Step-by-Step Guide: How to Open NPS Account

The National Pension Scheme (NPS) is a voluntary, contribution-based retirement product. It’s a government-backed scheme that falls under the jurisdiction of the Pension Fund Regulatory and Development Authority (PFRDA).

It’s a long-term, retirement investment option that helps you build your retirement funds. The NPS is a market-linked product, and you need to make voluntary contributions to the funds until you turn sixty.

What is the National Pension System?

The National Pension System (NPS) is a government-sponsored retirement savings scheme functioning under the Pension Fund Regulatory and Development Authority (PFRDA).  Under this scheme, individuals contribute regularly to their NPS account during their working years to accumulate a retirement corpus and lead a good life after retirement.

The main target of this scheme is to make a planned retirement corpus. Upon reaching retirement, individuals have the option to withdraw a certain amount of their corpus as a lump sum to ensure their financial needs. The remaining amount can be used to buy an annuity plan, providing them with certain monthly income post-retirement, ensuring financial stability and security for their life in later years.

Types of NPS Accounts

The National Pension System (NPS) provides you with two different types of accounts, which are Tier 1 and Tier 2. Both the mentioned accounts are different, guiding people to have their savings after retirement, and are customised for specific needs and requirements. Understanding these differences allows subscribers to choose the right account to open NPS account to meet their perfect retirement goals.

NPS Tier 1 vs. Tier 2 Account

Features & Benefits of NPS Account

The NPS comes with several benefits and features for its subscribers making it an attractive option for retirement planning: It offers its subscribers certain benefits and features that make it rather attractive for use as a retirement savings plan:

• Quick Account Opening: The registration of an NPS account can be done online through ICICI Bank Net Banking, iMobile Pay app or ICICIdirect and it hardly takes 10 minutes.
• Flexibility: The minimum contribution is Rs. 500 per contribution, and the investment can be made in a lump-sum or through SIP with a minimum of Rs. 1,000 per annum
• Portability: Seamlessly transfer your pension account across jobs and locations.
• Low Cost: Annual fund management fees are very less in comparison to the contribution amount.
• Better Returns: A combination of equity and debt investments offers higher returns than traditional retirement schemes.
• Incomparability with other Schemes: NPS offers greater flexibility and potential for higher returns through market-linked investments. It offers unique benefits that set it apart from other retirement schemes, making it a preferable choice for long-term financial planning.
• Tax Benefits- Get Tax deductions on contributions under sections 80CCD(1) and 80CCD(1B).

Who can open an NPS Account?

All Indians, residents and non-residents, between the age group of 18 and 60 years can open an NPS Account. All you need to have are - an active bank account with Internet Banking facility, a mobile number, e-mail ID and required identification documents for NPS Account opening.

Let’s look at a complete step-by-step guide on how to open an NPS Account in India.

Documents Needed to Initiate an NPS Account

You need to provide these documents, either digitally or physically, as per your preference:

• Proof of Identity: Aadhaar, PAN card, passport, or any other government-issued ID.
• Address Proof: Utility bills, Aadhar Card or any other valid address proof.
• Photograph: Recent Passport Size Photos.
• Bank Account: Cancelled cheque or Bank Statement

These documents secure your NPS account so that it can be easily opened, allowing you to save a significant amount for your retirement.

Where to open an NPS Account?

There are two methods of opening an NPS account.

Method 1: Visit a Point of Presence Service Provider (PoP) (SP)

To enrol for the National Pension Scheme, visit the nearest ICICI Bank with an enabled NPS service. You can find the complete list of branches that offer this facility here. Make sure to carry the required KYC documents (ID proof and address proof) mentioned in the PFRDA guidelines.

Method 2: Register and activate your NPS Account online

Earlier, starting your NPS Account was a lengthy, time-consuming process. Now, with the introduction of the eNPS portal, you can complete the entire process online easily.

How to open an NPS account online?

Requirements to open NPS account online – You need to have an Internet Banking account at any one of the 17 banks registered at the National Securities Depository Limited. If your PAN is linked to your bank account, you can simply log in to the eNPS portal to begin registration. Your bank will handle the other KYC details for you.

Earlier you could open an NPS Account using your Aadhaar number. But, this facility has been disabled now and you require PAN to register.

Before you begin the registration process, make sure you have the following details handy.

• PAN number
• Netbanking details
• Scanned passport size photograph (size 4 to 12kb and in jpg format)
• Scanned image of your signature (size 4 to 12kb and in jpg format)

10 steps to open an NPS Account online

Step 1 – Log into the eNPS website. Choose National Pension Scheme > Registration and click on Individual.

Step 2 – Enter your PAN and other details like name, age, address, e-mail ID and phone number. You will be sent an OTP to the mobile number linked with your PAN for verification.

Step 3 – Choose your preferred account type. The online NPS Account opening lets you open only a Tier I account or both a Tier I and Tier II account. You cannot open a solo Tier II account.

Step 4 – Choose your Pension Fund Manager. The contributions you make to your NPS Account, are managed by eight pension fund houses. You can choose your preferred Pension Fund Manager from the list.

Step 5 – Choose your investment mode. The two modes are:

• Auto mode – Equity allocation is done automatically for you and it gets rebalanced based on your age.
• Active mode – You are in control of the equity allocation, and you decide how you want to split it up among equities, corporate and government debt funds. If you choose the active mode, you can decide how you want to spread your corpus among different fund classes.

Step 6 – Assign nominees. Mention the details of your nominees, who receive your corpus after your death. You can also decide how you want to share the corpus among different nominees.

Step 7 – Upload the required documents. You will have to upload scanned copies of your PAN, passport size photograph and digital signature. Make sure that these documents have a size lesser than 12kb and are in jpg format.

Step 8 – To complete the registration process, you have to make an initial contribution to your NPS Account. You can use your Internet Banking, Credit or Debit Cards to make this payment. The minimum contribution is Rs 500 for Tier I Account and Rs 1,000 for Tier II Account.

Step 9 – Once your payment is made, you will get an auto filled-in copy of the registration form. Download this form and take a print out of it.

Step 10 – Your Permanent Retirement Account Number (PRAN) will be generated and your PRAN kit – your PRAN card, scheme documents – will be sent to your registered address. To complete the registration, make sure to print the downloaded form, paste your photo, attach the required document copies and e-mail it to the Central Recordkeeping Agency (CRA) within 90 days of opening your eNPS account. Failing to do this will get your NPS Account frozen.

Make subsequent contributions and start building your retirement wealth

Once you get your PRAN, you can log in to the eNPS portal or use the NPS mobile app to make contributions to your NPS account.

If you have further queries on how to open the NPS Account, please contact ICICI Bank’s investment experts.

FAQs

How to open an NPS account online?

NPS Account can be opened by any of the following methods:

1. ICICI Bank NetBanking: Log in to the Net Banking and in the “Investments and Insurance” section, click “National Pension System”. Fill required details, upload your photo and signature, confirm the details and click “Submit”.
2. iMobile Pay App: Log in to the app and click the "Invest and Insure" section. Then find the “Instant NPS” feature and fill in all the required details, upload your photo and signature, verify the information and submit.

Note: Your first contribution to the NPS account must be made online within 45 days of PRAN generation to avoid account freezing.

Can anyone open more than one NPS account?

No, It is not permitted to own more than one NPS account.

Can anyone change the data in their account?

You can update your personal details, contact information, and nominee details through the online portal or by submitting a request to your Point of Presence (PoP).

Can anyone obtain a loan with respect to their NPS account?

No, loans against NPS accounts are not allowed.

How can anyone obtain a PRAN number?

A Permanent Retirement Account Number (PRAN) is generated during the NPS account opening process. You would receiveexceptional the PRAN number on your registered email and other communication channels.

How much time is generally required to open an account?

It usually takes less than 10 minutes when applied through ICICI Bank’s platforms.

What are the documents required?

You will need identity proof, address proof, and a recent photograph. Aadhaar and PAN cards are commonly used documents.

Where can you open an NPS account?

You can open an NPS account online through ICICI Bank’s platform or by visiting a registered Point of Presence (PoP) such as banks or financial institutions.

Is NPS return tax-free?

Returns from NPS are not entirely tax-free. While up to 60% of the corpus can be withdrawn tax-free at retirement, the remaining amount invested in annuities is taxable. 

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