How To Open NPS Account Online

Opening a National Pension System account earlier was an arduous process. But, with the introduction of eNPS, opening an online NPS account takes no more than 30 minutes! It has made the process more seamless, time-saving, and easy. National Pension Scheme (NPS) which is regulated and administered by the Pension Fund Regulatory and Development Authority(PFRDA), is a reliable government-backed plan. It is specifically launched by the Government of India to offer financial security to the senior citizens of India.

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eNPS facilitates you in opening a personal Pension account under the NPS scheme.

Definition of National Pension Scheme (NPS)

NPS is a contribution based pension scheme that is launched by the Government of India with the objective of extending the old age retirement fund to all the citizens that opt for this scheme.  It is regulated and managed by the PFRDA (Pension Fund Regulatory and Development Authority).

Although initially it was launched only for government employees, it was subsequently extended to even non-government citizens in 2009. Also, being a market-linked product, NPS offers returns based on the performance of the fund.

Types of NPS Account:

Under National Pension Scheme, an individual can open two types of accounts, viz. TIER I and TIER II.

  1. Tier I Account:

    Tier I account is a non-withdrawal permanent retirement account. Before 2011, it had a lock-in period until the subscriber reaches the age of 60 years. However, PFRDA, the regulatory body has introduced a few changes in the year 2011. As per the new regulations, the subscribers are permitted premature withdrawals after the completion of 15 years in the service.

    It’s noteworthy that premature withdrawals are done in the form of repayable advances. One is also allowed to withdraw up to 50% of her/his contribution after completing 25 years of her/his service. These withdrawals will help the subscribers handle different events like critical illness, etc. that require urgent financial assistance.

  2. Tier-II Account: 

    NPS Tier-II account allows you to have unlimited withdrawals. It works just like a savings account. The only difference is that the process of withdrawing money in this account is a bit more tedious as compared to the savings account.

    However, it’s important to understand that an NPS Tier II account can only be opened when one already has an active Tier I account.

    The minimum contribution in an NPS Tier I account is Rs. 500 monthly and Rs. 6,000 for a year. On the other hand, in a Tier II account, the minimum contribution is Rs. 1,000 there will be a charge of Rs. 250 for a subsequent transaction.

Difference between Tier-I and Tier-II Account

Category NPS Tier-I Account NPS Tier-II Account
Status Default Voluntary
Withdrawals Not permitted Permitted
Tax Rebate Up to Rs 2 lakh per annum (Under 80C and 80CCD of IT Act) 1.5 lakh for government employees
Non-Government employees - NIL
NPS contribution (Minimum ) Rs 500 or Rs 1,000 per annum Rs 250  
NPS contribution (Maximum) No limit No limit

Ways to Open an e-NPS Account

If you have a bank account in one of the registered banks at the NSDL (National Securities Depository Ltd), you can easily open an NPS account online.

If your PAN details are linked to your savings account, you can simply log on to the eNPS official website and apply for their online account! 

Your bank will take care of the KYC for and processing of your application. 

Another way you can open an e-NPS account is if you have an Aadhaar card. The PFRDA (Pension Fund Regulatory Authority) approved Aadhaar as e-KYC on 17th February 2016. 

But it needs to be linked to your mobile and savings account number. 

You will then receive an OTP on the registered cellphone number for verification! 

Remember to activate your online banking facility before applying for an eNPS account! 

How to Open an NPS Account Online?

There are two ways you can open your NPS account online. 

  1. If you register using your Aadhaar Card

    • Your Aadhaar number should be linked to your mobile number.

    • The NPS KYC will be done through your registered mobile number by sending an OTP to it for authentication purposes.

    • Your data along with the picture will be extracted from the Aadhaar database and used in the NPS online form.

    • The rest of the mandatory details have to be completed by you online.

    • For registration purposes, upload your signature in a .jpg or .jpeg format. The file should be sized between 4 to 12kb.

    • You can replace your Aadhaar picture by uploading a new one in its stead.

    • You can then simply make the initial contribution to your e-NPS account through Net Banking or Credit/Debit Card. 

  2. If you register using your PAN Card

    • In this case, the KYC is taken care of by the bank. That is why your savings account needs to be in an NSDL empaneled bank.

    • The details filled by you on the online form for the NPS account should match the details already with your bank. If they don’t match the bank can deny your registration application and you would then have to contact the bank personally.

    • Fill in all the mandatory fields.

    • Upload a scanned picture and signature.

    • You will have to use Internet Banking to make the initial contribution.

Offline NPS Account Opening

You can open NPS accounts offline as well. 

First, you need to find a PoP or Point of Presence near you. 

Several banks act as intermediaries that can help you open your NPS accounts, do the KYC, and receive contributions to your NPS accounts. 

You will be given a registration form to fill out. Select the relevant options, fill out the details neatly and correctly, and submit them along with all your KYC documents. 

You will be charged Rs.125 as PoP charges for account opening. 

Once the PRAN is allotted to you, you will receive all the relevant information and passwords from the CRA (Central Record keeping Agency, eNPS processing center. 

An NRI can open an e-NPS account too!

You would need to choose the status of your bank account, whether it is repatriable or not. 

Next, you should furnish details of your NRO or NRE account and upload the passport’s scanned image. 

Lastly, select where you want your communication from e-NPS, at the permanent address in India or abroad. 

Remember that overseas communication will be charged extra. 

Permanent Retirement Account Number (PRAN)

Once the application is submitted online, you will be allotted your individual 12 digit PRAN number.

For a Tier-I account that has had PRAN generated through Aadhaar Card, they can opt to either eSign their application or print and courier it to the eNPS processing center. 

A copy of the e-signed document need not be sent to the eNPS processing center. Also, there will be a charge of Rs.5 + service tax for e-signing. 

If you are printing and couriering the form, remember to paste the photograph. Don’t sign across it, and neither should you pin, clip, or staple it! 

Remember to send the forms to the processing center of eNPS within 90 days of allotment of PRAN or it will be ‘frozen’ temporarily. 

Investing in NPS

Tax benefit by investing in NPS can be benefitted under Section 80C of the Income Tax Act. 

A maximum of Rs. 1,50,000 can be claimed as deductions if you invest in NPS along with the host of other tax-saving instruments like PPF, ELSS, Life Insurance, etc.

You can use your debit or credit card to make payments in your NPS account. But be warned, there will be a 1% payment charge charged by the payment gateway! 

People who want to open an eNPS account but whose Aadhaar number and PAN number are still not linked with their savings bank account will have to wait for the next financial year to invest in NPS! 

This is because, with the financial year drawing to a close, the number of people wanting to avail of maximum tax benefits has gone up considerably! 

That is why application processing is taking about 15 to 20 days. 

The financial year will end before you can receive your PRAN!

Tax Benefits Under NPS

Section Tax Benefits
Section 80CCD (1) Deduction up to Rs. 1,50,000 under Section 80C for contributors towards Tier-I
Section 80CCD 1 (B) Additional Rs. 50,000 under Section 80CCD (1) for contributors towards Tier-I
Section 80CCD (2) Deductions up to 14% for Central Government contributors in NPS whereas 10% for other contributors under Section 80C towards Tier-I

Comparing NPS to other Investment Options

Investment Interest Lock-in Period Risk Profile
NPS 9%-12% Till retirement Market-related risk
ELSS 12%-15% 3 years Market-related risk
PPF 7.1% (Guaranteed) 15 years Risk-free
FD 7%-9%(Guaranteed) 5 years Risk-free

To Conclude

eNPS facility is not available for those who have already enrolled themselves under the APY or Atal Pension Yojna. 

Once you have opened your online NPS account you have to make a payment into your eNPS account. The minimum payment that you can make is Rs.500.

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