/ public sector undertaking of the

Central or state government, can open NPS -Swavalamban account.


Benefits Of NPS


  • It is transparent –NPS is transparent and cost effective system wherein the pension contributions are invested in the pension fund schemes and the employee will be able to know the value of the investment on day to day basis.


  • It is simple – All the subscriber has to do, is to open an account with his/her nodal office and get a Permanent Retirement Account Number (PRAN).


  • It is portable – Each employee is identified by a unique number and has a separate PRAN which is portable i.e., will remain same even if an employee gets transferred to any other office.


  • It is regulated –NPS is regulated by Pension Fund Regulatory and Development Authority with transparent investment norms & regular monitoring and performance review of fund managers by NPS trust.



All the charges associated to Tier I account including Annual PRA Maintenance charge are paid by the employer. In case of Tier II account, activation charge and transaction charges are paid by the subscriber.

The POP charges and the CRA charges are given in the table below:


Intermediary Charge Head Service Charges* Method Of Deduction
CRA PRA opening charges Rs. 50/- Through cancellation of units at the end of each quarter.
Annual PRA maintainance cost per account Rs. 190/-
Charge per transaction Rs. 4/-
POP (Maximum permissible charge for each subscriber) Initial subscriber registeration Rs. 100 To be collected upfront
Initial contribution upload 0.25% of the initial contribution amount from subscriber subject to a minimum of Rs. 20 and a maximum of Rs. 25,000/-
Any subsequent transaction involving contribution upload 0.25% of the amount subscribed by the NPS subscriber, subject to minimum of Rs.20/- and a maximum of Rs.25,000/-
Any other transaction not involving a contribution from subscriber Rs. 20


*Service tax and other levies, as applicable, will be levied as per the existing tax laws.

Tagged with:    

About the author /

Ashmita is an ardent writer who loves to cover the emotions and write about facts, lifestyle and travel, her hobbies include reading and dancing. She is a fun-loving person whose sole purpose is to explore life as it follows. An appreciator of whimsical humor.