* The scheme is structured into two tiers:
This NPS account doesn’t allow premature withdrawal and is available from 1st May, 2009. Tier-I is mandatory for all Govt. servants joining Govt. service on or after 1.1.2004. In Tier I, Govt. servants will have to make a contribution of 10% of his Basic Pay, DP and DA which will be deducted from his salary bill every month. The Govt. will make an equal matching contribution. Since 1 April 2008, the pension contributions of Central Government employees covered by the NPS are being invested by professional Pension Fund Managers in line with investment guidelines of Government. However, there will be no contribution from the Government in respect of individuals who are not Government employees. The contributions and returns thereon would be deposited in a non-withdrawable pension account.
The tier-II NPS account permits withdrawal. Each individual can have a voluntary tier-II withdrawable account at his option. Government will make no contribution into this account. These assets would be managed in the same manner as the pension. The accumulations in this account can be withdrawn anytime without assigning any reason.
NPS - TIER- II account
1. The facility of Tier II account is available from December 1, 2009 to all citizens of India including Government employees mandatorily covered by NPS, who hold a Tier I account.
2. Unlike Tier I which is a non-withdrawable pension account, Tier II is a withdrawable account with an aim to provide a window of liquidity to NPS subscribers. Both Tier I (Pension Account) and Tier II (Savings Account) will be pure retirement savings products, the only distinction being that Tier- I is a non- withdrawable account while Tier-II is a withdrawable account to meet financial contingencies.
3. The Tier-II would enable the existing Permanent Retirement Account (PRA) holders to build savings over and above the investments in the Tier I pension account. An active Tier I account is a pre-requisite for opening a Tier II account.
1. Equity ( E )
2. Govt Securities ( G )
3. Debt Instruments ( C ) including corporate bonds and fixed deposits.
Minimum amount per contribution: Rs. 500 per month
Minimum number of contributions: 1 in a year
Minimum annual contribution: Rs 6,000 in each subscriber account.
The subscriber will have the option to actively decide as to how the NPS pension wealth is to be invested in three asset classes:
1. E Class:
It would invest in Index funds that replicate the portfolio of either BSE Sensitive index or NSE Nifty 50 index.
2. G Class:
Investment would be in Government securities like GOI bonds and State Govt. bonds.
3. C Class:
Investment would be in fixed income securities other than Government Securities.
You can choose to invest your entire pension wealth in C or G asset classes and up to a maximum of 50% in equity (Asset class E)