How to Open NPS Account Online

With the introduction of eNPS, opening an online NPS account takes no more than 30 minutes! It has made the process 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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Definition of National Pension Scheme (NPS)

The National Pension Program (NPS) is a contribution-based pension scheme introduced by the Government of India with the goal of extending the old age retirement fund to all people who choose this scheme. The PFRDA (Pension Fund Regulatory and Development Authority) regulates and manages this scheme.

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 Accounts:

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

  1. Tier I Account:

    Tier I accounts are permanent retirement accounts that do not allow withdrawals. Before 2011, there was a lock-in period until the subscriber reached the age of 60. However, the regulating agency, PFRDA, made a few amendments in 2011. According to the new legislation, subscriptions may be withdrawn prematurely after 15 years of service. This implies that you cannot take any money from the account unless the NPS account opening date has gone over 15 years.

    It is noteworthy that premature withdrawals are made in the form of repayable advances. In addition, one is also allowed to withdraw up to 50% of their contribution after completing 25 years of service. These withdrawals will help the subscribers handle different events, like critical illness, etc., that require urgent financial assistance.

    In order to keep your NPS tier 1 account active, you need to deposit at least Rs 1,000 every year.

  2. Tier-II Account:

    You can make unlimited withdrawals from your NPS Tier-II account. It functions similarly to a savings account. The main difference is that withdrawing money from this account is a little more difficult than withdrawing cash from a 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.

    In a Tier II account, you need to contribute a minimum of Rs. 1,000 every year. Moreover, there is no upper limit on the amount you can contribute yearly to such an account.

Difference between Tier-I and Tier-II Account

Category NPS Tier-I Account NPS Tier-II Account
Status Default Voluntary
Withdrawals Not permitted till the subscriber reaches 60 years of age Permitted, and you can withdraw money whenever you want
Tax Rebate Up to Rs 1.5 lakh per annum Under 80C of the IT Act, and an additional Rs 50k per annum under 80CCD(1B) of IT Action. These benefits are available on contribution to the scheme No tax benefits are available on contributions in this account.
NPS contribution (Minimum ) Rs 500 or Rs 1,000 per annum Rs 1000 per annum
NPS contribution (Maximum) No limit No limit

Invest & Save upto ₹46,800 per annum in taxInvest & Save upto ₹46,800 per annum in tax

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 NSDL 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 an e-KYC on 17th February 2016.

How to Open an NPS Account Online?

  1. 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-NPS empaneled bank.

    • The details filled in 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.

  2. Permanent Retirement Account Number (PRAN)

    Once the application is submitted online, you will be allotted your individual 12-digit PRAN number, which will be used for PRAN NPS.

    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.

  3. Investing in NPS

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

    By investing in a Tier-I account, you can claim tax benefits of Rs. 2,00,000 as deductions. The breakdown for this tax benefit is simple, Rs 1,50,000 comes under Section 80C, and the remaining Rs 50,000 comes from Section 80CCD 1B.

FAQ's

  • Is it possible to open NPS account online?

    Yes, NPS account opening is pretty easy, and anyone can do it.  The government also provides an option to open an account online using your PAN or Aadhar card.
  • Can we open NPS account offline? What documents are required for that?

    NPS accounts can be opened offline by visiting Point of Presence offices specified by the government. Whether you choose to open an account online or offline, the documents remain the same. 
  • How much money should I deposit in my NPS account every year?

    NPS is a good way to save money for your retirement life. You should try to save as much as you are comfortable in the NPS account, but remember, in order to keep the account active, you should add at least Rs 1000 every year.
  • Is it compulsory to have a bank account with NSDL-registered banks?

    Yes, if you want to open an NSDL-NPS account, it is compulsory to have a bank account in NSDL registered bank. However, most common banks in the country are NSDL approved, so it should not be a problem.
  • I don’t have a PRAN number. How do I get it?

    PRAN number is generated for every NPS account. Once you submit your documents and pay an initial Rs 500 to get your account started, you may get the PRAN number. Remember that this number will only be generated once all documents are verified and your account is opened successfully.
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