City Union Bank NPS

What is City Union Bank NPS?

The National Pension Scheme provides subscribers with an option to save a retirement corpus by making regular contributions over a period of their working lives. City Union Bank can be used to start and manage these contributions. The final value of the corpus is determined by the amount of contributions, the allocation of the assets and the performance of the market over time. At retirement, a portion of the accumulated corpus can be taken out in the form of a lump sum, but the rest has to be turned into an annuity, which pays periodic pensions.

The Pension Fund Regulatory and Development Authority regulates the National Pension Scheme. It was launched in 2004 for the employees of the Central Government and made available to all Indian citizens in 2009 through the All Citizen Model. An NPS account can be opened by resident Indians, NRIs and OCIs between the ages of 18 to 70 years, under the given KYC requirements.

NPS Calculator

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18 Years 59 Years

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Expected Return on Investment

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5% 15%

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Percentage of Corpus Allocated for Pension

%

40% 100%

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Expected Return from Pension

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Maturity Amount split (Lumpsum & Pension)

60%

Lumpsum Amount

At the age of 60 Yrs

40%

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At the age of 60 Yrs

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Types of City Union Bank NPS Accounts

Every subscriber of City Union Bank NPS is assigned a special Permanent Retirement Account Number (PRAN). The PRAN has two categories of accounts:

• Tier I Account: This is the required retirement account. The contributions here are locked until the exit terms are met. Tier I investments are the only ones that are subject to tax relief, and the withdrawal is as per NPS rules.
• Tier II Account: This is an optional investment account that is more liquid. Funds can be withdrawn at any time without any lock in period. To open a Tier II account, an active Tier I account is needed.

The key operational requirements for maintaining Tier I and Tier II NPS accounts through City Union Bank are outlined below:

Features of City Union Bank NPS

The National Pension Scheme provided by the City Union Bank is regulated by the rules of the PFRDA and provides the following features:

• Flexibility in Contributions: Subscribers have the option to change NPS contributions once a year, invest in lump sums any time, and increase amounts over time according to income increase or retirement plan.
• Regulated: The Pension Fund Regulatory and Development Authority regulates the National Pension Scheme, which ensures the clarity of investment norms, constant supervision, and the periodic review of the performance of fund managers.
• Choice of Fund Managers: Subscribers can select between several PFRDA-approved pension fund managers and change fund managers at any given time, depending on their preference in performance.
• Portability: NPS accounts are completely portable between cities, jobs and pension fund managers so that the account operations are not interrupted with authorised Points of Presence across India.
• Tax Benefits: NPS provides tax deductions in Section 80CCD(1), 80CCD(1B), and 80CCD(2) under the provisions of the Income Tax Act, which only apply to account deposits in Tier I.
• Choice of Pension Fund and Investment Pattern: Subscribers can choose between:
• Auto Choice - Life Cycle Funds: The investment allocations automatically change depending on the age to achieve a balance between growth and stability during various phases of the working life of the subscriber.
• Life Cycle 75 - High (15E / 55Y): Equity of 75% to age 35, and then reducing to 15% at age 55 and above, with an aim of increasing early-stage retirement wealth generation.
• Life Cycle 50 - Moderate (10E / 55Y): The maximum percentage of equity allocation is 50% at the age of 35, then reduces to 10% at 55 years and above, aimed towards balancing growth and capital protection.
• Life Cycle 25 - Low (5E / 55Y): Equity exposure up to 25% at age 35, with a decline of 10% at 55 years of age and above, appropriate to a conservative retiree.
• Life Cycle - Aggressive (35E / 55Y): Equity allocation of up to 50% at the age of 45, and then reducing to 35% at the age of 55 and above, is designed to suit investors who want to have a long-term exposure to growth assets.

Applicable Charges Under City Union Bank NPS

Charges applicable for NPS services offered by City Union Bank as a Point of Presence are aligned with PFRDA guidelines.

Note: Only charges related to services provided by AU Small Finance Bank are shown here. Other NPS charges are prescribed by PFRDA and apply separately.

Documents Required to Open a City Union Bank NPS Account

Applicants must submit a completed Subscriber Registration Form along with applicable KYC documents:

• Recent passport-size photograph
• PAN card
• Proof of address
• Bank account proof (Savings / NRE / NRO)
• Identity document (Indian passport for NRIs / OCI card for OCIs)

How to Open a City Union Bank NPS Account?

A City Union Bank NPS account can be opened through both online and offline modes, based on the subscriber's convenience and preferred method of application.

Online Process

Subscribers can open a City Union Bank NPS account online by completing a simple registration process through the bank's digital platform.

• Access NetBanking: Log in to the City Union Bank NetBanking portal.
• Select NPS Registration: Choose the National Pension Scheme registration option.
• Complete KYC: Finish PAN-based electronic KYC verification.
• Provide Details: Enter personal information, nominee details, and bank account particulars.
• Make Contribution: Pay the initial NPS contribution online.
• PRAN Generation: PRAN is generated after successful submission.

Offline Process

Subscribers may also open a City Union Bank NPS account by visiting an authorised bank branch.

• Visit Branch: Go to the nearest City Union Bank branch.
• Collect Form: Obtain and complete the Subscriber Registration Form.
• Submit Documents: Provide required KYC documents and recent photographs.
• Choose Investment Options: Select the pension fund manager and investment option.
• Initial Contribution: Make the first contribution through cash, cheque, or account transfer.
• PRAN Issuance: PRAN is issued after verification and processing.

Withdrawal Rules for City Union Bank NPS Account

City Union Bank NPS account withdrawal regulations fall under PFRDA regulations, and depend on the age of the subscriber, the nature of exit, and the total accumulated corpus.

For Subscribers Joining Between 18 and 60 Years

Partial Withdrawal (Tier I)

• Withdrawal of contributions may be done up to four times before age 60, with three-year gaps.
• A subscriber may withdraw up to four times during the entire tenure.
• Each withdrawal must have a minimum gap of four years and is allowed only for specified purposes.

Exit at Age 60 (Normal Exit)

• At least 20% of the accumulated pension wealth must be used to purchase an annuity.
• The remaining corpus can be withdrawn as a lump sum or in installments.
• If the total corpus is ₹8 lakh or below, 100% lump-sum withdrawal is permitted.
• If the corpus is ₹12 lakh, up to ₹6 lakh may be withdrawn as a lump sum, with the balance paid through systematic withdrawals for a minimum of six years or annuity.
• Subscribers may defer lump-sum withdrawal or continue contributions up to the age of 85 years.

Exit Before Age 60 (Premature Exit)

• Premature exit is allowed at any time before attaining the age of 60 years.
• A minimum of 80% of the accumulated pension wealth must be utilised to purchase an annuity.
• The remaining balance can be withdrawn as a lump sum.
• If the total corpus is less than ₹5 lakh, 100% lump-sum withdrawal is allowed.

On the Death of the Subscriber

• The nominee is entitled to receive 100% of the accumulated pension wealth.
• The nominee may opt for lump-sum withdrawal or pension, as applicable.

For Subscribers Joining After 60 Years

Normal Exit

• Subscribers may exit the NPS at any time.
• At least 20% of the accumulated corpus must be utilised for annuity purchase.
• The remaining amount can be withdrawn as a lump sum or through systematic withdrawals.
• If the total corpus is ₹12 lakh or below, 100% lump-sum withdrawal is permitted.

On the Death of the Subscriber

• The nominee is eligible to receive 100% of the NPS pension wealth as a lump sum.

Tax Implications on City Union Bank NPS

City Union Bank customers can avail of National Pension Scheme tax benefits on contributions, subject to applicable income tax rules.

Note: NPS income in the form of an annuity is taxable according to the relevant income tax brackets. The taxation of withdrawal is under the existing income tax regulations upon exit.

Key Takeaways

City Union Bank NPS offers a regulated market-based long-term retirement plan under the supervision of the Pension Fund Regulatory and Development Authority. It includes a required Tier 1 account that has tax advantages and an optional Tier 2 liquidity account. Subscribers are able to choose pension fund managers, make modifications throughout contributions and maintain portability across places and professions. Exits are regulated according to the age-related exit policies and annuity demands. More structured planning can also be performed through the City Union Bank NPS Calculator to get an idea of the future corpus and pension values of an investment by investors.