Canara Bank National Pension Scheme (NPS)

What is the Canara Bank National Pension Scheme?

The Canara Bank National Pension Scheme (NPS) is a voluntary contribution pension scheme. You can make yearly contributions to the scheme as per your choice, and the funds are invested in various asset classes. The corpus fund built through these contributions is used to pay a monthly pension after you retire. You can build a significant corpus through this scheme, because the income generated by your contributions gets reinvested in the same asset classes, and compounds over time.

NPS Calculator

Your Age

Years

18 Years 59 Years

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Monthly Investment

₹

₹500 ₹10L

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Expected Return on Investment

%

5% 15%

Expected Return on Investment

Percentage of Corpus Allocated for Pension

%

40% 100%

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Expected Return from Pension

%

5% 15%

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Your Monthly Pension

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Total Investment

Returns Earned

Maturity Amount

Maturity Amount split (Lumpsum & Pension)

60%

Lumpsum Amount

At the age of 60 Yrs

40%

Pension Wealth

At the age of 60 Yrs

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Features of the Canara Bank National Pension Scheme (NPS)

The Canara Bank NPS scheme is an attractive pension plan because it is low-cost, accessible, and government-backed. Here are some of its most prominent features.

• Portable Account: You can use the same NPS account even after changing your job or your city. You can also switch your NPS sector from government to corporate if required.
• Investment Duration: You can make contributions to the Canara Bank NPS scheme up to the age of 60 years. This period can be extended for 15 more years. If you subscribe to NPS after turning 60, you can contribute until you turn 75, subject to a minimum lock-in period of 3 years.
• Limited Withdrawals Permitted: After you turn 60, you can withdraw 40% of your NPS funds tax-free, keeping the balance 60% invested for annuity. You can only withdraw 20% of the accumulated funds before turning 60. However, in the unfortunate event of death, 100% of the accumulated funds can be withdrawn.
• Diversified Investments: Your NPS contributions can be invested in four asset classes- equity (E), corporate debt (D), government securities (G), and alternative investment funds (A). You can choose the proportion yourself through active choice mode, or select the auto choice option.

Types of Canara Bank NPS Accounts

You can open a Tier 1 or a Tier 2 NPS account with Canara Bank. Let us understand what makes these account types different.

• Tier 1 NPS Account: This is a mandatory individual pension account. You can only withdraw funds from it according to PFRDA's rules and regulations.
• Tier 2 NPS Account: You can only open this account if you have an active Tier 1 account. This is an optional NPS account with no withdrawal restrictions.

Who is Eligible for the Canara Bank National Pension Scheme?

Here are the eligibility rules for investing in the Canara Bank National Pension Scheme (NPS).

• Indian citizens can invest in NPS, who are between 18 and 70 years old are eligible to invest in Canara Bank NPS.
• Both salaried and self-employed individuals can be a part of this scheme.
• The subscribers must make a minimum initial contribution of Rs. 500 to a Tier 1 Account, and of Rs. 1000 for a Tier 2 account.
• Subscribers must comply with the KYC Requirements prescribed by Canara Bank to invest in NPS.

Charges Levied by Canara Bank on NPS Accounts

Canara Bank acts as a POP (Point of Presence) to facilitate investments in the NPS scheme. The bank charges the following rates for the services it provides.

Note: GST will be levied on all these charges separately. 

Tax Benefits under the Canara Bank National Pension Scheme

The contributions made to the Tier 1 NPS accounts are eligible for deductions under the Income Tax Act 1961. Here is a summary of the deductions. 'Salary' means basic salary and dearness allowance for the calculation of these deductions.

1. Section 80CCD(1)

   You can claim a deduction of your own contribution to the NPS scheme under this section. The deduction is up to 10% of salary for employees (14% for the Central government employees) and up to 20% of the gross total income for the self-employed. This deduction comes within the overall limit of Rs. 1,50,000.

2. Section 80CCD(1B)

   This section allows you to claim a deduction of up to Rs. 50,000 in addition to Sec 80CCD(1). This deduction is not considered while calculating the limit of Rs. 1,50,000 under section 80CCE.

3. Section 80CCD(2)

   Under this section, salaried individuals can get a deduction of the contribution made by their employer. The deduction is limited to 10% of salary (14% for the Central government employees) under the old tax regime and to 14% of salary under the new tax regime.

How to Invest in the Canara Bank National Pension Scheme? Step-by-step Guide

You can visit a Canara Bank branch near you to submit a physical application for the Canara Bank National Pension Scheme (NPS). Alternatively, you can subscribe to the scheme online using the following method.

• Visit the official website of Canara Bank.
• Select the 'National Pension System' option.
• Click on 'Apply NPS-Online'.
• You will be redirected to 'myNPS', an online system for investing in NPS. Read the requirements listed there to understand how to invest in the scheme.
• Fill the application with your personal information, submit the KYC documents like identity proof, and address proof.
• Pay your initial contribution to the NPS scheme online.

Conclusion

It is essential to plan for your retirement while you are still working. Small contributions made to the Canara Bank National Pension Scheme (NPS) over multiple years can help you build a solid foundation for your retirement planning. The digital platform of Canara Bank makes the scheme easier to manage and invest in.