NPS: What changes have happened in the last 6 months, if you invest in pension scheme then know the important thing

Matching of name with bank verification is necessary

Name matching along with bank verification is now mandatory for exit and withdrawal. Along with this, verification and name matching has become necessary for making changes in bank details.

Online withdrawal facility is available for NPS Lite/APY.

In case of death of the investor, the family members can get the work done with the help of POP for withdrawal of the deposit amount. In this, name verification and bank detail verification through penny drop has now been made mandatory.
PFRDA has now implemented online screen based facility at its POP i.e. Point of Presence. Let us tell you that Point of Presence (POP) is an institution under PFRDA which provides services to all citizens for opening and operating their NPS accounts. These POPs work through their network of branches called Service Providers (POP-SP).

document size limit increased

The size limit of the document to be uploaded at the time of exit process for Superannuation, Incapacitation and Pre-Mature Exit has been increased from 2MB to 5MB.

You can update your bank details at the nodal office

Nodal offices can now update and upload bank details for their customers through bulk processing using the HRIMS system.

It is mandatory to link your mobile number with your NPS account

To prevent any fraud at the time of withdrawal i.e. closing the account, customers will now have to add a special mobile number to their NPS account to ensure security.

Verification will have to be done on withdrawal from NPS Lite account

In case of NPS Lite account, name verification through penny drop has now been made mandatory for death and partial withdrawal.

Customers will have to do verification like this

In case of NPS Lite, GDS customers registering will have to compulsorily undergo name matching as well as verification through penny drop.

NPS investors can now choose more than one PF option

Subscribers can now choose more than one pension fund (PF) under Active Choice investment after three months from the date of opening the NPS account.

Changes in the family or disability pension process

Changes have been made in the methodology to now include splitting of company and employee contributions and verification through penny drop with mandatory name matching for customer/claimant’s bank details.

These changes have been made for security at the nodal office

Aadhaar based verification has been implemented during login for Central Recordkeeping Agency (CRA) at the nodal office. After the changes made for security, now CRA will have to undergo Aadhaar based verification while logging in.

Also read: Mutual Fund: 9.5 lakhs accumulated in 5 years with SIP of just 5000, this infrastructure fund gave around 48% annualized return

Read the specialty of NPS pension scheme

To open an NPS Tier 1 account, your age should be between 18 and 70 years, while to open Tier 2, you must already be a member of Tier 1. Talking about the lock-in period, NPS Tier 1 account lasts for 60 years and your deposit amount is locked in it, while there is no lock-in period in Tier 2, and you can withdraw the amount whenever you want. The minimum balance for Tier 1 is Rs 500, while there is no minimum balance for Tier 2, you can deposit as much amount as you want.

You get income tax exemption on investment in Tier 1, while there is no exemption on investment in Tier 2. It is a voluntary account, which you can open if you are a Tier 1 account, and you get flexibility in investment and withdrawal. To invest in it, you must have a Permanent Retirement Account Number (PRAN), which is given to you on opening an NPS account. That is why it is said that NPS Tier I is essentially a retirement account, while Tier II is a voluntary savings account linked to your PRAN. This scheme is market linked. It is necessary to invest in NPS for at least 20 years. After opening the account, contributions have to be made till the age of 60 or till maturity. NPS investors are allowed partial withdrawal before retirement.

You can withdraw 25% of the total deposit amount from the NPS account. For this withdrawal, your NPS account must be at least 3 years old. NPS provides many types of flexibility to its customer. Account holders can contribute to the NPS fund anytime according to their need in a financial year. They can also change their investment option by choosing it themselves. Along with this, investors get the facility to handle their account online. On retirement, one can withdraw up to 60% of the amount and buy annuity from the remaining fund. The specialty of NPS is that on retirement neither can one withdraw 100% of the fund nor can buy annuity from 100% of the fund. It is necessary to buy annuity with at least 40% of the amount. In this scheme, it is necessary to buy annuity for monthly pension. That is, this scheme not only gives pension and lump sum fund on retirement, investors in NPS get tax benefits before retirement.

Due to investing in the market, there is a little market risk in NPS, although there is a possibility of higher returns. In such a situation, NPS can also prove to be a better option for investors who want a big retirement corpus. In this, tax exemption is available under section 80C of the Income Tax Act on investment up to Rs 1.5 lakh in a financial year. Apart from this, tax benefit is also available on investment up to Rs 50,000 annually above Rs 1.5 lakh under section 80CCD (1B). That is, on investment in NPS, tax exemption is available on investment up to Rs 2 lakh in a year, which is not available in any other investment.