Federal Bank National Pension Scheme (NPS)

What is the Federal Bank National Pension Scheme?

Federal Bank NPS is a pension plan in which you make voluntary contributions, which are invested in securities to build a retirement corpus. The funds are invested in equity, corporate debt instruments, and government securities. After retirement, you get a fixed pension every month from the investment income. Federal Bank facilitates investment in this scheme through the Federal Bank National Pension Scheme initiative.

NPS Calculator

Your Age

Years

18 Years 59 Years

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Monthly Investment

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₹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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₹0

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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 Federal Bank National Pension Scheme (NPS)

Take a look at the main features of the Federal Bank National Pension Scheme (NPS) to see how it can benefit your financial journey.

• Active or Auto Investment Option: Under NPS, you have the option to decide whether you want to actively decide where your corpus is invested. You can also choose the auto option, where your money is distributed in pre-decided ratios.
• Composite Application Form: Investors can open both Tier I and Tier II accounts at the same time under the Federal Bank NPS scheme by filling out the composite application form.
• Market-Linked Rate of Return: NPS interest rates are market-linked, as the funds are invested in various equity, debt, corporate, and government instruments.
• Systematic Investment Plan Available: Federal Bank allows you to invest in their NPS scheme in fixed instalments through their SIP plan. This way, you can conveniently contribute to the scheme throughout the year.

Types of Federal Bank NPS Accounts

NPS is structured into two tiers- Tier I and Tier II. You can open both Tier I and Tier II accounts through Federal Bank.

• Tier I NPS Account: This is a permanent retirement account. After a lock-in period of 3 years, you can withdraw up to 25% of its value. Once you turn 60, you can withdraw up to 60% of this fund's value without paying any tax.
• Tier II NPS Account: This is a withdrawable NPS account which you are allowed to open only if you already have a Tier I account. You can withdraw your funds at any time, but they are taxable.

Who is Eligible for the Federal Bank National Pension Scheme?

Here are the eligibility requirements for the Federal Bank National Pension Scheme (NPS).

• Indian citizens (residents, non-residents, or overseas citizens) between the ages of 18 and 70 are eligible to invest in NPS. 
• Hindu Undivided Families (HUF) and People of Indian Origin (POI) are not permitted to invest in this scheme.
• Non-resident Indians are not eligible for opening a Tier II account under NPS.
• You need to make a minimum contribution of Rs. 1,000 while opening an NPS account with Federal Bank. For future contributions, you need to make a minimum contribution of Rs. 500 for a Tier I account and Rs. 250 for a Tier II account.
• The minimum account balance at the end of the financial year should be Rs. 1000 for a Tier I account and Rs. 2000 for a Tier II account.

Charges Levied by Federal Bank on NPS Accounts

Federal Bank has implemented this charge structure for NPS accounts from 1st March 2025.

Tax Benefits under the Federal Bank National Pension Scheme

Another important advantage of investing in the Federal Bank NPS is the tax deductions it offers. Here is a summary of the tax benefits available under both income tax regimes.

Note: 'Salary' means a total of basic salary and dearness allowance for the calculation of your NPS deduction.

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

Investing in the Federal Bank NPS scheme is quite simple. Here is a step-by-step guide to investing online.

• Visit the official website of the Federal Bank and go to the 'Personal' tab.
• Select 'National Pension System' under 'Insurance and Investments'.
• Click on the 'Open NPS Online' button.
• Click on 'Registration' and fill out your application. 
• Complete the authentication with a One Time Password (OTP).

You can also visit the nearest branch of Federal Bank and fill out an offline application. The list of designated Federal Bank branches is available on the bank's official website, along with the downloadable NPS forms.

Conclusion

Federal Bank National Pension Scheme (NPS) is a safe scheme and provides a sustainable source of income in your retirement. Due to the withdrawal limits, your funds grow over the years, and you benefit from the compounding benefits due to reinvestment of investment returns.