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HDFC National Pension Scheme

National Pension System (NPS) is a pension scheme introduced by the government of India. This investment product was introduced in order to help the investors create a retirement corpus and avail pension during the post-retirement phase of their life. The scheme is designed to offer market-linked returns to the subscribers i.e. the pensioners. The scheme is regulated by the ‘Pension Fund Regulatory and Development Authority (PFRDA)’. The scheme is extended to every Indian Citizen, whether resident or non-resident. Government Employees, Non-Government Employees and Self-Employed, every Indian Citizen can invest under this scheme.

The National Pension scheme managed by HDFC Pension Management Company Limited is a perfectly created products for subscribers who want a good retirement planning. The National Pension Scheme is designed to collect investment from the investors during their employment years and give it back to the subscribers at the time of their retirement along with returns earned. Subscribers can avail a lump sum benefit at the time of retirement along with pension to curb the financial need arising post-retirement. The National Pension Scheme is a well-designed and curated investment product that offers hassle-free opportunity to create a reasonable retirement corpus by investing the money in market-based instruments like equity bonds, government bonds, corporate bonds etc. Let us understand the features and benefits offered by the National Pension Scheme managed by HDFC Pension Management Company Limited.

Features of HDFC National Pension Scheme

The National Pension Scheme offers not one but many exquisite features to the subscribers. NPS allows a unique investment opportunity to Individuals who wish to create a corpus of money through long-term saving and investment. Following are some of the key highlight features of the HDFC National Pension Scheme:

  • NPS allows the subscribers to create an account having a 12-digit unique account number called as the ‘Permanent Retirement Account Number (PRAN)
  • Allotment of PRAN number signifies the opening of the NPS account. The PRAN number is allotted in order to process hassle-free transactions within the NPS account. The PRAN number makes it possible for the subscribers to easily access their NPS account from any corner of the world. The PRAN number is the permanent address of your NPS account i.e. it remains the same, irrespective of jobs change or location change.
  • The NPS account provides you with a tool called as the NPS Calculator that helps you in calculating the amount of pension you will receive at the end of the tenure of your NPS investment. You can calculate your pension at any given time.
  • NPS invests the collected corpus in various market-based instruments. So, the NPS scheme offers the facility of choosing the fund managers who provide valuable insight on portfolio management and take care of your investment. However, if you are unhappy with the returns offered by one fund manager, you can switch your NPS account to another fund manager.

Thus, by over viewing the performance of various fund managers, you can easily switch your NPS account from one fund manager to another. National Pension Scheme funds managed by HDFC are well managed. Hence, if your current fund manager is not doing justice to your investments, then you can switch to National Pension Scheme’s managed by HDFC Pension Management Company Limited.

  • NPS allows hassle-free access to one’s NPS account. Every subscriber having an NPS account can easily access their NPS account online and check the status of their account. The online facility has made it easier for the subscribers to invest and view the performance of their investments. For online access, the NPS provides unique Login ID and password to every subscriber.
  • Investing in NPS is highly flexible i.e. the amount of investment and the frequency of contribution to be made to the NPS account is as per the wish and convenience of the investor.
  • The governance and regulated terms and conditions of the NPS makes it one of the most transparent investment tools. The PFRDA is the governing and monitoring authority responsible for reviewing the performance of the NPS and the fund managers under the scheme.
  • 24*7 help is available for the subscribers of the National Pension Scheme. Customers can call the NPS authority through CRA or PFRDA Website or can call on the designated helpline number or can send an email. Alternatively, subscribers can also contact HDFC customer care support NPS@hdfcbank.com for any queries or help.
  • The investment under the National Pension Scheme is done in various market-based instruments namely equity, corporate bonds, government bonds etc. the performance of the account is based on the type of fund selected for investment.
  • The ‘PRAN’ is the permanent 12-digit account number provided to the NPS account subscriber. This number remains same throughout the life of the subscriber.
  • The National Pension Scheme is designed to create a corpus for retirement. Around 60% of the entire corpus accumulated can be withdrawn as lump sum. The balance however, has to be compulsorily annuitized. This annuity amount is taxable in the year of receipt under the ‘Income from Other Sources’ head.
  • Subscribers of the NPS account are allowed to open 2 types of accounts as under the same PRAN Number. The two types of accounts are as under:

Tier I

  • The tier 1 account is a non-withdrawable account i.e. the amount cannot be withdrawn unless the subscriber attains 60 years of age.
  • Partial withdrawal from the accumulated corpus is available subject to fulfillment of certain conditions.
  • The subscribers contributing to the tier 1 account can avail tax benefit up to Rs 1.50 Lakhs under Section 80C of the Income Tax Act, 1961.
  • The contributions made to the tier 1 account type are eligible for additional tax benefit of Rs. 50000 under Section 80CCD (1B) of the Income Tax Act, 1961

Tier II

  • A Tier-II account of the NPS is voluntary savings account offering flexibility to the subscriber to invest or withdraw funds from the accumulated corpus at any given point of time.
  • The subscribers who are having an active tier 1 account can open tier 2 account.
  • The subscribers can opt for different investment schemes and nominations under both the account.
  • Subscribers can transfer funds from tier 2 account to tier 1 account at any time.
  • As the tier 2 account can be opened only by the subscribers holding tier 1 account, there is no need to separately submit KYC documents for opening this account.
  • The NPS scheme offers hassle-free portability and accessibility to the subscribers as they can invest, manage or withdraw from anywhere and at any time.

Benefits of HDFC National Pension Scheme

The subscribers of the National Pension Scheme account can enjoy the following benefits-

  • Tax Benefit: The tier 1 account of the National Pension Scheme offer following tax benefits to its salaried subscribers-
    • Investment up to 10% of Salary (Basic + Dearness Allowance) is deductible from taxable income u/s 80CCD (1) of Income Tax Act, 1961, subject to Rs. 1.5 lakhs limit of Section 80C.
    • Additionally, investment up to Rs. 50,000 is deductible from taxable income u/s 80CCD (1B) of Income Tax Act, 1961 While, the self-employed professionals can avail following tax benefits
    • Investment up to 20% of Gross Annual Income is deductible from taxable income u/s 80CCD (1) of Income Tax Act, 1961 subject to Rs. 1.5 lakhs limit of Section 80C
    • Additionally, investment up to Rs. 50,000 is deductible from taxable income u/s 80CCD (1B) of Income Tax Act, 1961
    • Kindly note, no tax benefit on investment is available for the subscribers of Tier 2 NPS account holders.
  • Regulated: The NPS account is closely regulated by PFRDA allowing highest transparency in transactions.
  • Transparency: All the transactions in the NPS account are transparent as the account can be accessed online. The subscribers can also contribute online and track all the transactions online.
  • Minimal contribution: The minimum amount of deposit you need to make under the NPS account is Rs. 500 per month or Rs. 6000 annually.
  • Two accounts: The subscribers of the NPS account can invest in 2 types of accounts namely Tier I and tier 2 account. Both the account offers different features and benefit. The tier 1 account is a fixed investment type of account where the invested corpus is locked till the end of the tenure of the account and there are certain restrictions on the premature withdrawal of funds from this account. However, the tier 2 account is a voluntary account where the subscriber can invest and withdraw the funds from the account at any given time. There are no restrictions related to withdrawal attached to tier 2 account.
  • Risk Balancing: Since the NPS account invests the corpus in market-based instruments, it is important to balance the risk for this the equity exposure of the portfolio is capped at 50%. In this manner, the accumulated corpus in the account is protected from the market volatility.

Eligibility Criteria for HDFC’s National Pension Scheme

Subscribers need to fulfill the below mentioned eligibility criteria in order to apply for the National Pension Scheme:

  1. The age of the prospective subscriber must be between the range of 18 years to 65 years.
  2. For completing the process of account opening, the prospective subscriber needs to submit relevant KYC documents.

Following is the list of relevant KYC documents needed for opening of NPS account with HDFC:

  • Copy of Photo Id proof
  • Copy of Age Proof
  • Copy of Address proof
  • Duly filled Application form
  • Apart from the above-mentioned KYC norms, the subscriber needs to fulfil the below given criteria
  • Subscribers of the Tier 1 account must keep the following things in mind:
  1. The minimum contribution amount required for opening NPS account with HDFC is Rs.500
  2. The minimum amount for every contribution is Rs. 500
  3. The minimum mandatory Account Balance required in the account at the end of every financial year is Rs. 6,000
  4. The subscribers must contribute at least once in their NPS account with HDFC
  5. Subscribers of the Tier 1 account must keep the following things in mind:
  6. The minimum contribution amount required for opening NPS account with HDFC is Rs. 1000
  7. The minimum amount for every contribution is Rs. 250
  8. No minimum balance required
  9. Tier 2 account can only be opened by subscribers who are having an active tier 1 account.
  10. Subscribers can open both tier 1 and tier 2 account simultaneously. For such applications, the minimum account opening amount is Rs 1500.
  11. Submission of a cancelled cheque is mandatory in case of composite application or Tier 2 account.

How to Open NPS Account through HDFC Bank

The process of opening the NPS account with HDFC is very simple and quick. Subscribers can activate their NPS account via online channel. The account can be opened from any corner of the globe within few clicks. Following is the step-by-step guideline that will help you in opening the NPS account with HDFC quickly and hassle-free.

  • Customers of the HDFC bank can apply online to the NPS account through HDFC Bank website.
  • Click on the ‘Apply Online’ Button on the given link: www.hdfcbank.com/personal/products/investments/national-pension-system
  • The link shall direct you to cra.karvy.com/POPONLINE/POPAuthenticate#. This is karvy website which will take care of the account opening procedure.
  • Subscriber is then required to all the mandatory fields mentioned in the online application form.
  • Once all the required information is submitted, the receipt number of account opening will be generated. Subscriber can complete the entire application process in one go or else can do it later. In case the process is to be completed later, then this receipt number shall be helpful to search your application form from the Banks Database.
  • Subscribers need to submit the KYC documents. The verification of the KYC shall be carried out by HDFC Bank.
  • Subscribers need to enter all the required mandatory details like account number, account type, nominee details etc. before submitting the application. Remaining details may be Bank details, scheme details, nominee details etc.
  • Subscribers are required to submit all the scanned copies of photograph, signature etc for completing the process of form filling.
  • Once all the required details are filled, the subscribers shall be navigated to the payments page where they need to pay towards the first contribution towards the account.
  • Upon successful online payment, PRAN shall be generated and allotted to the individual.

FAQs on HDFC National Pension Scheme

How can I open a national pension scheme in HDFC?

You can open National Pension Scheme account with HDFC bank in two ways namely: online channel and offline channel. The online channel consists of filling the application form online and paying fees online. While in case of offline channel, the prospective subscriber needs to visit the nearest HDFC bank branch to open the account.

How can I open a national pension scheme?

You can open a national pension scheme account either online or by visiting the nearest point of presence counter of the NPS. For online account opening, kindly visit the given link: enps.nsdl.com/eNPS/NationalPensionSystem.html

How much can I invest in NPS?

There is no ceiling or maximum limit on the amount of contribution that can be made under the NPS accounts.

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