If you have just started working, everybody will advise you to save for your future. With increasing expenses over the years, it will get difficult for you to consciously save enough money for your retirement. Life after retirement can change drastically if you don’t have enough savings to maintain your lifestyle and handle emergency expenses. To ensure that most people have sufficient funds to lead their life comfortably post-retirement, the government had started with saving schemes like the Provident Fund (PF) and the National Pension Scheme
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(NPS). NPS is a voluntary investment that helps you make sound retirement planning in India, While PF is a mandatory deduction by your employer.
The National Pension Scheme (NPS) is the social security scheme introduced by the Indian Central Government. The NPS is a scheme based on contribution, which offers market-linked returns to the pensioners. It was originally intended at the employees of Central Government only. Nevertheless, NPS was consequently made available to all the citizens by the Pension Fund Regulatory and Development Authority (PFRDA). So, now, even the private sector employee or self-employed individual can also avail the benefits of new pension scheme. This scheme also comes handy with portability feature across different location along with jobs.
You can open an NPS account at the State Bank of India (SBI).
A National Pension Scheme (NPS) account is a pension account that stores money invested by the subscribers of the National Pension Scheme. Every NPS subscriber is allotted with a Permanent Retirement Account Number or PRAN by the Central Record Keeping Agency (CRA). An NPS account holds greater value for non-government employees as it ensures that they receive a monthly pension after being retired.
The money invested in an NPS account earns market returns until maturity. While a certain percentage of the corpus pension wealth can be withdrawn in a lump sum after retirement, the remaining amount can be received as pension every month until the rest of your life.
An NPS account can be opened at a Point of Presence- Service Provider (POP-SP) Bank. The State Bank of India (SBI) is one such POP-SP bank that allows a prospective National Pension Scheme applicant to open an NPS account in SBI. National Pension Scheme SBI facilitates an applicant to create an NPS account and submit the application form & the supporting documents to the State Bank of India.
The National Pension Scheme SBI is also regulated by the PFRDA and every subscriber with an NPS account in SBI is registered with CRA to obtain a PRAN number.
A National Pension Scheme SBI account has two account variants –
Tier I Account – It is the primary pension account that everyone needs to open to apply for National Pension Scheme SBI needs to open. This accumulated corpus in this SBI NPS account is non-withdrawal until maturity i.e. when the account holder attains 60 years of age. It is also compulsory for the pension holder to annuitize at least 40% of the accumulated pension wealth upon maturity. The remaining 60% of the corpus either can be commuted or can be withdrawn in a lump sum or staggered until the age of 70 years.
However, the National Pension Scheme SBI account holder can withdraw up to 25% of wealth after completing a lock-in period of 3 years for a maximum of 3 times in the entire tenure of the SBI NPS account. Moreover, 20% of the corpus can be withdrawn in a lump sum after completing 10 years while the remaining 80% has to be annuitized. In case the total accumulated pension wealth is less than INR 2,00,000 when the account holder turns 60, the subscriber has the freedom to withdraw the entire amount.
Tier II Account – It is a type of SBI NPS account that is opened voluntarily by an applicant for investment purpose. Tier II Account of National Pension Scheme SBI account allows the account holder to withdraw money from the accumulated pension wealth at any point of time without any withdrawal limit. This NPS account in SBI has a lower minimum annual contribution and minimum account balance at the end of the financial year.
Categories | Tier I Account (INR) | Tier II Account (INR) |
Account Status | Mandatory | Voluntary |
Minimum Contribution to Open SBI NPS Account | 500 | 1,000 |
Minimum Total Contribution in a Financial Year | 1,000 | No limit |
Minimum Amount Per Contribution | 500 | 250 |
Maximum Contribution to an SBI NPS Account | No upper limit | No upper limit |
Minimum SBI NPS Account Balance at Every Financial Year End | 6,000 | 2,000 |
Withdrawal Before Maturity | Not allowed | Allowed |
Tax Exemption | Up to 2,00,000 | 1,50,000 for government employees only |
A person applying for an NPS account in SBI can also make a composite application in which both Tier I and Tier II accounts can be opened simultaneously. A canceled cheque also needs to be submitted along with a composite application. A minimum investment of INR 1,500 is required for opening the Tier I and Tier II account together through a composite application.
The SBI NPS account comes with Standing Instructions (SI) functionality. It averages the expense of an NPS account just like Systematic Investment Plan or SIP does to the cost of Mutual funds.
The National Pension Scheme SBI has the following features:
The National Pension Scheme SBI can also be opened by Non-Resident Indians or NRIs, except NRIs with Overseas Citizenship of India (OIC) and Person of Indian Origin (PIO). An NRI applicant can only apply for a Tier I NPS account in SBI and enjoys all the features of a Tier I account.
The NRI applicant can nominate a person while opening their NPS account in SBI. In the case of the death of the subscriber, the nominee will receive the accumulated pension wealth of the subscriber in a lump sum. All pension withdrawal or annuity will be paid in Indian Rupees. He can contribute in their SBI NPS account through a Non-Resident Rupee (NRE) or Non-Resident Ordinary Rupee (NRO) account.
The NRI applicant has the option to choose between repatriation and non-repatriation SBI NPS account. In the case of repatriable account, contributions can be made only through an NRE account. In case the applicant opts for a non-repatriable account, future contributions can be made through an NRO account only. However, the applicant does have an option to shift his repatriable to non-repatriable account.
You may also like to read: Employee Pension Scheme
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
The eligibility criteria to enroll for the National Pension Scheme SBI are as follows:
In order to avail the benefits of having National Pension Scheme SBI account, follow the steps given below to open an NPS account in SBI online:
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
The following POP or bank charges will be levied on the subscriber at the time of opening an NPS account in SBI or making a contribution under the National Pension Scheme SBI:
Charges (Per Subscriber) | Amount In INR (Excluding GST) |
Initial Subscriber Registration Charge | 200 |
Ad Valorem on Initial Contribution Amount | 0.25% on the contribution amount (where minimum amount is 20 and maximum is 25,000) |
Ad Valorem on Subsequent Contribution Amount | |
Charges on Services Other Than Contributions | 20 |
Persistency Charges for NPS All Citizens Accounts | 50 per annum |
In case the NRI applicant mentions his overseas address as the communication address, he will be subject to extra charges.
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
The pension amount that you will receive on the maturity of your SBI NPS depends entirely on the contributions made by the applicant and the performance of the NPS funds. Since the money contributed to the National Pension Scheme SBI account is invested in equity and debt funds, the corpus earns market returns and grows over the years. Any withdrawals that you make during the course of your NPS scheme SBI tenure also affect the pension that you receive upon maturity.
Moreover, the annuity rate on your accumulated pension wealth also decides the actual pension that you receive upon maturity. For instance, if you have an accumulated pension wealth of 80 lakh with a prevailing annuity rate of 8%, you will get an annual pension of INR 6,40,000. This translates into a monthly pension of INR 53,333.33.