Frequently Asked Questions

Any Individual who wants to get registered as a subscriber and wants to open a Permanent Retirement Account (PRA)(Tier I) in NPS would submit the duly filled form (Composite application form for subscriber registration) with other supporting KYC documents to HDFC securities Ltd.

Application form for registration for NPS can be downloaded from the www.hdfcsec.com website. You need to forward the duly filled subscriber registration form, photograph, 1st contribution cheque & self-attested KYC documents to HDFC securities corporate office at Kanjurmarg, Mumbai.

No there is no upper limit on Investment in NPS.

• There are two types of accounts offered under NPS viz. Tier I and Tier II.

• In order to enroll for NPS Tier-1 is a mandatory account, whereas Tier-2 is optional. All the tax benefits available in NPS are associated to Tier-1 account only. There are no tax benefit associated to a Tier-2 account.

• A Tier I account restricted and conditional withdrawals which are allowed only upon meeting the exit conditions. Whereas Tier II function as a mutual fund as the withdrawal option are unlimited.

• It is voluntary-NPS is open to every Indian citizen. You can choose the amount you want to set aside and save every year. Extending old age security coverage & income to all citizens.
• It  is  flexible-You  can  choose  your  own  investment  option  and  Pension  Fund  Manager  and see your money grow.
• It  is  portable-You  can  operate  your  account  from  anywhere  in  the  country,  even  if  you change your city, job or your pension fund manager.
• It is regulated-NPS is regulated by PFRDA, with transparent investment norms and regular monitoring and performance review of fund managers by NPS Trust.
• Reasonable market based returns over the long term.
• Tax Benefits–Contribution towards NPS are exempted under sections 80C & 80CCD (1B) & 80CCD(2).
• Low cost investment - Cost effective mode of planning for one's retirement.

• Yes.  You  can  make  contribution  in  your  NPS  accounts anytime  between  the  18  to  65  years  of  age.

• After attaining 60 years of age, you have an option to continue investing in NPS up to the age of 70 years.

The cheque needs to be in favor of "POP - HDFC SECURITIES LIMITED - COLLECTION A/C - NPS TRUST".

• There are two types of accounts offered under NPS viz. Tier I and Tier II.

• In order to enroll for NPS Tier-1 is a mandatory account, whereas Tier-2 is optional. All the tax benefits available in NPS are associated to Tier-1 account only. There are no tax benefit associated to a Tier-2 account.

• A Tier I account restricted and conditional withdrawals which are allowed only upon meeting the exit conditions. Whereas Tier II function as a mutual fund as the withdrawal option are unlimited.

You should be between 18 –65 years of age as on the date of submission of his/her application to the POP/ POP-SP.

You  should  comply  with  the  Know  Your  Customer  (KYC)  norms  as  detailed  in  the  Subscriber Registration  Form.  The  Subscriber  Registration  form  attached  with  this  Offer  Document  should  be duly  filled-in  by  the  applicant  and  all  terms  and  conditions  mentioned  therein  should  be  duly complied with. All the documents required for KYC compliance need to be mandatory submitted.

However the following applicants cannot join:

• Undischarged insolvent: Individuals who are not granted an ‘order of discharge’ by a court.
• Individuals of unsound mind: An individual is said to be of unsound mind for the purposes of making a contract if, at the time when he makes it, he is incapable of understanding it and of forming a rational judgment regarding its effect upon his/ her self-interest.
• Pre-existing account holders under NPS.

Subscriber needs to pay the service charges to POP (HDFC securities) for subscribing to NPS scheme.

1. An Initial subscriber registration charge of Rs.200/- and an ad valorem transaction charge of 0.25%  of  the  initial  contribution  amount*  from  subscriber  subject  to  a  minimum  of  Rs.20 and a maximum of Rs. 25,000/-.
2. Any subsequent transaction involving contribution* – 0.25% of the amount subscribed by the NPS subscriber, subject to minimum of Rs.20/- and a maximum of Rs.25000/-.
3. Any other transaction# not involving a contribution from subscriber – Rs.20/

Other transactions include:

1. Change in subscriber details.
2. Change of investment scheme/fund manager.
3. Processing of withdrawal request.
4. Processing of request for subscriber shifting.
5. Issuance of printed Account statement.
6. Any other subscriber services as may be prescribed by PFRDA.

The 1st contribution cheque would be debited post PRAN generation.

For Tier-I You are required to make your first contribution at the time of applying for registration with the POP–SP (i.e. HDFC securities).

You are required to make contributions subject to the following conditions:

• Minimum amount per contribution-Rs 500 (net contribution excluding charges)
• Minimum contribution per year-Rs 1,000 (net contribution excluding charges)
• Minimum number of contributions-01 per year

Over  and  above  the  mandated  limit  of  a  minimum  of  1  contribution,  you  may  decide  on  the frequency of the contributions across the year as per your convenience. PFRDA will impose penalties on intermediaries in case of delay beyond this period.

Yes, the cheque amount needs to include POP charges + the minimum investment amount of Rs.500.  (e.g.  Contribution amt: Rs.1000 + Rs.200 + (0.25% or Rs.20 whichever is higher) + GST @18% = Rs.1259.50)

Yes. You transfer savings from Tier II to Tier I, but vice versa is not allowed.

HDFC securities trading account holder – can visit to www.hdfcsec.com. Go to product and services and click on subscribe online. Enter the trading credential. Here you will get an option to make lump sum contribution as well to give standing instruction.

Non HDFC securities trading holder but HDFC Bank account holder – can visit to www.hdfcsec.com. Go to product and services and click on register now. Create a portal id. Enter your PRAN, PAN card and DOB. Here you will get an option to make lump sum contribution.

Other Bank account holder - Customer can Click Here download the subscriber contribution slip from and attached the contribution cheque along with and can submit the same to nearest HDFC Securities branch or can courier the same to HDFC securities corporate office at Kanjurmarg, Mumbai

The NPS offers you two approaches to invest your money:

• Active choice: Here the individual would decide on the asset classes in which the contributed funds are to be invested and their percentages (Asset class E, Asset Class C, Asset Class G and asset Class A).

• Auto choice: Subscriber has the choice of three lifecycle funds i.e
• Aggressive Life Cycle Fund (LC75),
• Moderate Life Cycle Fund (LC50) and
• Conservative Life Cycle Funds (LC25).

You will have the option to actively decide as to how your NPS pension wealth is to be invested in the following three options:

Asset Class E - investments in predominantly equity market instruments (to the extent of 50% only)

Asset Class C - investments in fixed income instruments other than Government securities (to the extent of 100%)

Asset Class G - investments in Government securities (to the extent of 100%)

*However, total allocation across the specified asset classes must be equal to
100%

In case you do not indicate any choice of PFMs, your form shall not be accepted by the POP-SP.

While exercising an Active Choice, remember that your investment allocation is one of the most important factors affecting the growth of your pension wealth. If you prefer this “hands-on” approach, keep the following points in mind:

• Consider both risk and return. The E Asset class has higher potential returns than the G asset class, but it also carries the risk of investment losses. Investing entirely in the G asset class may not give you high returns but is a safer option.
• You can reduce your overall risk by diversifying your investment. The three individual asset classes offer a broad range of investment options; it is good not to put “all your eggs in one basket.”
• The amount of risk you can sustain depends upon your investment time horizon. The more time you have before you need to withdraw from your account, the more is the risk you can take. (This is because early losses can be offset by later gains.)
• Periodically review your investment choices. Check the distribution of your account balance among the funds to make sure that the mix you chose is still appropriate for your situation. If not, rebalance your account to get the allocation you want.

NPS offers an easy option for those participants who do not have the required knowledge to manage their NPS investments. In case you are unable/unwilling to exercise any choice as regards asset allocation, your funds will be invested in accordance with the Auto Choice option. You will, however, be required to indicate your choice of PFM and Asset Allocation according to your risk appetite. In case you do not do so, your form shall not be accepted by the POP-SP.

In this option, the investments will be made in a life-cycle funds. Here, a pre-defined portfolio will determine the fraction of funds invested across three asset classes.

• These ratios of investment will remain fixed for all contributions until the participant reaches the age of 36.
• There are three different options available within ‘Auto Choice’ –

o Conservative – LC25: Exposure to equities is constrained to 25% that is reduced on an annual basis.
o Moderate- LC50: Exposure to equities is constrained to 50% that is reduced on an annual basis.
o Aggressive- LC75: Exposure to equities is constrained to 75% that is reduced on an annual basis.

Net Asset Value (NAV) will be released on a regular basis so that you may be able to take informed decisions

As the age of subscriber increases, the debt exposure in the portfolio increases and the equity exposure decreases, irrespective of the selection made in the life-cycle fund.

No. You have to select either Active Choice or Auto Choice as your option when making investments under NPS.

The subscriber shall be allowed to exercise the choice twice, at any time during the financial year.

You are required to specify your Pension Fund Manager (PFM) at the time of applying for NPS registration by indication your preferred PFM out of the 8 PFM identified by PFRDA.

NPS allows you to choose from any one of the following six entities to manage your pension fund

Currently:-

• HDFC Pension Management Company Limited
• ICICI Prudential Pension Funds Management Company Limited
• Kotak Mahindra Pension Fund Limited
• Reliance Capital Pension Fund Limited
• SBI Pension Funds Private Limited
• UTI Retirement Solutions Limited
• LIC Pension Fund Ltd
• Birla Sunlife Pension Management Limited

Yes. An annual statement containing details of your unit holdings will be issued by CRA to your registered address within 3 months of the end of every financial year.

The PFM will invest your savings in a scheme of your choice. Remember that your investment allocation is one of the most important factors affecting the growth of your pension wealth. The rate of return earned by your contribution depends on the return provided by the asset classes you choose to invest in viz equity instruments, fixed income instruments, government securities. The NAV’s of each PFM’s are published routinely on the CRA website.

The returns earned by the PFM on the scheme selected by you will be credited to your account.

Kindly refer the NPS Tier I Offer Document for details on the risks associated with your investments.

On attaining age of 60 years or superannuation age, the subscriber will get 2 option.

Option 1 – Subscriber can extend the investment up to the age of 70 years.

Option 2 – Subscriber need to compulsorily invest at least 40 % of the accumulated savings (pension wealth) to purchase a life annuity from any IRDA-regulated life insurance company. He/she may choose to purchase an annuity for an amount greater than 40%.

Death due to any cause- In such an unfortunate event, option will be available to the nominee to receive 100% of the NPS pension wealth in lump sum. However, if the nominee wishes to continue with the NPS, he/she will have to subscribe to NPS individually after following due KYC procedure.

At maturity withdrawal up to 40% of the corpus amount is tax free and the remaining 20% can be withdrawn in maximum 10 annual installment, which will reduce the tax liability as the individual will fall in lower tax bracket or nil tax bracket. OR remaining 60% of the corpus can be used for purchasing annuity, thus no tax liability on the corpus used for purchasing the annuity on the subscriber.

To withdraw from your Tier I account at any time before 60 years of age, you would be required to invest at least 80% of your pension wealth to purchase a life annuity from any IRDA-regulated Life Insurance Company. You may withdraw the remaining 20% of your pension wealth as a lump sum.

In the event of death of the subscriber, the beneficiary needs to submit a withdrawal request to the associated POP-SP who will enter the request in the CRA system. After the request is processed, a cheque is issued favoring the beneficiary and forwarded to the associated POP.

Annuity in the context of NPS refers to the monthly sum that will be received by the subscriber from the Annuity Service Provider after he attains the age of 60.

Annuity Service Providers (ASPs) is the entity who will be responsible for managing the funds (allocated for buying annuity) and payment of the pension after a subscriber attains the age of 60. The ASPs will be the entities regulated by Insurance Regulatory and Development Authority.

Below are the 5 ASPs currently tied up with PFRDA:

• HDFC Life Insurance Co. Ltd.
• Life Insurance Corporation of India
• SBI Life Insurance Co. Ltd.
• ICICI Prudential Life Insurance Co. Ltd.
• Star Union Dai-ichi Life Insurance Co. Ltd.

The following are the generic annuities that are offered by Annuity Service Providers to the subscribers of NPS. However, some of the ASP’s may offer some variants which have slightly different or combination type of annuities.

• Pension (Annuity) payable for life at a uniform rate to the annuitant only.
• Pension (Annuity) payable for 5, 10, 15 or 20 years certain and thereafter as long as you are alive.
• Pension (Annuity) for life with return of purchase price on death of the annuitant (Policyholder).
• Pension (Annuity) payable for life increasing at a simple rate of 3% p.a.
• Pension (Annuity) for life with a provision of 50% of the annuity payable to spouse during his/her lifetime on death of the annuitant.
• Pension (Annuity) for life with a provision of 100% of the annuity payable to spouse during his/her lifetime on death of the annuitant.
• Pension (Annuity) for life with a provision of 100% of the annuity payable to spouse during his/her lifetime on death of the annuitant and with return of purchase price on death of the spouse. If the spouse predeceases the annuitant, payment of annuity will cease after the death of the annuitant and purchase price is paid to the nominee.

The option to select the ASP and the annuity scheme lies with the subscriber.

The pension payment would start from the next month after the subscriber chooses the Annuity Service Provider, Annuity Scheme and furnishes all the necessary documents related to it.

Yes. Investment in NPS is independent of your contribution to any Provident Fund.

Yes. Investment in NPS is independent of your subscription to any other pension fund.