Karnataka Grameena Bank NPS

What is Karnataka Grameena Bank NPS?

In the National Pension Scheme, subscribers make frequent deposits in their working years to build a long-term retirement fund, which is accessible and can be operated through the Karnataka Grameena Bank. The accumulated corpus value increases with time depending on the amount of contributions, the selected asset allocation, and the market performance. Upon retirement or retirement, subscribers have the option of taking out a lump sum of the corpus, with the rest of it required to be converted into an annuity to generate further pension payments periodically.

The Pension Fund Regulatory and Development Authority (PFRDA) regulates the National Pension Scheme. It was launched in 2004 for the Central Government employees and extended to the entire Indian citizens in 2009 under the All Citizen Model. Resident Indians, Non-Resident Indians (NRIs), and Overseas Citizens of India (OCIs) between 18 and 70 years of age are eligible to subscribe, subject to the applicable Know Your Customer (KYC) requirements.

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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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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Types of Karnataka Grameena Bank NPS Accounts

Under the National Pension Scheme provided through Karnataka Grameena Bank, each subscriber is allocated a special Permanent Retirement Account Number (PRAN). The PRAN operates on the basis of two kinds of accounts, Tier I and Tier II.

• Tier I Account

  This is the major retirement account. Contributions to this account are locked in according to the NPS rules. Withdrawals are controlled, and tax advantages are only applicable to Tier I contributions.

• Tier II Account

  It is an optional, voluntary savings account and is more liquid. Subscribers can also withdraw money at will without the exit restriction. A Tier II account would need an active Tier I account to be opened.

Operational Requirements

Features of Karnataka Grameena Bank NPS

NPS is available to the customers of Karnataka Grameena Bank regarding the provisions of PFRDA as follows:

• Portability Across Employment and Location: NPS accounts can be moved across employment, sectors and locations without a new account being needed.
• Multiple Contribution and Service Channels: Subscribers can make contributions and service requests through Karnataka Grameena Bank branches or authorised digital platforms, as permitted under NPS guidelines.
• Partial Withdrawal Facility: Partial withdrawals of up to 25% of the subscriber's own contributions are permitted after three years, for specified purposes, subject to limits on frequency.
• Centralised Grievance Redressal: Complaints are handled through the Central Grievance Management System (CGMS), with a resolution timeline of up to 30 days.
• Choice of Pension Fund and Investment Pattern: Subscribers can choose both their Pension Fund Manager and investment option:
• Active Choice: Equity up to 75% (up to age 50, tapering thereafter), Corporate Bonds up to 100%, Government Securities up to 100%, and Alternate Assets up to 5%.
• Auto Choice (Life Cycle Funds): LC25 (Conservative), LC50 (Moderate - default), and LC75 (Aggressive).

Applicable Charges Under Karnataka Grameena Bank NPS

The charges to be applied in NPS provided by Karnataka Grameena Bank as a Point of Presence (PoP) in accordance with the PFRDA norms are as follows:

Note: Charges above are only applicable to PoP services. Additional charges on NPS are charged individually as prescribed by PFRDA.

Documents Required to Open a Karnataka Grameena Bank NPS Account

Applicants must submit a duly completed Subscriber Registration Form (physical or online) along with applicable KYC documents:

• One recent passport-size photograph
• PAN card
• Proof of address
• Proof of bank account (savings account for residents; NRE or NRO account for NRIs)
• Identity proof: Indian passport (for NRIs) or OCI card (for OCIs)

Subscribers can open an NPS account through Karnataka Grameena Bank using either the online or offline mode.

Online Process

The online process of opening an NPS account in Karnataka Grameena Bank is as follows:

1. Access NPS registration: Log in to the authorised NPS registration portal linked with Karnataka Grameena Bank.
2. Select registration option: Choose 'New Registration' under NPS.
3. Complete KYC: Enter PAN details and complete verification.
4. Provide personal details: Fill in personal, nominee, and bank account information.
5. Make initial contribution: Pay the minimum required amount online.
6. PRAN generation: It is upon successful submission that PRAN is generated.

Offline Process

Below is the offline process to open an NPS account through a Karnataka Grameena Bank branch:

Visit branch: Visit the nearest Karnataka Grameena Bank branch.

1. Collect form: Obtain and fill out the Subscriber Registration Form (CSRF/NRSF).
2. Submit documents: Provide KYC documents and photographs.
3. Choose investment options: Select a pension fund manager and asset allocation.
4. Make initial contribution: Pay via cash, cheque, or account transfer.
5. PRAN issuance: PRAN is issued after verification and processing.

Withdrawal Rules for Karnataka Grameena Bank NPS Account

PFRDA regulations govern withdrawal norms and vary based on subscriber category.

Partial Withdrawal (Tier I - All Subscribers)

• Permitted after completion of 3 years from the date of account opening.
• Limited to a maximum of 25% of the subscriber's own contributions, excluding any employer contribution.
• Allowed only for specified purposes such as higher education, marriage, purchase or construction of a residential house, medical treatment, or repayment of loans related to NPS.
• Partial withdrawals are restricted in number during the entire subscription period, as prescribed by PFRDA.

Exit Before Age 60

Government Subscribers

• Up to 20% of the accumulated pension wealth can be withdrawn as a lump sum
• A minimum of 80% of the corpus must be utilised to purchase an annuity.
• If the total accumulated corpus is ₹5 lakh or below, a 100% lump-sum withdrawal is permitted.

Non-Government Subscribers

• Lump-sum withdrawal is allowed up to 20% of the accumulated corpus.
• The remaining 80% must be used for purchasing an annuity.
• Full withdrawal is allowed if the total corpus does not exceed ₹5 lakh.

Exit at Age 60 or Superannuation

Government Subscribers

• The portion of the accumulated pension wealth may be withdrawn as a lump sum.
• A minimum of 40% must be used to purchase an annuity.
• If the total corpus is ₹8 lakh or less, a 100% lump-sum withdrawal is allowed.
• For a corpus between ₹8 lakh and ₹12 lakh, structured withdrawal options are available as per requirements.

Non-Government Subscribers

• Up to 80% of the accumulated corpus can be withdrawn as a lump sum.
• At least 20% must be utilised for annuity purchase.
• Full withdrawal is allowed if the total corpus is ₹8 lakh or below.
• The 80:20 withdrawal structure is mandatory if the corpus exceeds ₹12 lakh.

Joining NPS at or After Age 60 (Non-Government Subscribers)

• Lump-sum withdrawal of up to 80% of the accumulated corpus is permitted on exit.
• The remaining 20% must be used to purchase an annuity.
• If the total corpus is ₹12 lakh or lower, a 100% lump-sum withdrawal is allowed.

On the Subscriber's Death

Government and Non-Government Subscribers

• The nominee or legal heir receives the entire accumulated pension wealth.
• No compulsory need to buy the annuity in case of death.
• Nominees are also free to choose between lump-sum withdrawal and structured payouts according to the PFRDA regulations.

Tax Implications on Karnataka Grameena Bank NPS

Contributions to NPS can be taxed as a subscriber under the provisions of Income Tax.

Key Takeaways

Karnataka Grameena Bank NPS is a retirement scheme regulated by the government and governed by PFRDA and providing its services to resident Indians, NRIs, and OCIs of the age group of 18 to 70 years. It is defined-contribution and market-linked and has a Tier I account that is mandatory and a Tier II account that is optional. The Karnataka Grameena Bank NPS calculator can also be used by the subscribers to estimate the retirement corpus and plan contributions better.