National Pension Scheme


National Pension System (NPS) is a voluntary, defined contribution retirement savings scheme. The NPS has been designed to enable systematic savings during the subscriber's working life.. It is an attempt towards finding a sustainable solution to provide adequate retirement income to every citizen of India.

How NPS Works?

  • Under the NPS, an individual’s savings is pooled in a pension fund.
  • These funds are invested by Pension Fund Regulatory and Development Authority (PFRDA) regulated professional fund managers as per the approved investment guidelines in the diversified portfolios comprising of government bonds, bills, corporate debentures and shares
  • These contributions would grow and accumulate over the years, depending on the returns earned on the investment made.

At the time of a normal exit from NPS, the subscribers may use the accumulated pension wealth under the scheme either to purchase a life annuity from a PFRDA empanelled life insurance company or withdraw a part of the accumulated pension wealth as lump-sum, if they choose to do so.

SenSage provides service for opening NPS Accounts of investors.


All citizens age from 18 years to 60 years of age, including NRIs.

Additional tax benefit

As per the amendment made by Union Budget 2015 in tax provisions for FY 2015-16, if any customer contributes voluntarily towards the NPS scheme, then he would get an additional benefit of INR 50,000 under section 80CCD (1B) which would be over and above the ceiling limit of INR 1,50,000 as prescribed under section 80 CCE.

Features and Benefits of National Pension System (NPS)


NPS offers a range of investment options and choice of Pension Fund Managers (PFMs) for planning the growth of your investments in a reasonable manner and see your money grow. Individuals can switch over from one investment option to another or from one fund manager to another, subject, of course, to certain regulatory restrictions. The returns are totally market related.

Flexibility to choose between Active and Auto Choice for distribution:

The subscribers can choose between 8 Fund Managers namely-

  1. ICICI Prudential Pension Fund Management Co. Ltd.
  2. HDFC Pension Management Co. Ltd.
  3. Kotak Mahindra Pension Fund Ltd.
  4. LIC Pension Fund Ltd.
  5. Reliance Capital Pension Fund Ltd.
  6. SBI Pension Funds Pvt. Ltd
  7. UTI Retirement Solutions Ltd
  8. Pension Fund (PF) to be incorporated by Birla Sunlife Insurance Co. Ltd

One Fund Manager must compulsorily be selected.

Flexibility Flexibility to choose between 8 Fund Managers to choose between Active and Auto Choice for distribution: A subscriber must choose between active choice and auto choice for distribution of his contribution. If active choice is selected, the subscriber must indicate the percentage distribution between corporate, gilt and equity. The maximum investment allowed in equity is 50%.

Simple: Opening an account with NPS provides a Permanent Retirement Account Number (PRAN), which is a unique number and it remains with the subscriber throughout his lifetime. The scheme is structured into two tiers:

  1. Tier-I account: This is the non withdrawal Permanent Retirement Account in which the accumulations are deposited and invested as per the option of the subscriber.
  2. Tier-II account: This is a voluntary withdrawal account which is allowed only when there is an active Tier I account in the name of the subscriber. The withdrawals are permitted from this account as per the needs of the subscriber as and when claimed.


NPS provides seamless portability across jobs and across locations, unlike all current pension plans. It would provide hassle-free arrangement for the individual subscribers.


NPS is regulated by PFRDA, with transparent investment norms, regular monitoring and performance review of fund managers by NPS Trust.



The subscriber wishing to exit from NPS has to submit a Withdrawal Application Form to the concerned Point-of-Presence (POP) along with the documents specified below for withdrawal of the benefits.

Following documents are required to be submitted along with the withdrawal forms in order to settle the claims:

  1. PRAN card in original
  2. Attested copy of proof of identity (e. g. Passport, Aadhaar Card, PAN Card, valid Driving License, Voter ID Card etc.)
  3. Attested copy of proof of address (e. g. Passport, Aadhaar Card, Valid Driving License, Voter ID Card etc.)
  4. Cancelled cheque (containing Subscriber Name, Bank Account Number and IFSC Code) or Bank Certificate containing Name, Bank Account Number and IFSC code, for direct credit or electronic transfer.

  • The POP would authenticate the documents and forward them to Central Record-keeping Agency (CRA) the National Security Depository Limited (NSDL).
  • CRA in turn would register the claim and forward the necessary application form along with the procedure to be followed and documents that need to be submitted.
  • Once the documents are received, CRA processes the application and settles the account.

Even if it seems a long way off, it pays to plan for your retirement as early as possible. Most people end up relying on their children and their own savings for income in retirement. How much you’ll need to save will depend on your own circumstances, but the sooner you start, the more you will have.