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After 2004 the Indian Govt, both the Central and the States have launched National Pension System popularly called NPS in all their departments. In the year 2009 it was thrown open to private sector also. Indica Investments is playing a pivotal role in propagating the importance and necessity of Pension both as an economic and social security.


* The scheme is structured into two tiers:

1-Tier-I account:

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.

2-Tier-II 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 The accumulations in this account can be withdrawn anytime without assigning any reason.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.

Asset classes:

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.

Investment Options:

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)

E Class: CHART

G Class: CHART

C Class: CHART

Withdrawal Norms:::

After 60:
After age 60 years from the pension system, the subscriber would be required to invest at least 40% of pension wealth to purchase an annuity.

After 70:
If subscriber does not exit the system at or before 70 years, account would be closed with the benefits transferred to subscriber in lump sum.

On Death:
If a subscriber dies, the nominee has the option to receive the entire pension wealth as a lump sum.

Tax Treatment:

1. Contributions and returns to the NPS are exempt up to a limit.

2. Withdrawals would be taxed as normal income (EET).

The aggregate deduction under Section 80C, 80CCC and 80CCD is fixed at Rs.1.5 lac.
So, if the NPS subscriber is already having other eligible deductions such as LIC premium, PPF, bank or NSC deposits, ELSS etc., under Section 80C, 80CCC and Section 80CCD., deduction allowed under Section 80CCD in respect of contribution towards New Pension Scheme may not be of much useful as the overall limit of savings eligible for deduction is pegged at Rs. 1.5 lac.

PRAN will provide access to two personal accounts

• Tier-I pension account: You will contribute your savings for retirement into this non withdrawal account.

• Tier-II savings account: This is an ad-on account, which is simply a voluntary savings facility. You are free to withdraw your savings from this account whenever you wish




1. Contribution amount from member is assumed at Rs 5000 per month.
2. Cost and Fee as charged by POPs and CRA are not taken into account.
3. Return on investment is variable.
Above calculation of Pension is based on current annuity of Rs 7110 per lakh per year .
4. The above amount of Pension will be payable to the wife and then children of the annuvitent after his death as long as the corpus is not withdrawan.