Take your first step towards National Pension Scheme

All of us have heard about God, but only a few have experienced miracles that can be attributed to his presence. Same is the case with the National Pension Scheme (NPS), many of us have heard about it, but only a few know how it works.

On the basis of mails received from readers on a previous article on NPS in DNA,  I have realised that though lot of people have heard about the NPS, but not many are aware how it functions and more importantly how to open a NPS account.

In this piece, I have discussed about taking the first step towards opening your NPS account.

Who can open the NPS account?
Any individual who is a citizen of India can open account under NPS. So, an NRI who has retained his Indian passport can also open this account.  For opening the account under NPS, a person should have completed 18 years of age on the date of opening the account. A person who has completed the age of 60 years cannot open this account since purpose of NPS is accumulation of corpus till one reaches the age of 60 years. A person who has been declared an insolvent and has not been discharged as insolvent cannot join this scheme. A person of unsound mind also cannot open account under NPS.

Where the account can be opened?
For facilitating Indian Citizens in opening the NPS account, the government has nominated 34 entities for the purpose. These include nationalised banks such as Central Bank of India, Allahabad Bank, Syndicate Bank, Union Bank of India, and State Bank of India and its subsidiaries. In addition to the nationalised banks, the government has nominated private banks such as ICICI Bank, Kotak Mahindra Bank, Axis Bank and Yes Bank. In addition to the banks, the government has also nominated some other entities like Indian Postal Department, Stock Holding Corporation, UTI Asset Management Company and UTI Technology Services Limited etc. All these entities are known as Points of Presence (POPs). These entities have in turn nominated a few branches as service providers and are called POP-SP. The detailed list with contact numbers is available on website www.pfrda.org.in and www.npscra.nsdl.co.in.

So, you can see that there are ample entities being nominated for opening the account, hence you will not find it difficult to identify the POP for opening your account.

How to open the NPS account?
You have to collect the application form for subscriber registration from any of the 34 POPs. The application form duly filled in with necessary documents for the purpose of know your customer (KYC) should be submitted to any of the above POP. The KYC norms are like those which are applicable for the purpose of opening your savings bank account. You have to make first contribution to your NPS account while submitting the application forms to POP-SP.

Does it have nomination facility?
While filling up the form, you can appoint one or more nominees for the purpose of receiving the corpus lying to the credit of your NPS account, in case something happens to you. You can nominate upto three persons as nominees for this account. It is always advisable to have nominees in all your accounts, be it bank account or demat account. Even a minor can be appointed as a nominee here. However, in case you are appointing a minor as nominee, you need to provide the details of the guardian and date of birth of the minor. While nominating more than one nominee, you need to specify shares of each nominee in percentage term. Please ensure that share is not mentioned in fraction and sum of all the shares is equal to 100%.
However, unlike your bank account, you do not have the option to add someone as joint account holder under NPS. The account has to be opened in an individual’s single name.

What are the documents required?
For complying with KYC, you need to provide documents for identity, date of birth and address proof etc. Please note that you need not have a PAN card in order to make an application under NPS unless you intend to make cash contribution of  `50,000 or above. For proofs of identity and address, various documents are accepted like school leaving certificate, water bill, electricity bill, driving license, copies of your depository account, PAN card, rent receipt and credit card statement etc. Even if you are not able to provide any of the documents listed in the application form, as a last resort you can obtain a certificate of identity and certificate of address signed by Member of Parliament, Member of Legislative Assembly, Gazetted Officer or even a Municipal Councilor.

How to select the pension fund manager?
Like the POP, the government has also appointed six pension fund managers (PFM) for the purpose of management of the funds. While filling up the application form for registration under NPS, you have to indicate your preference for the PFM. If you do not indicate your preference of the PFM, your application will not be processed and will be invariably rejected. The PFM appointed are Pension Fund Management Companies of various financial institutions /mutual fund houses such ICICI Prudential Pension Funds, SBI Pension Funds, Kotak Mahindra Pension Funds, Reliance Capital Pension Fund, IDFC Pension Fund and UTI Retirement Solutions.

What is Pension Retirement Account Number (PRAN)?
The government has appointed National Securities Depositories Limited (NSDL) as the central record keeping agency for the purpose of NPS. NSDL is responsible for record keeping of the all the subscribers under NPS.  Once your application for the purpose of registration is accepted and processed, you will receive a welcome kit from NSDL, in addition to an allotment letter of a PRAN and the PRAN card bearing your photograph having basic details about you. You have the option of receiving your PRAN card in Hindi also and for that purpose you will have to submit some basic details in Devnagri script. Please be careful while you fill in the details in the application form for registration for NPS. In case you have committed some mistakes while filling in the details in the application form, this may cause errors in all the documents including the PRAN card. The PRAN is your unique identification for the purpose of operating this account.

The welcome kit will also contain a telephone identification number (TPIN) for the purpose of accessing your NPS account through the call center number 1800-222080. The kit will also have an Internet password to access your NPS account through Internet on www.npscra.nsdl.co.in.

I hope now you will not find it difficult to open the NPS account about which you have just heard till now. Take your first step towards experiencing the benefits of NPS.

— The writer is CFO, ApnaPaisa.com, a price comparison engine for loans, insurance and investments. He can be reached at
balwant.jain@apnapaisa.com