National Pension System (NPS) is a voluntary, contribution-based retirement product backed by the government and regulated by the Pension Fund Regulatory and Development Authority (PFRDA). It helps build retirement funds through market-linked investments. It can be opened by any Indian citizen who falls under the age bracket of 18 to 70 years. Learn more about how to open an NPS account and start saving for your future.
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.
NPS encourages a healthy habit of securing money for your retirement years. People can withdraw a lump sum amount from their accumulated corpus after retirement to cover their immediate financial demands. The remainder is used to buy an annuity plan, which assures a consistent monthly income post-retirement for long-term financial security.
Read more: What is NPS?
If you’re wondering how to apply for the National Pension System, go to ICICI Bank’s website and begin making contributions to your safe retirement account.
How to open an NPS account online
Open NPS Account through iMobile App:
- Log in to your mobile banking account.
- Click the "Invest" section, find the “NPS” feature and click ‘Invest now’.
- Fill in all the required details, such as your investment amount, personal information, and nominee details.
- Now, upload your photo and signature.
- After verifying the information, submit your application through the app.
Open NPS Account through Net Banking:
- Log in to your Net Banking using your credentials.
- Find the section “Investments and Insurance”.
- Next, click “National Pension System”.
- Fill in your investment amount, personal information, and nominee details.
- Next, upload your photo and signature.
- Confirm the details and click “Submit”.
Open NPS Account through NSDL Portal
The NPS account opening process with NSDL is very simple. You can download the form for NPS account opening via the NSDL portal. Fill out the form with details like your personal and bank details, complete KYC, and make your initial contribution of at least ₹500 via your bank account.
How to Open an NPS Account Offline?
The account opening for NPS can be done both via online and offline processes. Learn how and where to open an NPS account with ICICI Bank’s offline services.
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.
To avoid account freezing, your first contribution to the NPS account must be made online within 45 days of PRAN generation.
Types of NPS Accounts
The National Pension System (NPS) provides you with two different types of accounts, which are NPS 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
The eligibility conditions hold for both types of accounts:-
Feature |
Tier 1 Account |
Tier 2 Account |
|---|---|---|
Purpose |
The first preference and purpose of a Tier 1 account is retirement savings, the main account for participants. |
The Tier 2 account is a flexible investment option, and comes with more liquidity compared to the first one. |
Lock-in Period |
Investments in the Tier 1 account are locked in for individuals until the person is of 60 years, making sure long term savings. |
There is no lock-in period for the Tier 2 account, which gives permission to withdraw funds as per their will. |
Withdrawals |
Withdrawals are conditional. At maturity, up to 60% of the corpus is allowed to be withdrawn, while the remaining 40% should be used to purchase annuity for later age. |
Withdrawals from the Tier 2 account can be made anytime, which allows flexibility to the individual. |
Tax Benefits |
Contributions to the Tier 1 account are eligible for tax benefits under sections 80CCD(1) and 80CCD(1B) of the Income Tax Act. |
Contributions to the Tier 2 account do not qualify for any tax benefits. |
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 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.To open an NPS account, you need an active bank account with internet banking, a mobile number, an email ID, and the necessary identification documents.
Eligibility Criteria to Open an NPS Account
The eligibility conditions hold for both types of accounts:-
Eligibility Criteria |
Tier I Account |
Tier II Account |
|---|---|---|
Age |
Between 18 to 70 years |
Between 18 to 70 years |
Citizenship |
Indian Citizen (Resident/Non-Resident) or Non-Resident Indian (NRI) |
Indian Citizen (Resident/Non-Resident) or Non-Resident Indian (NRI) |
KYC Compliance |
Must comply with KYC norms |
Must comply with KYC norms |
Contractual Competence |
Legally competent to execute a contract under the Indian Contract Act |
Legally competent to execute a contract under the Indian Contract Act |
Eligibility for Overseas Citizens |
Not available for Overseas Citizens of India (OCI), Persons of Indian Origin (PIO), or Hindu Undivided Families (HUFs) |
Not available for Overseas Citizens of India (OCI), Persons of Indian Origin (PIO), or Hindu Undivided Families (HUFs) |
Account Opening |
Can be opened only by the individual |
Can be opened only by the individual |
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.
How to Open an NPS Account Offline?
The account opening for NPS can be done both via online and offline processes. Learn how and where to open an NPS account with ICICI Bank’s offline services.
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.
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)
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
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 NPS account?
It usually takes less than 10 minutes when applied through ICICI Bank’s platforms.
What are the documents required to open an NPS account?
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.
Can an NPS account be opened through the DigiLocker facility?
Yes, an NPS Account can be opened through the DigiLocker facility.
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