Bank of India is a public sector bank that is owned and managed by the Government. The bank was established in the year 1906 as a private bank but was later nationalized in the year 1969. Today, the bank offers multiple banking services and products to MSMEs, retail customers, corporates and NRIs. The NPS scheme is one such product offered by the bank to allow individuals to plan a retirement corpus.
What is the NPS Scheme?
The National Pension System, popularly called the NPS scheme, is a retirement saving scheme. The scheme aims to create a retirement corpus through regular investments which accrue market-linked returns. Moreover, after maturity, the NPS scheme pays lifetime pensions thereby creating a source of income after you retire.
Bank of India NPS
The NPS scheme is managed by the Pension Fund Regulatory and Development Authority (PFRDA). PFRDA authorizes financial institutions to offer NPS investments to their customers. Such financial institutions are called Point of Presence (POP). Bank of India is one such financial institution that is a POP for NPS investments. You can apply for the NPS scheme at Bank of India.
For applying to the National Pension Scheme, BOI offers both the online mode and the offline mode for easy investments. To invest online, you can visit the Bank of India’s website. For offline investments, you can visit the designated branches of Bank of India which allow NPS investments. The list of such branches can be found online at the link https://www.npscra.nsdl.co.in/pop-sp.php.
Enter your State and location and the list of designated branches accepting NPS subscriptions would be displayed. You can visit any branch, fill up the registration form and submit the form with your KYC documents, contribution amount and the relevant bank charges. Upon verification of your details, your BOI NPS account would be opened.
Eligibility Criteria to Open BOI NPS Account
To invest in the NPS scheme in Bank of India, here are some eligibility criteria which you should fulfil-
- You should be in the age bracket of 18 and 70 years
- You should be an Indian citizen (NRIs and OCIs can also subscribe to the NPS account)
- You should make a minimum contribution of Rs.500 for Tier I Account and Rs.1000 for Tier II Account
- You should comply with the KYC norms of the bank
- You should submit your photographs, identity proof, age proof and address proof to subscribe to the NPS scheme
Features of Bank of India NPS
Before investing in the NPS scheme in Bank of India, know the important aspects of the scheme. Here is a list of some of the scheme highlights –
- BOI NPS is a regular investment scheme. once you open a BOI NPS account, you would have to make a minimum contribution to the account every financial year till you attain 70 years of age
- There are two BOI NPS accounts into which you can invest. The first account is the Tier I Account which is a mandatory account. You have to invest at least once every financial year into this account. Moreover, this account does not allow free withdrawals except under specific circumstances
- The second type of BOI NPS account is the Tier II Account. This account is not mandatory but optional. Tier II Account allows easy withdrawals and acts as a savings bank account
- Your investments are allocated to market-linked funds. There are three primary types of funds which are Asset Class E, C and G. E is an equity fund, C is a corporate debt fund and G is a Government securities debt fund
- You have a choice of two investment strategies. You can either take control of your investments and invest in suitable funds under the Active Choice investment strategy or let your investments be automatically allocated under the Auto Choice strategy
- There are different pension fund managers in charge of managing your NPS investments. These fund managers have been appointed by the PFRDA and you can choose a fund manager yourself
- The NPS scheme in Bank of India allows you to switch between investment strategies, investment funds (in Active Choice strategy) and also pension fund managers
- The scheme matures at 70 years of age. You can defer the maturity by another 10 years if you want
- On maturity, up to 60% of the accumulated fund can be withdrawn in a lump sum. This is called commutation of pension and the commuted value is tax-free in your hands
- The remaining fund is used to pay pensions for your lifetime. You can choose from different pension payment options and also include your spouse you receive pensions if you predecease him/her
Tax Benefits under BOI NPS
The NPS scheme is favourable among many investors not only because of its retirement planning and pension payment features but also for its tax benefits.
There are attractive tax benefits on NPS investments which are as follows –
- Tier I Account investments qualify for tax deduction under Section 80CCD (1). You can claim a maximum deduction of up to Rs.1.5 lakhs which includes deductions available under Section 80C
- The additional deduction is available under Section 80CCD (1B) for investments done into Tier I Account. You can claim an additional deduction of up to Rs.50, 000 under this section over and above the deduction availed under Sections 80C and 80CCD (1)
- If you subscribe to BOI NPS account under the employer-employee model and your employer contributes to the Tier I Account on your behalf, you can claim a deduction on such investment under Section 80CCD (2). The deduction is available for a maximum limit of 10% of your basic salary including dearness allowance
- Government employees can claim a tax deduction on investments made into Tier II Accounts. Such investments would be allowed as a deduction under Section 80C up to Rs.1.5 lakhs and a lock-in period of 3 years would apply to the investments.
The National Pension Scheme is a beneficial investment scheme that you can subscribe to for creating a sizeable retirement corpus and for receiving lifelong incomes.
The scheme can be subscribed to with authorized financial institutions and the Bank of India is one such institution that allows you this facility. So, invest in BOI NPS scheme and plan a comfortable retirement.