National Pension System or NPS is a voluntary retirement savings scheme by the Central Government. It encourages individuals to invest in a pension during their employment. There are two charges that are applicable for NPS, namely CRA (Central Recordkeeping Agency) and POP (Points of Presence) charges.
This article will offer an overview of these charges. It will also delve into how an NPS calculator can help you ascertain the costs.
The table given below highlights the various POP charges for NPS:
Charged under heading
|Point of Presence (POP)||Rs. 200||Subscriber registration charges|
|0.25% of one’s contribution (subject to a maximum of Rs. 25,000 and a minimum of Rs. 20)
Rs. 20 for non-financial ones
|Any subsequent transaction|
|Rs. 50 per annum||Persistency, i.e. less than 6 months and Rs. 1000 contribution|
|0.10% of the contribution (minimum Rs. 10 and maximum Rs. 10,000)||Contribution via eNPS|
Here, it is critical to note that the above charges are collected upfront from subscribers.
Discussed below are the CRA and other intermediary charges of NPS:
Charged under heading
|Central Recordkeeping Agency (CRA)||Rs. 69 for NCRA and Rs. 57.63 for KCRA||Yearly PRA maintenance charges (per NPS account)|
|NCRA: Rs. 40 (if a subscriber opts for physical PRAN card),
Rs. 35 (for ePRAN card with physical welcome kit) and Rs. 18 (for ePRAN card with welcome kit sent via email only)
KCRA: Rs. 39.36 (if a subscriber opts for physical PRAN card),
Rs. 39.36 (for ePRAN card with physical welcome kit) and Rs. 4 (for ePRAN card with welcome kit sent via email only)
|PRA opening costs|
|Rs. 3.75 for NCRA and Rs. 3.36 for KCRA||Cost per transaction|
|Custodian||0.0032% per annum for electronic and physical segment||Asset servicing costs|
|Pension Fund Manager (PFM)||Varies with slabs of AUM under the PF:
Up to Rs. 10,000 crore = 0.09%
Rs.10,001 crore to Rs. 50,000 crore = 0.06%
Rs. 50,001 crore to Rs. 1,50,000 crore = 0.05%
More than Rs. 1,50,000 crore = 0.03%
|Fees for investment management|
|NPS Trust||0.005% per annum||Reimbursement of expenses|
Here are various NPS payment gateway service charge applicable for transactions on the eNPS platform:
|Payment mode||Rate of quotation per transaction||Charges|
|Debit cards||Free||Not applicable|
|Credit cards||Percentage of transaction value||0.75%|
|Internet banking||Flat rate as per INR||0|
Prospective investors can use calculators offered by platforms such as Groww to plan their investments. It also helps one to determine the maturity amount based on his/her monthly contribution, age, and expected return.
For clearer understanding, let’s take an example:
Mr. Verma is 30 years old and wants to invest in the NPS scheme. He is planning to invest a sum of Rs. 12,000 per month towards his retirement corpus. His expected rate of return is 8% per annum.
When Groww’s NPS calculator is used, it provides the following results:
From the above information, Mr. Verma can have a fundamental idea of the total investment value, interest earned, maturity amount, and the minimum annuity investment.
Prospective NPS subscribers must note that the NPS calculator indicates approximate or expected figures. It doesn’t represent the exact amounts.
NPS investment is a sound financial decision for individuals who plan to opt for early retirement and have a low-risk appetite. Salaried individuals can also claim income tax deduction.