The National Pension System, popularly called the National Pension Scheme or NPS, is a retirement oriented saving scheme which was introduced by the Government. This is a market-linked scheme wherein your investments are invested in market-linked funds so that they provide you with inflation-adjusted returns. You can invest in the NPS scheme for a long term period and also get tax benefits. Furthermore, after maturity, the NPS scheme also pays guaranteed annuities for your entire life so that you can live a financially comfortable life even after you retire.
You can open an NPS account with a bank which is registered with the Pension Fund Regulatory and Development Authority (PFRDA) to offer the scheme. These registered banks are called Point of Presence (POP) and they allow customers to open an NPS Account with them. HDFC Bank is one such POP through which you can invest in the NPS Scheme. Let’s understand how –
To invest in NPS scheme by HDFC, you have two options. These options are as follows –
You can invest in the NPS scheme offline through HDFC Bank. For this, you should visit an authorized branch of HDFC from where NPS investment can be done. These branches are called Point of Presence Service Providers (POP-SPs) and they allow the opening of the NPS account. At the branch, avail of the NPS registration form and fill it up. Submit this form along with your KYC documents. HDFC Bank would verify and check the registration form and the documents submitted. Once the verification is done, the HDFC NPS account would be opened.
HDFC Bank offers easy online facilities to its customers and opening an account is no different. You can invest in HDFC NPS online through the website of the bank. The process is as follows –
To apply for the HDFC NPS scheme, the following documents would have to be submitted whether you choose to open the account offline or online –
1. An identity proof which can be a copy of any of the following –
2. Address proof which can be a copy of any of the following –
3. Age proof which can be a copy of any of the following –
Moreover, your coloured recent photographs would also be required. However, if you are an existing customer of the bank, the requirement of documents would reduce since the bank already has your KYC documents with it. Existing customers can, therefore, open an HDFC NPS account easily with minimal documentation.
When you invest in the National Pension by HDFC Bank or any other bank, here are some important aspects which you should know
The NPS scheme gives you tax benefits on investments as well as on maturity. These tax benefits are mentioned below –
So, if you are looking to invest in the NPS scheme for creating a retirement corpus as well as for the tax benefits which the scheme provides, you can choose to invest through HDFC Bank for ease and convenience of investment.
Ques. Can an accountholder open more than one NPS account?
Ans. No. NPS subscribers are not allowed to open multiple accounts. The NPS Account number issued to the subscriber called PRAN is fully portable across various locations.
Ques. Is it necessary to open Tier II NPS Account while opening Tier I NPS Account?
Ans. No. Tier II NPS Account is optional and can be opened by the subscriber later on as well.
Ques. How many funds are offered under NPS?
Ans. An NPS account the following funds to its subscribers:
Investment towards Equities Fund is limited to 50% of the total contribution amount for both Tier I and Tier II NPS Accounts. However, a subscriber can invest up to 100% in Corporate Bonds or Government Securities Fund.
Ques. Are returns under NPS guaranteed?
Ans. NPS returns depends on the market as the investments are market-linked. The returns are generated under Equity, Corporate Bonds and Government Securities funds, and the Corpus will be created accordingly.
Ques. Is there any restriction on the number of NPS contribution?
Ans. There is no cap on the frequency of contributions under NPS. One can make the contributions in any mode – monthly, quarterly, half yearly or yearly. Also, subscribers have the choice of ad – hoc contribution as well.