FAQs
-
What is the difference between NPS and EPF?
The Employees' Provident Fund (EPF) is a statutory pension scheme for employees in the organized sector. The NPS is a voluntary pension scheme for all citizens of India.
-
What is the Swavalamban Scheme?
The Swavalamban Scheme is a government initiative to encourage people to join NPS. Under this scheme, the government will contribute Rs. 1,000 per year to the NPS account of every eligible subscriber who contributes a minimum of Rs. 1,000 and maximum Rs. 12,000 per annum.
-
What is the retirement age under NPS?
The retirement age under NPS is 60 years. However, you can start withdrawing your pension from the age of 60.
-
Who will invest my money in NPS?
Pension Funds are responsible for investing contributions, accumulating them and managing pension corpus through various schemes under National Pension System in accordance with the provisions of the PFRDA Act.
-
What are the investment choices available in NPS?
NPS offers you two approaches to invest in your account:
1. Active choice
2. Auto choice
In Active choice, Subscriber selects the allocation percentage in assets classes,however, in Auto choice, funds are automatically allocated amongst asset classes in a pre-defined matrix, based on the age of the subscriber. After selection of pension fund manager, Subscriber also has to exercise the choice of investment.
-
What is Active / Auto choice in NPS?
Active choice:
Unlike traditional investment products, NPS offers you with the flexibility to design your own portfolio. Depending on your risk appetite, you can design your portfolio by allocating Funds amongst available four asset classes. This is called Active Choice. Following are the four asset classes are available under Active choice:
1. Equity or E
2. Corporate Debt or C
3. Government Securities or G
4. Alternative Investment Funds or AIF
Auto Choice:
At times designing your portfolio can be a little delicate and time consuming. NPS gives you the flexibility to opt for a dynamic and automatic allocation of your portfolio in case you do not want to exercise an Active choice. This option is called the Auto choice.
In Auto choice, your money will be invested in asset classes - E, C and G - in defined proportions based on your age. As individual’s age increases, exposure to Equity and Corporate Debt is gradually reduced and that in Government Securities is increased. Depending upon the risk appetite of subscriber, there are three different options available within Auto Choice-Aggressive, Moderate and Conservative.
1. Aggressive (LC-75) – Maximum Equity exposure is 75% up to the age of 35
2. Moderate (LC-50) - Maximum Equity exposure is 50% up to the age of 35
3. Conservative (LC - 25) – Maximum Equity exposure is 25% up to the age of 35
-
Where (in which asset classes) my money will get invested in NPS?
Following are the assets classes are available for investment under NPS:
1. Equity or E- A 'high return-high risk' fund that invests predominantly in equity market instruments
2. Corporate Debt or C - A 'medium return-medium risk' fund that invests predominantly in fixed income bearing instruments
3. Government Securities or G - A 'low return-low risk' fund that invests purely in Government Securities
4. Alternative Investment Funds or A –In this asset class, investments are being made in instruments like CMBS, MBS, REITS, AIFs, Invlts etc.
If you are a conservative investor, you can choose to invest your entire pension wealth in C or G asset class. However, if you want to have exposure to equity, you can allocate maximum 50% of your money to asset class 'E' or up to 5% in Alternative Investment Funds.
-
What is meant by Scheme preference change?
Scheme preference change is the option given to the Non-Government subscriber to design / redesign their own portfolio. It comprises change of Pension Fund Manager (PFMs), switching between Active choice and Auto choice and in case of Active choice to decide percentage of allocation in different asset classes.
A subscriber of Non-Government sector can change their Scheme Preference through their associated POP-SP. It can also be done online through their log-in credentials of CRA. In NPS, there are multiple PFMs, Investment Options (Auto or Active) and four Asset Classes – Equity, Debt, Government Securities and Alternate Investment Funds. Subscriber has been given the flexibility to choose any one out of available Pension Fund Managers (PFMs) and investment options separately for Tier I and Tier II account.
-
How do I select the PFM?
Selection of Pension Fund Manager is mandatory while filling up the registration form. All the PFMs under NPS are registered and regulated by PFRDA. They are mandated to invest Subscriber's contribution as per prescribed guidelines and regulations by PFRDA. You can find the performance of respective PFMs on NPS Trust website at http://www.npstrust.org.in/return-of-nps-scheme. Returns of different schemes under NPS may help you while selecting the PFM. In NPS, you are allowed to change PFM once in a financial year.
-
What is Net Asset Value (NAV)?
Net Asset Value is also known as NAV. This is the price of one unit of a fund. NAV is calculated at the end of every working day. It is calculated by adding up the value of all the securities and cash in the fund's portfolio (its assets), subtracting the fund's liabilities, and dividing that number by the number of units that the fund has issued. The NAV increases (or decreases) when the value of the fund's holdings increase (or decrease). NAV of schemes of different PFMs may differ. Even the different schemes under the same PFM will have different NAV.
-
Do I need to re-open NPS account when I change my Job or location?
No, there is no need to re-open NPS account when you change your Job or location. Portability is one of the key features of NPS, it can be operated from anywhere in the country irrespective of individual employment and location/geography.This implies that you can shift your PRAN from one sector to another, e.g. Central Government to Corporate sector, State Government to Central Government etc. and vice versa.Further, if you are relocated because of any reason, you can also change POP-SP within the same POP or you can change to POP of your choice available to the location.
Additional information:
NPS website: https://npstrust.org.in/
NPS helpline: 1800-180-1555