The ICICI Bank NPS (National Pension Scheme) is a retirement savings scheme which gives you attractive returns through market-linked investments and also the ability to reduce your taxes through deductions on investments.
Everybody needs a fund after retirement to finance their lifestyle expenses when the active source of income is no longer available. That is why investing in retirement avenues is necessary while working so that one can create a suitable corpus which would fund their needs post-retirement. When selecting a suitable investment avenue, one should ensure that –
- The avenue gives good returns
- The returns are inflation adjusted
- The avenue is tax efficient
The National Pension Scheme promises the combination of all three criteria and makes sure that one can live free of worries in their golden years.
How to Open an ICICI Bank National Pension Scheme Account?
Opening of an NPS account can be done through banks which are registered with the PFRDA to allow their customers to invest in NPS. Many banks have been authorized by the PFRDA to allow NPS account opening and one such bank is ICICI Bank. ICICI Bank offers a range of banking solutions to its customers and opening an NPS account is one such solution for investors looking to invest in retirement schemes.
To open an account of National Pension Scheme with ICICI, you would have to fulfil the following eligibility criteria –
- You should be aged between 18 and 60 years
- You should be an Indian citizen
If you fulfil these simple eligibility criteria, you can invest in ICICI NPS and start building a retirement corpus. The ways to invest in ICICI Bank NPS are as follows –
Investing offline in ICICI Bank NPS
ICICI Bank is a registered Point of Presence (POP) with PFRDA and is allowed to offer the facility of NPS investment to individuals. If you want to open an ICICI Bank NPS account, you can visit one of the registered branches of the bank which allows offline investments. These branches are called Point of Presence Service Providers and you can find a branch nearest to your location using this link. Once you locate the branch, visit it with your KYC documents. Get the NPS registration form from the branch, fill it up with the required details and submit it along with the copy of your KYC documents. You should also submit the first deposit amount required to open the ICICI National Pension Scheme account. Once the registration form and your documents are verified by ICICI, the NPS account would be opened in your name.
Online Mode of Investment in ICICI NPS
Being a technology-driven bank, ICICI allows its customers to invest in its NPS scheme through online modes as well. If you don’t want to visit the branch of the bank and want to invest online, visit the NPS investment page of ICICI Bank. On the page, you would be able to check the details of the NPS scheme and also invest in it online. To invest online, click on ‘Apply Now’. You would be redirected to the net banking page of the bank wherein you should log into your online ICICI Bank account through your user ID or registered mobile number. Once you log into your net banking account, choose to invest in ICICI NPS. An online application form would be shown which you should fill and submit. Also, make the deposit towards the NPS account from your existing bank account or through any online payment mode. Once you complete all the formalities, the ICICI Bank NPS account would be opened instantly.
The online mode of investing in NPS in ICICI Bank is simpler. As you are an existing customer of the bank, you would not have to submit your KYC documents again. The process is, therefore, convenient and your account is also opened instantly.
Things to check when opening NPS in ICICI Bank
The NPS scheme has different aspects which you should know if you choose to subscribe to it. These aspects include the following –
- Type of NPS account
When you subscribe to NPS in ICICI Bank, you would be presented with two account options to choose from – Tier I and Tier II. Tier I is a compulsory account and to invest in NPS you would have to invest in Tier I Account. Tier II Account, on the other hand, is optional in nature. If you have opened a Tier I Account, you can opt for a Tier II Account as well for additional investment. Tier I is a fixed-tenure account which does not allow withdrawals before the completion of the tenure except in specific situations. Tier II Account, on the other hand, is very flexible and allows you to invest and withdraw as per your convenience.
- Minimum contribution
To open an ICICI NPS Tier I account, you would have to make a minimum deposit of Rs.500. Once the account is opened, a minimum investment of Rs.1000 would have to be made every month to keep the account active. For opening a Tier II ICICI NPS account, a minimum deposit of Rs.1000 would be required. Thereafter, a minimum deposit of Rs.250 would be needed every financial year to keep the account active.
- Investment choice
There are two investment choices available to you when you choose to open an ICICI NPS Account. The first one is Active Choice wherein you would have the option of investing in four different types of funds – Asset Class A, C, E and G. The second is Auto Choice where you just choose your risk profile from aggressive, moderate or conservative and then the investment is done automatically in a combination of funds. So, depending on your investment preference, choose a suitable strategy. Remember, you can switch between the chosen strategies as well as between the chosen funds within the investment duration.
- Tenure of the scheme
The NPS scheme runs till you reach 60 years of age. The investment period can also be extended to 70 years of age. Partial withdrawals are allowed for meeting specific financial needs like marriage, medical emergency, education, etc. On maturity, up to 60% of the accumulated corpus can be withdrawn in cash while the remaining 40% is used to pay lifelong annuities.
- Tax benefits
The investments that you made into the ICICI NPS Account qualify for deduction under Section 80CCD (1) up to Rs.1.5 lakhs. Moreover, you can claim an additional deduction of up to Rs.50, 000 under Section 80 CCD (1B). These deductions are available for Tier I investments. Investments into Tier II Account, however, do not give any tax benefits. However, Central Government employees can claim a tax benefit on investing in Tier II Account with a 3-year lock-in period. Their contribution would be allowed as a deduction under Section 80C up to Rs.1.5 lakhs.
Open an ICICI NPS Account and start investing towards a retirement corpus. Get tax benefits on your investments and also when you withdraw a part of the corpus on maturity. This scheme would help you earn good returns on investments and also promise lifelong annuities for a regular source of income post-retirement.
ICICI Bank NPS – FAQs
Ques. Do NPS allow tax-free partial withdrawals?
Ans. Yes, partial withdrawals can be made from Tier I Account completely tax-free.
Ques. What is the tax treatment of annuities in NPS?
Ans. Under the NPS scheme, the annuity payments received by account holders are fully taxable.
Ques. What happens in the case of the account holder under the NPS scheme?
Ans. In case of sudden demise of the account holder before maturity, the entire corpus of the scheme can be availed in a lump sum by the nominee. T
Ques. Is opening a joint account allowed under the National Pension System?
Ans. No, joint account opening is not permissible under the National Pension System.