📘 NATIONAL PENSION SYSTEM (NPS) FOR EXAM PREPARATION

📘 TIPS 13: NATIONAL PENSION SYSTEM (NPS)

📅 Basic Information

Operational From: 01.01.2004

Previous Name: New Pension Scheme

Current Name: National Pension System

🔤 Key Abbreviations

ASP	Annuity Service Provider
CRA	Central Record Keeping Agency
KYC	Know Your Customer
PFRDA	Pension Fund Regulatory and Development Authority

💰 Tier Accounts

Tier-I Account

✅ Mandatory for all government servants

✅ Exit at or after 60 years

✅ 40% pension wealth mandatory for investment at exit

Tier-II Account

⚡ Optional for government servants

⚡ At discretion of employee

⚡ Can be closed separately

💸 Contribution Details (From 01.04.2019)

Employee Contribution

10%

of Basic Pay + DA

Government Contribution

14%

of Basic Pay + DA

🔢 PRAN Details

📛 PRAN - Permanent Retirement Account Number

🔢 12-digit unique number

🏢 Allotted by NSDL (National Securities Depository Limited)

📧 Communicated to PAOs (Public Account Offices)

💰 Tax Benefits

• Employee contribution up to 10% of salary under Section 80-CCD(1)
• Government contribution (14%) under Section 80-CCD(2)
• Additional deduction up to ₹50,000 under Section 80-CCD(1B)
• 40% lump sum withdrawal at superannuation is tax-free
• Partial withdrawals are tax-free
• ❌ No tax benefits on Tier-II contributions

📋 Withdrawal Rules

✅ Allowed after 3 years from joining

✅ Maximum 25% of employee's own contribution

✅ Maximum 3 withdrawals during entire tenure

✅ Permitted for: Higher education, Marriage, House construction, Medical treatment

❌ NOT allowed for: Foreign travel

🏢 Annuity Service Providers

• Life Insurance Corporation of India
• SBI Life Insurance Co. Ltd.
• ICICI Prudential Life Insurance Co. Ltd
• HDFC Standard Life Insurance Co. Ltd
• Star Union Dai-ichi Life Insurance Co. Ltd

⚠️ Important Notes

• Subscribers can defer annuity purchase up to 75 years

• No annuity purchase required if corpus ≤ ₹5 lakh (superannuation) or ≤ ₹2.5 lakh (early exit)

• One-way switch allowed from Tier-II to Tier-I account

• Tier-II account closes automatically if Tier-I account is closed