National Pension Scheme SBI

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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

(NPS). NPS is a voluntary investment that helps you make sound retirement planning in India, While PF is a mandatory deduction by your employer.

What is National Pension Scheme

The National Pension Scheme or National Pension System is a social security scheme initiated by the Central Government of India in order to promote long-term investment by the working-class people. It encourages people working in public, private, and unorganized sectors to invest money at regular intervals in their NPS accounts during the period of their employment. The NPS invests the subscriber’s contributions in equities & debt funds. The accumulated money along with market returns can be used post-retirement to cover day-to-day expenses.

The National Pension Scheme is regulated by PFRDA or Pension Fund Regulatory & Development Authority of India. It also enjoys exclusive tax benefits under Section 80CCD (1B) along with Section 80C.

What is an NPS Account?

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 While a certain percentage of the corpus pension wealth can be withdrawn in a lump sum after retirement, the remaining amount can be received as pension every month until the rest of your life.

National Pension Scheme SBI

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.

Types of SBI NPS Accounts

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.

Features of National Pension Scheme SBI

The National Pension Scheme SBI has the following features:

  • SBI NPS account can be opened at any branch of the State Bank of India
  • National Pension Scheme SBI can be extended until 70 years provided no new contributions be made after the account holder turns 60.
  • A total of 40% of the withdrawn accumulated pension wealth is tax-free under Section 80C and Section 80CCD.
  • Unilateral transfer of funds between Tier I and Tier II accounts are allowed under National Pension Scheme SBI.
  • A low-cost investment scheme with minimal charges of 0.01%
  • Partial withdrawal of 25% allowed to Tier I account holders after 3 years for essential requirements including child’s education, major illness and home buying
  • There is no restriction on withdrawing money from Tier II account of the National Pension Scheme SBI.
  • Flexible investment scheme as the subscriber has the freedom to select as well as change the existing Pension Fund Manager in a financial year
  • Under National Pension Scheme SBI, freedom to withdraw the entire pension wealth if the total amount is less than INR 2,00,000 when the account holder turns 60
  • Online access to SBI NPS via CRA’s website and mobile app
  • One-time transfer of existing corpus to NPS scheme SBI on superannuation
  • Standing Instruction (SI) functionality is available to all subscribers of the National Pension Scheme SBI.

National Pension Scheme SBI for NRIs

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

Eligibility Criteria’s for National Pension Scheme SBI

The eligibility criteria to enroll for the National Pension Scheme SBI are as follows:

  • Any Indian citizen between the age group of 18 and 65 years can open National Pension Scheme SBI account.
  • Non-Resident Indians or NRIs between 18 years and 65 years, except PIO and OIC holders
  • Completion of KYC required before opening a SBI NPS Tier I account
  • At least one contribution needs to be made every year
  • SBI NPS Tier II account is not available to NRIs
  • An SBI NPS Tier II account can be opened only if the applicant has an active Tier I account

Step-by-Step Guide for Opening an NPS Account Online With SBI

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:

  1. Visit the official website of National Pension System Trust
  2. Go to National Pension System and select Registration to reach the Online Subscriber Registration page
  3. Select new registration and enter the required details including your PAN number and the POP-SP bank
  4. Select ‘State Bank of India’ among the list of banks
  5. You will receive an OTP on your registered mobile number
  6. Enter your personal details in the form along with OTP and generate an acknowledgment number
  7. Choose SBI Pension Plan amongst the various pension funds listed by the NPS
  8. Select the mode of investment between auto and active mode
  9. Assign one or more nominees who will receive the corpus in case of your death
  10. Upload your passport size color photo along with the scanned image of your signature and the canceled cheque of your bank account
  11. Make the initial subscriber contribution for your SBI NPS account. The payment can be made online using debit, credit card or net banking
  12. A PRAN number will be generated on successful payment along with the payment receipt
  13. On the next page, take a printout of the completed form, paste a passport size photo and send it to the CRA office within 90 days
  14. If you opt for ‘e-sign with Aadhaar’, an OTP will be sent to your registered mobile number
  15. Enter the OTP to get your Aadhaar authenticated and your registration signed electronically

Documents Required to Open an NPS Account in SBI

  • Aadhaar Card and PAN Card (linked to the applicant’s SBI bank account)
  • Scanned image of passport size color photo
  • Scanned image of the applicant’s signature
  • Proof of Address

For NRIs:

  • Duly filled subscriber registration form
  • Photocopy of the passport (including first, last and the visa page)
  • Address proof, in case the current local address doesn’t match the address mentioned on the passport
  • Recent passport size color photograph

Charges Levied for National Pension Scheme SBI

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.

How Much Pension Will You Get in the SBI National Pension Scheme?

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.

Written By: PolicyBazaar - Updated: 20 August 2019