National Pension System, or the NPS scheme, in short, is a Government promoted investment scheme. This is a retirement planning avenue wherein you can invest over your working life to create a retirement corpus.
Thereafter, on maturity, the NPS scheme promises you a tax-free lump sum corpus as well as guaranteed pensions throughout your life. The money that you invest in the scheme is allocated to market-linked funds which allow you to earn attractive returns on your investments. Moreover, when you invest, you also get tax benefits which lower your tax liability.
You can invest in the NPS scheme through a financial institution which is registered with the Pension Fund Regulatory and Development Authority (PFRDA). Many banks are registered with PFRDA and allow NPS investments. One such bank is the IDBI Bank which allows you to invest in the NPS scheme online as well as offline. Before we have a look at IDBI Bank NPS, let’s have a look at some of the salient features of the scheme in general-
Features of National Pension Scheme
Here are some of the distinguishing features of the NPS scheme –
- There are two types of investment accounts. The first one is the Tier I Account which is compulsory. The second is the Tier II Account which is optional
- The scheme is market-linked and you are allowed a choice of two investment strategies. The first one is the Active Choice strategy wherein you can invest in four types of investment funds as per your preference. The second is the Auto Choice strategy wherein you choose your risk profile and then your investment is automated.
- There are eight pension fund managers to manage the investments. You can choose any fund manager as per your preference
- The scheme runs till 60 years of age and you are required to contribute every year to build up a retirement corpus
- You can make partial withdrawals from Tier I Account from the third year of investment. This withdrawal is allowed for specific financial needs and the limit is up to 25% of the available fund value
- On maturity, 60% of the accumulated fund value can be withdrawn in a lump sum. This withdrawal would be completely tax-free in your hands
- After maturity, you would get guaranteed pensions throughout your lifetime. There are different pension options which you can choose from
- The investments that you make into the NPS scheme are allowed as a deduction from your taxable income. You can claim a deduction of up to Rs.1.5 lakhs under Section 80 CCD (1) and an additional Rs.50,000 under Section 80 CCD (1B)
IDBI Bank NPS
For subscribing to NPS, IDBI Bank has been authorized by the PFRDA to accept NPS deposits from individuals. To invest in NPS, IDBI Bank offers you the facility of subscribing to NPS through its designated branches. The process is as follows –
- Many of the bank’s branches are designated as POP-SPs (Point of Presence Service Providers) through which you can invest in the NPS scheme offline. You can find the list of approved branches at this link – https://www.idbibank.in/pdf/address-of-Branches-where-NPS-Registration-Facilit.pdf.
- To open an NPS account through any of these branches, you should visit the branch and avail an NPS subscriber form. The form is also available online at https://www.npscra.nsdl.co.in/download/government-sector/central-government/forms/CSRF%20Subscriber%20Registration%20Form.pdf. You can download this form, fill it up and then submit it at the branches of IDBI Bank.
- Along with the subscriber form, you would have to submit the relevant documents and the minimum amount required to open the NPS account. The minimum amount required for opening a Tier I account is Rs.500 and for both Tier I and Tier II account is Rs.1500
- Once you submit the application forms and documents and the amount of deposit, IDBI Bank would verify your details and open your NPS account if the details are verified successfully.
Documents Required for Opening IDBI Bank NPS Account
To allow you to open an account of the National Pension Scheme, IDBI Bank needs you to submit relevant documents for verification. These documents are as follows –
- KYC documents like your identity proof, age proof and address proof
- Your photographs
- A cancelled cheque of your bank account if you are opening a Tier II Account. The cheque should be drawn in favour of ‘IDBI Bank Collection Account – NPS Trust’
Eligibility Criteria for Subscribing to IDBI Bank NPS
To invest in the NPS scheme, the following eligibility qualifications should be met –
- You should be an Indian citizen
- NRIs can invest in NPS provided they have an Indian passport in their name
- You should be aged between 18 and 60 years when subscribing to the scheme
- You should comply with the KYC norms of the bank
Contribution Amount Criteria
Whether you open a Tier I account, Tier II account or both, you would have to comply with the minimum contribution criterion every financial year. This contribution is needed to keep your account active. The minimum contribution depends on the type of account that you choose and is as follows –
- The minimum amount for account opening – Rs.500
- The minimum contribution in a running account – Rs.500
- The minimum contribution in a financial year – Rs.6000
- The minimum amount for account opening – Rs.1000
- The minimum contribution in a running account – Rs.250
- The minimum contribution in a financial year – Rs.250
For maximum contribution, however, there is no limit. You can contribute any amount as per your suitability.
Charges Applicable for IDBI Bank NPS
To subscribe to the National Pension Scheme IDBI Bank levies some charges which are as follows –
- Registration charges – Rs.200 payable one time when opening the account. This charge is deducted from the contribution amount
- Contribution processing charges – 0.25% of each contributed amount subject to a minimum of Rs.20 and maximum of Rs.25, 000
- Non-financial transaction processing charges – Rs.20 for each service request
- Permanent Retirement Account opening charges – Rs.50 payable to CRA once when opening the account
- Permanent Retirement Account maintenance charges – Rs.95/year payable to the CRA
- Transaction processing charges – Rs.4 per transaction payable to the CRA
Understand the aspects of the NPS scheme before investing and then visit IDBI Bank’s designated branches to invest in the scheme easily.