The Government of India (GOI) has rolled out the NPS for all citizens of India from May 01, 2009.
The person (employee/citizen) who joins the NPS will be known as ‘Subscriber’ in the NPS. Under the NPS, each Subscriber will open an account with Central Recordkeeping Agency (CRA) which will be identified through unique Permanent Retirement Account Number (PRAN).
Under NPS, two types of account would be available to subscribers i.e. Tier I & Tier II; Tier I account - where subscribers contribute his / her savings for retirement into a non-withdrawable account, and a Tier II account - a voluntary savings account from which subscribers are free to withdraw their savings whenever he wishes. The facility of Tier II account was made available from December 01, 2009 to all citizens of India including Govt. employees not mandatorily covered under NPS. An active Tier I account will be a pre requisite for opening of a Tier II.
What are the benefits of NPS?
- It is voluntary - NPS is open to every Indian Citizen. A subscriber can choose the amount he wants to set aside and save every year.
- It is simple - All the subscriber has to do is to open an account with any one of POPs (Point Of Presence) and get a PRAN.
- It is flexible - Subscribers can choose their own investment option and pension fund and see their money grow.
- It is portable - Subscribers can operate their account from any where in the country, even if they change the city, job or their pension fund manager.
- It is regulated - NPS is regulated by PFRDA, with transparent investment norms and regular monitoring and performance review of fund managers by NPS Trust.