2. Introduction
Pension plans provide financial security and stability
during old age. Retirement plan ensures that people
live with pride and without compromising on their
standard of living during advancing years.
The National Pension System (NPS) is a defined-
contribution pension system operated by
the Government of India in 2004
All citizens of India between 18 to 60 years of age
are eligible for investing in NPS.
3. Objectives
To Provide old age income
Safe and reasonable market based returns over the long
term
Extending old age security coverage to all citizens.
To reach out to and provide social security to vulnerable
sections of society, particularly those living below the
poverty line.
4. KeyPOints
National Pension System (NPS), regulated by Pension Fund
Regulatory and Development Authority (PFRDA)
There Are two types of pension accounts-
▫ Tier - I pension account: You will contribute your savings for
retirement into this non withdrawal account.
▫ Tier - II savings account: This is an add-on account, which is
simply a voluntary savings facility. You are free to withdraw
your savings from this account whenever you wish
6. Minimum Contributionand Charges
Tier 1 Tier 2
• Entry Age (18-60) years
• Minimum contribution to open A/C
Rs. 500/-
• Minimum contribution in financial
year Rs. 6,000/-
• Minimum A/c balance in a financial
year N.A
• Fund Management Fee (p.a.) 0.25%
Maximum
• Entry Age (18-60) years
• Minimum contribution to open A/C
Rs. 1,000/-
• Minimum contribution in financial
year Rs. 250/-
• Minimum A/c balance in a financial
year Units worth Rs. 2,000/-
• Fund Management Fee (p.a.) 0.25%
Maximum
7. Benefits Of joiningNPS
It is meant for all citizens of India between age 18 to 60
years
It is Flexible, one can choose his own Investment option
and Pension Fund Manager
It is Portable, one can operate the account from anywhere
in country, Even if you change your City, job, or Pension
Fund Manager
Tax benefits would be available as per the Income Tax
Act 1961 as amended from time to time.
8. Reasons For Failure
Difficulty to access
Lack of Incentives, There is no Direct Incentives for
people selling scheme
Lack of participation by service providers
Low Distribution costs to Agents and point of presence
Complications of Tier 1 and Tier 2 accounts
Low fund Managements Cost as 90 paisa for 10,000
fund management which affects the fund management
operational cost and income
9. Demand of Pension in India
Innovation and Technology has lead to increase in life
expectancy of Humans.
Therefore Increase in life expectancy will require to fulfil
the basic needs in old age which will lead to great
demand of pension schemes in India
Therefore with improvements in cost factors such as
Management expense and easily availability will lead to
success of New Pension Schemes
