National Pension System Regulations

Questions and Answers

What is the minimum period of subscription required for a subscriber to voluntarily exit from the National Pension System before the age of sixty?

Twenty years

Fifteen years

Five years

Ten years (correct)

What percentage of the accumulated pension wealth is required to be utilized for purchasing an annuity upon voluntary exit from the NPS?

One hundred percent

Ninety percent

Eighty percent (correct)

Seventy percent

Upon reaching sixty years of age, what is the maximum percentage of the corpus a subscriber can withdraw as a lump sum?

70%

40%

60% (correct)

50%

What is the minimum percentage of the corpus that must be used to purchase an annuity plan after the completion of sixty years?

40% Signup and view all the answers

What is the condition for a government/corporate sector employee to exit voluntarily from the NPS before the age of superannuation?

Must have completed at least ten years of subscription Signup and view all the answers

What is the maximum charge for subscriber registration through the Point of Presence?

₹ 400 Signup and view all the answers

What is the minimum charge for initial contribution and subsequent transactions?

₹ 30 Signup and view all the answers

For contributions through the eNPS platform of NPS Trust or D-Remit, what is the minimum charge applicable?

₹ 15 Signup and view all the answers

What percentage is charged for subsequent transactions related to initial contributions?

0.20% Signup and view all the answers

What is the maximum charge for the initial contribution and subsequent transactions?

₹ 25,000 Signup and view all the answers

What is the primary restriction when non-resident Indians (NRI) want to activate a Tier-II NPS account?

They are restricted from activating Tier-II. Signup and view all the answers

Which of the following statements is true regarding the minimum contribution for a Tier-I NPS account?

The minimum contribution to open is Rs. 500. Signup and view all the answers

Which of the following entities is NOT mentioned as a registered Pension Fund for NPS?

ICICI Bank Pension Fund Signup and view all the answers

What benefit is associated with contributions made to a Tier-I NPS account?

Tax benefits are available. Signup and view all the answers

What is the main characteristic that distinguishes Tier-II accounts from Tier-I accounts?

Tier-II does not have tax benefits. Signup and view all the answers

What is the minimum contribution requirement per year for a Tier-II NPS account?

Rs. 250 Signup and view all the answers

Which asset classes can NPS contributions be invested in as per subscriber choices?

Equity, Corporate Bonds, Government Securities, and Alternate Assets Signup and view all the answers

What is the minimum contribution required to open a Tier-II account?

Rs. 1000 Signup and view all the answers

What is the new employer's contribution percentage to the National Pension System (NPS)?

14% Signup and view all the answers

What is the maximum payout per family under the revised pension scheme?

₹30,000-35,000 Signup and view all the answers

What is the new Foreign Direct Investment (FDI) limit for NPS fund managers?

74% Signup and view all the answers

What is the minimum transaction value of Direct Remittance (D-Remit) under NPS?

Rs. 500 Signup and view all the answers

Which tax benefit is associated with the National Pension Scheme Tax Saver Scheme, 2020?

Tax benefit under U/s 80C Signup and view all the answers

What feature does the Direct Remittance (D-Remit) facilitate for NPS subscribers?

Same day NAV on investments Signup and view all the answers

Who is eligible to subscribe to the National Pension Scheme Tax Saver Scheme, 2020?

Any Central Government NPS subscriber Signup and view all the answers

What innovation does D-Remit provide for making contributions to the NPS?

Creation of a Virtual ID Signup and view all the answers

What is the minimum charge for processing a withdrawal in the NPS?

₹ 125 Signup and view all the answers

What is the account opening charge for NSDL?

₹ 40 Signup and view all the answers

What is the annual persistency charge for contributions above ₹6000?

₹ 100 Signup and view all the answers

What is the transaction charge for a financial or non-financial transaction under NPS?

₹ 3.75 Signup and view all the answers

What is the highest percentage rate for Pension Fund Investment Management Fee?

0.09% Signup and view all the answers

What are the charges for account maintenance per annum by KFintech?

₹ 57.63 Signup and view all the answers

What percentage of the corpus is charged for processing withdrawal/exit?

0.125% Signup and view all the answers

Which of the following is a charge applicable for annual contributions between ₹1000 and ₹2999?

₹ 50 Signup and view all the answers

What is the maximum charge for processing a withdrawal in the NPS?

₹ 500 Signup and view all the answers

What will be the persistency charge for a contribution of ₹6000?

₹ 75 Signup and view all the answers

Who acts as the interface between the Subscriber and the NPS architecture?

Point of Presence (PoP) Signup and view all the answers

What is the maximum equity exposure allowed for a subscriber aged 65-70 years if they open an NPS account?

15% Signup and view all the answers

Which of the following is NOT eligible to subscribe to NPS?

Hindu Undivided Families (HUFs) Signup and view all the answers

Which entity provides custodial services to the NPS system?

Deutsche Bank Signup and view all the answers

What must an individual investor be in order to qualify for NPS subscription?

Legally competent to execute contracts Signup and view all the answers

How are contributions managed once a subscriber enrolls in the NPS?

Through Points of Presence (PoPs) Signup and view all the answers

What is the maximum age limit for an individual to open an NPS account?

70 years Signup and view all the answers

What do Annuity Service Providers do within the NPS framework?

Facilitate annuity payments to subscribers Signup and view all the answers

What is the minimum charge applicable for the initial contribution in the NPS?

₹30 Signup and view all the answers

What is the charge percentage for contributions made through the eNPS platform of NPS Trust or D-Remit?

0.20% Signup and view all the answers

What is the maximum charge for subscriber registration through the Point of Presence?

₹400 Signup and view all the answers

How much is charged for subsequent transactions in the NPS?

Minimum ₹30 to Maximum ₹25000 Signup and view all the answers

What is the minimum charge applicable for a subscriber using the NPS Trust for initial contributions?

₹30 Signup and view all the answers

What is the revised maximum payout per family under the new pension scheme?

₹30,000-35,000 Signup and view all the answers

What is the new percentage of employer contribution to the National Pension System?

14% Signup and view all the answers

What is the new Foreign Direct Investment limit for pension fund managers under the NPS?

74% Signup and view all the answers

What is the minimum transaction value for Direct Remittance (D-Remit) under the NPS?

₹500 Signup and view all the answers

Which of the following features does D-Remit provide for NPS subscribers?

Same day NAV on investments Signup and view all the answers

Who is eligible to subscribe to the National Pension Scheme Tax Saver Scheme, 2020?

Any Central Government NPS subscriber Signup and view all the answers

What is the minimum value required for a D-Remit transaction in a Tier I account?

₹500 Signup and view all the answers

What tax benefit does the National Pension Scheme Tax Saver Scheme provide under the IT Act?

Deduction under Section 80C Signup and view all the answers

Which of the following entities is eligible to participate in the corporate model of NPS?

Trusts and Societies Signup and view all the answers

What is the primary role of the NPS Trust in the NPS architecture?

To hold and monitor pension assets Signup and view all the answers

Which age group is eligible for registration as subscribers under the NPS for corporate entities?

18-60 years Signup and view all the answers

What distinguishes the Central Record Keeping Agency (CRA) from the NPS Trust in the NPS architecture?

CRA focuses on recordkeeping and administration Signup and view all the answers

Which of the following is NOT a registered Pension Fund under NPS?

SBI Mutual Fund Signup and view all the answers

What condition must be fulfilled for an individual to be registered as a subscriber under State Government NPS?

The individual must be employed under that particular State Government Signup and view all the answers

Which of the following statements is true regarding the NPS account transferability?

NPS accounts can be voluntarily subscribed alongside other pension schemes Signup and view all the answers

The composition of which entity is appointed by the PFRDA as part of the NPS architecture?

NPS Trust's Board of Trustees Signup and view all the answers

What is the maximum number of Pension Funds a subscriber can hold separately for NPS-TTS?

Three Pension Funds Signup and view all the answers

What is the revised investment limit for Cash/Money Market/Liquid MFs under the new operational guidelines?

Upto 10% Signup and view all the answers

After the lock-in period, how are re-investments categorized?

As fresh investments Signup and view all the answers

What is the new timeline for executing withdrawal requests for NPS subscribers?

T+2 days Signup and view all the answers

What minimum corpus amount does the exposure norm not apply to according to the revised guidelines?

Rs. 5 Crores Signup and view all the answers

What is the channel through which contributions to NPS can now be remitted, as stated by PFRDA?

UPI Signup and view all the answers

For subscribers with Protean eGov Technologies Ltd, what is the settlement time for requests authorized before 10:30 AM?

T+2 days Signup and view all the answers

During the lock-in period, when can a subscriber make withdrawals?

Only in case of death of subscriber Signup and view all the answers

Study Notes

NPS Withdrawal Rules

If the accumulated corpus is under Rs 2.5 lakh, the full amount is paid as a lumpsum.
Government and corporate employees can exit NPS before 60 years or superannuation age, needing a minimum subscription period of ten years.
At least 80% of the pension wealth must be used to purchase an annuity, with the remainder paid as a lumpsum.

Normal Withdrawal (Tier-I)

Subscribers can withdraw a maximum of 60% of the corpus at age 60 or after 3 years if joined after 60.
Minimum 40% of the corpus is required to be converted into an annuity for pension.
Accounts can be opened online through eNPS.

Types of Accounts

Tier-I Account:
- Individual pension account with withdrawal restrictions.
- Minimum contribution to open is Rs 500; minimum annual contribution is Rs 1,000.
- Tax benefits applicable on contributions.
Tier-II Account:
- Optional investment account for active Tier-I account holders.
- No withdrawal restrictions, but lacks tax benefits.
- Minimum contribution to open is Rs 1,000; minimum per contribution is Rs 250.

Investment Choices

Subscribers can choose from various Pension Funds registered with PFRDA.
Default Pension Funds for Government Sector: LIC, SBI, and UTI Pension Funds.
Investments can be made in equity, corporate bonds, government securities, and alternate assets, following PFRDA guidelines.

Charges

Registration charged between Rs 200 to Rs 400.
Initial contribution transactions charged at 0.5% of the amount, with a minimum of Rs 30.
eNPS platform contributions have a charge of 0.20%, with a minimum of Rs 15 up to Rs 10,000.
Withdrawal processing fee varies from Rs 125 to Rs 500, depending on the corpus.
Annual persistency charges based on contribution levels range from Rs 50 to Rs 100.
Account opening and maintenance charges applied by Central Record Keeping Agencies (NSDL and KFintech).

Employer Contribution Changes

Employer contribution to NPS has increased from 10% to 14%.
This change enables a pension payout increase, potentially reaching Rs 30,000-35,000 per family.

FDI Limit Changes

FDI limit for pension fund managers has been increased from 49% to 74%.

D-Remit Facility

Direct Remittance (D-Remit) allows existing NPS subscribers to deposit voluntary contributions via a virtual ID linked to their PRAN.
Requires a minimum deposit of Rs 500 per transaction in Tier I and Tier II accounts.
Offers same-day NAV for contributions received by 8:30 AM.

National Pension Scheme Tier II - Tax Saver Scheme (NPS-TTS)

Tax benefits under Section 80C of the Income Tax Act for Central Government NPS subscribers as per PFRDA guidelines.

National Pension System (NPS) Overview

NPS is mandatory for employees of the Army, Navy, Air Force, and Central Autonomous Bodies who joined post a specified date.
Subscribers under State Governments must be employed by that State Government; various states have adopted NPS from different start dates.

Corporate Model

Available to entities registered under the Companies Act, Cooperative Acts, public sector enterprises, partnership firms, LLPs, trusts, societies, and proprietary concerns.
Eligible employees must be Indian citizens aged 18-60 years and KYC compliant.

NPS Architecture

NPS Trust: Established by PFRDA to hold pension assets for subscribers; monitored by a Board of Trustees.
Central Record Keeping Agency (CRA): Manages recordkeeping and customer service; includes NSDL (now Protean), KFintech, and CAMS.
Pension Funds (PFs): Handle investment management under PFRDA guidelines; seven PFs registered (e.g., LICPF, SBIPF).
Trustee Bank (TB): Responsible for banking services related to fund management; Axis Bank is the current TB.
Points of Presence (PoPs): Distributes NPS in the non-government sector; acts as an interface for subscribers.
Custodian: Manages custodial services; Deutsche Bank currently holds this role.
Annuity Service Provider: Insurance companies provide annuity payments upon subscriber exit from NPS.

All Citizen Model

Eligibility includes Indian Citizens (resident or non-resident) or Overseas Citizens of India (OCI) aged 18-70; HUFs and PIOs are not eligible.
Individuals aged 65-70 can join and defer their accounts up to 75 years.
Maximum equity exposure limited to 15% for Auto Choice and 50% for Active Choice after age 65.

Enrollment Process

NPS accounts can be opened through PoPs, available in online or physical modes.
PoPs assist with registration, KYC verification, contributions, and account management.

Charges Involved

Registration with PoPs costs between ₹200 to ₹400.
Initial and subsequent transaction charges range from 0.5% of the contribution amount with a minimum of ₹30 and a maximum of ₹25,000.
eNPS platform contributions incur a charge of 0.20%, with minimums at ₹15.

Government Initiatives

Increase in employer contribution to NPS from 10% to 14%.
Foreign Direct Investment limit in pension fund management raised to 74%.
Launch of D-Remit facility for easier contributions through a Virtual ID linked to PRAN.

NPS Tier II - Tax Saver Scheme (2020)

Open to Central Government NPS subscribers with a lock-in period of three years.
Maximum three Pension Funds allowed for NPS-TTS; PF changes permitted post lock-in.
Changes allowed investment limits in cash/money markets/liquid MFs from 5% to 10% until the corpus exceeds ₹5 Crores.

Additional Features

Contributions via UPI have been facilitated for convenience within NPS and Atal Pension Yojana.
Withdrawal timelines have been reduced from T+4 to T+2 days for expedited processing.

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Description

This quiz covers the key regulations regarding the National Pension System (NPS) in India. It focuses on conditions for lump sum payments, criteria for voluntary exit, and minimum subscription periods. Test your knowledge of these essential aspects of NPS.