The National Pension Scheme or NPS is a social security scheme introduced by the government of India. This scheme allows one to build a retirement fund and also get lifelong annuity incomes. When the scheme was launched, it was meant only for the Government employees but then the scheme was made accessible to all. Today, every individual can invest in the NPS Scheme if he/she fulfils some basic eligibility criteria prescribed by the scheme.
Banks and post offices have been authorized to allow individuals to open an NPS scheme in their name. SBI, India’s largest public sector bank, also allows customers to open an SBI NPS account through it. Let’s understand the different aspects of the same and how you can invest in the National Pension Scheme in SBI.
Here are the salient features of the national pension scheme in SBI –
To invest in the NPS scheme, SBI has a set of eligibility criteria that are also applicable for NPS investments. These eligibility criteria are as follows –
For investing in the National Pension Scheme, SBI offers two modes of application – offline and online. Here are the processes for both these modes of investments –
The Pension Fund Regulatory and Development Authority (PFRDA) has allowed some banks to act as a Point of Presence for NPS investments. SBI is one such bank registered with PFRDA which is a POP for NPS applications. Some of SBI’s branches act as authorized POP Service Providers and you can visit such branches to apply for the opening of the NPS account. To find a list of SBI’s branches that serve as POP-SPs, you can use the link and enter in your State and City. The authorized branches and their addresses would be shown.
Locate the nearest SBI branch and visit the branch for opening an NPS account. At the branch, you can get the NPS registration form which you should fill up and submit to apply for the opening of the NPS account. The form is also available online at this link which you can download, print, fill up and then submit at the authorized SBI branch for opening the account. Along with the form, attach your recent coloured photograph and submit your KYC documents to complete the account opening application process.
Besides submitting the registration form, you are also required to make the initial contribution to open the NPS account. To do so, avail the NPS Contribution Instruction Slip (NCIS) from the branch, fill it up and submit it with the contribution amount. The NCIS can also be downloaded online from the bank’s website using the link
SBI would, then, verify your details and open the account in your name once the verification is done.
The facility of online investment into the NPS scheme is available for the existing customers of the bank. Customers who use the net banking facility of the bank would be allowed to open an account of the National Pension Scheme in SBI through online modes. For doing that, they should visit www.onlinesbi.com and log in to their net banking account using their user ID and password. On the home page of their account, under ‘Payments and Transfers’, there would be the option of ‘NPS contributions’. They would have to add a beneficiary to contribute to the NPS scheme online. The contribution would be debited from the savings account and credited to the NPS account held in the customer’s name.
After you open the NPS account in SBI, your investment would continue till 60 years of age. Then, the scheme would mature and you would be allowed to withdraw up to 60% of the accumulated corpus in a lump sum. This withdrawal would be tax-free in your hands. The remaining corpus would be used to pay annuities and such annuities would be taxable at your income tax slab rates.
So, understand the nature of NPS investments and their features and then invest in the pension scheme in SBI through the online or the offline mode.
Ques. How is NPS calculated?
Ans. Just like all other pension schemes globally, NPS uses compounding interest to calculate returns. One can use the NPS calculator available over the internet to calculate the NPS returns.
Ques. How many contributions can be made towards the NPS account?
Ans. There is no fixed lower or upper cap to the number of contributions that can be made per year. The account holder is free to manage the frequency and amounts of contributions.
Ques. Can an NRI open an NPS account?
Ans. Yes, an NRI can open an NPS account.
Ques. What are the tax benefits one can avail of under NPS?
Ans. The various Tax benefits under NPS are as follows:
a. Employee Contribution:
Deduction of up to 10% of the salary (basic+ DA) within an overall cap of Rs.1.50 Lakh u/s 80C.
b. Voluntary Contribution:
Deduction of up to Rs.50,000 u/s 80 CCD(1B) from taxable income for an additional contribution to NPS.
c. Employer Contribution:
Deduction of up to 10% of the salary (Basic + DA) from the employee’s taxable income u/s 80 CCD(2). This is above the limits u/s 80C.