How to Open an NPS Account?

NPS, short for National Pension System, is a retirement saving scheme that the citizens of India can opt for voluntarily. The scheme was introduced by the Government of India with the aim of providing every citizen of the country with the opportunity to create a pension fund for themselves, in order to enjoy a financially secure and stress-free retirement life. The primary objective of this scheme is to ensure financial security for senior citizens during their post-retirement years. By opening an NPS account and building a pension corpus, individuals can ensure that they remain self-sufficient as they age.

This blog aims to provide a step-by-step guide on opening an NPS account. But before diving into the account opening process, let’s briefly discuss what exactly an NPS account is.

What is NPS?

The National Pension System, as the name implies, is a retirement financial security plan initiated by the Central Government. It falls under the jurisdiction of the Pension Fund Regulatory and Development Authority (PFRDA). The scheme encourages Indian citizens to invest in the NPS account every year while they are working. They can withdraw a percentage of the amount invested in the scheme post-retirement. 

During the retirement years, the remaining amount will be disbursed as a monthly pension to the account holder.  Opening an NPS account is an easy online process, and managing it, including NPS login, statement download, and account management, is also simple. Furthermore, making an NPS investment online comes with several tax benefits under Section 80C and Section 80CCD of the Income Tax Act. 

Open an NPS Account Online/Offline

You can open an NPS account online as well as offline. Let us take a look at the procedure to open the account through both methods one by one.

Online Method to Open NPS Account 

Here is how to start NPS using the online method:

• Login to the NPS official website and register for the account.
• Link your mobile number, Permanent Account Number (PAN), and Aadhaar Card Number with your NPS account.
• Verify the registration by entering the OTP received on your registered mobile number.
• Once the registration formalities are completed, you will receive a Permanent Retirement Account Number (PRAN). 
• Click open the NPS portal and use the PRAN number to log into your NPS account.
• NPS online payments can be made by using this login id and password.

Offline Method to Open an NPS Account 

Here is how to apply for an NPS account using the offline method:

• Complete a subscriber form and provide it along with your KYC documents at the nearest Point of Presence (PoP).
• Next, deposit a minimum of INR 500 to open a tier I account. You will receive your Permanent Retirement Account Number (PRAN) after the completion of these formalities. An initial amount of INR 1,000 needs to be deposited for the tier II account at the time of registration. 
• Once you have received your PRAN number and password, you can start using your NPS account. However, a one-time registration fee of INR 125 needs to be deposited for this purpose.
• You can make NPS contributions online moving forward.

What is the Eligibility for NPS Account Opening?

Initially, the NPS scheme was available only to Central Government employees. But this is not the case now. PFRDA has made it available for others as well. Any public/private employee or business owner can apply for NPS online or offline. Hence, this is a national pension scheme for private employees and businessmen as well. Let us take a closer look at the eligibility criteria of this scheme:

• The applicant must be a citizen of India. Both resident and non-resident Indians can apply for the scheme. Those belonging to the Overseas Citizen of India (OCI) category can also apply.
• He/she must be aged between 18-70 years on the date of submission of the NPS application.
• He/she must be legally capable of executing a contract as suggested in the Indian Contract Act.

Note: Persons of India Origin (PIOs) and Hindu Undivided Families cannot apply for this scheme

Also Read: Know About Atal Pension Yojana

What are the Documents Required for NPS Account Opening?

As per NSDL, the following documents are required for the NPS account opening:

1. Offline Aadhar e-KYC Zip file
2. Scanned copy of the PAN
3. Scanned copy of a cancelled cheque
4. Scanned signature
5. Scanned photograph

If KYC has not been done, then the following documents will be while opening an NPS account :

In addition to other requirements, opening an NPS account also entails submitting a proof of identity and photograph.

To Conclude: Undoubtedly, the Government of India has taken a commendable step by introducing NPS. It has bestowed senior citizens with financial independence in their post-retirement years. Retirement can prove to be a challenging phase if not planned beforehand. However, NPS serves as a flexible and lucrative investment option, providing financial stability in old age along with substantial tax advantages.