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 –
In this article
How to Invest in HDFC Bank NPS Scheme?
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 –
- Visit HDFC NPS account page and click on ‘Apply for NPS’
- HDFC Bank allows NPS investments through KFIN Technologies Private Limited. Once you choose ‘Apply for NPS’ you would be taken to the online portal of the company to invest in NPS online
- On the application page, you should enter the details required
- You can invest in HDFC Bank NPS either by being an existing customer of the bank or by submitting your Aadhaar card details if you are not an existing customer
- Choose the type of NPS account you want to open and provide your PAN card details
- Enter in the captcha code to continue
- Make the deposit online, choose the investment strategy and the investment funds and your application for online opening of HDFC NPS account would be done and your account would start
Documents Required for HDFC NPS Scheme
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 –
- Aadhaar card
- PAN Card
- Voter’s ID Card
- Driving licence
2. Address proof which can be a copy of any of the following –
- Driving License
- Aadhaar Card
- Voter’s ID card
- Utility bills
- Rent agreement
- Property sale deed
3. Age proof which can be a copy of any of the following –
- Voter’s ID Card
- Aadhaar card
- Driving license
- Birth certificate
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.
Things to Know About HDFC Bank NPS
When you invest in the National Pension by HDFC Bank or any other bank, here are some important aspects which you should know
- There are two types of investment accounts under NPS – Tier I and Tier II. A Tier I account is compulsory and you would have to open this account to invest in HDFC Bank NPS. Tier II Account, however, is optional and can be opened if you have a Tier I Account
- There are two types of investment strategies – Active Choice and Auto Choice. The Active Choice strategy is self-managed while the Auto Choice is automatically managed based on your age and risk preference. You would have to choose the investment strategy to get good HDFC NPS returns
- Though you subscribe to the National Pension Scheme through HDFC, you can choose any pension fund manager to manage your investments
- A minimum deposit of Rs.500 would be required to start the Tier I Account. If you also want to open a Tier II Account, a minimum deposit of Rs.1000 would be required to open the account.
- Deposits should be made every year in NPS accounts to keep them operative. For Tier I Account, a minimum annual deposit of Rs.1000 is required while for Tier II Account the minimum deposit is Rs.250
- You should be aged 18 years to 60 years and a resident of India to open an HDFC Bank NPS account
- Once opened, you can manage and track your HDFC NPS account online through the bank’s net banking facility.
Tax Benefits of NPS scheme
The NPS scheme gives you tax benefits on investments as well as on maturity. These tax benefits are mentioned below –
- Investment into Tier I Account, up to Rs.1.5 lakhs, is allowed as a deduction under Section 80 CCD (1)
- If you are a Central Government employee and you invest in Tier-II Account with a lock-in period of 3 years, you get a deduction on such investments under Section 80C up to a limit of Rs.1.5 lakhs
- If your employer contributes to HDFC NPS on your behalf, such contributions, up to 10% of your basic salary and Dearness Allowance, would be allowed as a deduction under Section 80 CCD (2)
- Additional investments in Tier-II Account, up to Rs.50, 000 would qualify as additional deductions under Section 80CCD (1B)
- When the NPS scheme matures, up to 60% of the accumulated corpus of Tier I Account can be withdrawn in a lump sum as a tax-free income
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.
HDFC NPS Account – FAQS
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:
- Equities (E)
- Corporate Bonds (C)
- Government Securities (G)
- Maximum Permissible Limit (M)
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.