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National Pension Scheme

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National Pension Scheme (NPS) is a pension scheme.

The intention of the scheme is that you save as much as you can till the age of 60 years and after the age of 60 years, you use the funds accumulated to buy an annuity.

With the annuity, you can get regular monthly pension for life.

After the death of annuity holder, depending on the type of annuity being taken, the annuity amount will go to the nominee.

You can select the schemes and ratio in which your funds can be alloted.

You can select between Equity, Corporate Debt or Government Securities.

So, during these contribution period, you will be alloted units under each of these schemes.

The returns will be market linked.

But given that we invest for a long time, typically 20, 25 or 30 years, we get a reasonably huge corpus.

Detailed information about the investment choises and other details is available at

You can open your NPS account online at

Opt for both tier 1 and 2. Only tier 1 contributions can be counted under tax saving 80c or 80ccd

Funds in tier 1 will be locked till age of 60 after which the funds will have to be bought for an annuity which gives a monthly pension

Tier 2 allows investing and withdrawal anytime. No load. But returns are taxable as per your tax slab

Read all features before investing. It is a form of pension scheme.

Yes. Contributions to the extent of Rs 50k come under 80ccd(1).

This is over and above Rs. 1.5L that can be saved under 80c.

To save on transaction charges, make your contributions from the list of 44 banks that are linked to them. This way, there will be zero bank transaction charges for each contribution.

ICICI Bank is not an empallenelled banker with eNPS

Mostly the banks linked with SBI ePAY are empannelled.

As per existing tax laws, returns from both Tier I and Tier II are taxable equal to that of your existing tax slab.

I feel this is a huge anomaly and i am hoping the tax law makers will fix this loop hole to allow returns from Tier I subscription to be made tax free.

Tier II account can be treated as a equity-oriented Hybrid mutual fund scheme.

Returns from various funds of NPS can be seen at

Retirement planning is a complex activity. I being in high tax slab am hoping to use the NPS corpus to feed me for 4 months of the year. The other 8 months, i have to plan with other financial instruments like tax-free bonds or something like that.

Not sure of the time lines but i think it is totally online. There is a paper-option available too. The contribution receipt would be generated instantly upon making netbanking fund transfer during the account opening process and that should be sufficient as proof for your employer.

Consider inflation and other aspects, this is what the Government is planning for us for our retirement. When any other good financial instrument becomes available, I will be the first to go for.

Like with Mutual funds, try avoiding brokers, such as banks or financial companies when making your NPS transaction. Do the transaction online as far as possible.

Roughly speaking, brokers for NPS are called POP.

While i am not against to brokers or POPs, i prefer doing online so as to cut the transactions cost etc.

By the way, for NPS, even SBI and CAMS are POP which means that they take a small paltry charge for the NPS contribution you make. You can avoid the charge by making NPS contributions online directly yourself from

There's another section 80CCD(2) under which you can save tax on upto 10% of your basic (provided this contribution comes via your employer in other words as part of your salary structure... this doesn't mean employer will give the contribution... it's your money but directly goes to your NPS account from your salary)

APY is the aam admi version of NPS. Basically, they both function the same. APY has certain restrictions

Only Tier I investments will come under tax saving.

Tier II is a low cost investment account - something like a balanced fund.

In general, one can make a minimum investment for Tier II and keep it aside

Prefer in the order of SBI, ICICI, UTI and Kotak. Go for a house that u do not any type of investment account with them - such as demat, trading, mf etc

Not putting all our eggs in the same basket. De-risking strategy. Important since it is for retirement planning types.

Sir in NPS pran will be allotted directly.No direct or regular option.

Yes. There is nothing like DIRECT option or REGULAR option for PRAN

Can I open nps from sbi bank? If then can I add direct to the folio later?

Yes. You can open NPS account from SBI or CAMS or even directly from NSDL website at

There is nothing like DIRECT and REGULAR options as we see in Mutual funds. So, they are mean the same.

Also, where ever you open your PRAN, once generated, you can make your subsequent contributions online from

I am unable to open through NPS from CAMS Website.

It looks like CAMS is not yet offering online opening of accounts. You need to download the forms from

Filled in application forms and submit them at your nearest CAMS office.

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