NPS Account — How to Open National Pension System Account Online

The National Pension System (NPS) is a government-backed retirement savings scheme regulated by the Pension Fund Regulatory and Development Authority (PFRDA). It allows any Indian citizen between 18 and 70 years to invest regularly and build a retirement corpus that provides a monthly pension after age 60.

NPS offers market-linked returns (typically 9–12% over the long term), flexible fund choices, and one of the best tax benefits available under the Income Tax Act. You can open an NPS account entirely online through the eNPS portal in under 15 minutes.

What is NPS?

NPS was launched in 2004 for government employees and opened to all citizens in 2009. It is a defined contribution scheme — your pension depends on how much you invest and how your funds perform.

Key highlights:

• Regulated by PFRDA (Government of India)
• Open to all Indian citizens aged 18–70 years
• Two account types: Tier 1 (retirement) and Tier 2 (savings)
• Choose your own asset allocation and pension fund manager
• Partial withdrawal allowed after 3 years (Tier 1)
• At age 60: withdraw up to 60% tax-free, use 40% to buy an annuity (monthly pension)

NPS Tier 1 vs Tier 2 — What's the Difference?

Tier 1 is mandatory to open first. Tier 2 is optional and works like a mutual fund with no lock-in.

Tax Benefits of NPS

NPS offers up to ₹2 lakh in tax deductions — more than most other instruments. Here is the breakdown:

1. Section 80CCD(1) — Employee's Own Contribution

• Deduction up to 10% of salary (for salaried) or 20% of gross income (for self-employed)
• This falls within the overall ₹1.5 lakh limit of Section 80C

2. Section 80CCD(1B) — Additional NPS Benefit

• Extra ₹50,000 deduction over and above the ₹1.5 lakh 80C limit
• Available to both salaried and self-employed individuals
• This is the exclusive NPS advantage — no other product offers this

3. Section 80CCD(2) — Employer's Contribution

• Employer's NPS contribution is deductible up to 14% of salary (central government) or 10% of salary (others)
• This is outside the ₹1.5 lakh limit — a significant additional benefit
• Not available to self-employed individuals

Tax on Withdrawal

• At maturity (age 60): 60% withdrawal is completely tax-free
• The 40% used to buy annuity is tax-free at the time of purchase
• The annuity income (monthly pension) is taxable as per your income slab

Note: Under the new tax regime (applicable from FY 2023–24), only Section 80CCD(2) (employer contribution) is available. Sections 80CCD(1) and 80CCD(1B) are not available under the new regime.

NPS Fund Choices — Where is Your Money Invested?

NPS invests your money in a mix of these four asset classes:

Investment Choices

1. Active Choice — You decide the allocation across E, C, G, and A

   • Maximum equity (E) allowed: 75% up to age 50, then reduces by 2.5% each year
   • Maximum in Alternative Assets (A): 5%

2. Auto Choice (Lifecycle Fund) — Allocation adjusts automatically based on your age

   • Aggressive (LC-75): Starts with 75% equity, reduces with age
   • Moderate (LC-50): Starts with 50% equity
   • Conservative (LC-25): Starts with 25% equity

For most people under 40, Active Choice with 75% equity or Aggressive Auto Choice works well for long-term wealth building.

NPS Pension Fund Managers

You must choose one pension fund manager (PFM) for your NPS account. You can change your PFM once per year. Current PFMs registered with PFRDA:

1. SBI Pension Funds Pvt. Ltd.
2. LIC Pension Fund Ltd.
3. UTI Retirement Solutions Ltd.
4. HDFC Pension Management Company Ltd.
5. ICICI Prudential Pension Funds Management Company Ltd.
6. Kotak Mahindra Pension Fund Ltd.
7. Aditya Birla Sun Life Pension Management Ltd.
8. Tata Pension Management Ltd.
9. Max Life Pension Fund Management Ltd.
10. Axis Pension Fund Management Ltd.

Tip: Compare returns of different PFMs on the NPS Trust website before choosing. Historical performance of Tier 1 Scheme E (equity) varies between PFMs.

How to Open NPS Account Online — eNPS Registration (Step-by-Step)

You can register for NPS online through the eNPS portal without visiting any bank or office.

Documents Required

• Aadhaar card (linked to mobile number for OTP verification)
• PAN card
• Bank account details (account number, IFSC)
• Scanned photograph and signature (JPEG, max 500 KB each)

Steps to Register on eNPS

1. Go to the eNPS portal: https://enps.nsdl.com/eNPS/NationalPensionSystem.html
2. Click "Registration" → Select "Individual Subscriber"
3. Choose your account type — Tier 1 (mandatory), optionally add Tier 2
4. Enter your Aadhaar number and verify via OTP sent to your Aadhaar-linked mobile
5. Fill in personal details: name, date of birth, address, nomination details
6. Enter PAN number and bank account details
7. Upload photograph and signature
8. Select your Pension Fund Manager and investment choice (Active or Auto)
9. Choose asset allocation (if Active Choice)
10. Make the initial contribution — minimum ₹500 for Tier 1 (online payment via net banking/debit card/UPI)
11. Submit the form and note your Permanent Retirement Account Number (PRAN)
12. Your PRAN card will be sent to your registered address

The entire process takes about 10–15 minutes. Your PRAN is your unique NPS identity — keep it safe.

Minimum Contribution Requirements

If your Tier 1 account is frozen due to non-contribution, you can reactivate it by paying the minimum due amount plus the penalty.

NPS Withdrawal Rules

At Maturity (Age 60)

• Withdraw up to 60% as lump sum (tax-free)
• Use at least 40% to buy an annuity from a PFRDA-registered annuity provider
• If total corpus is ≤ ₹5 lakh, you can withdraw 100% as lump sum

Premature Exit (Before Age 60)

• Allowed after completing 5 years in NPS
• Withdraw up to 20% as lump sum
• Must use at least 80% to buy an annuity
• If total corpus is ≤ ₹2.5 lakh, you can withdraw 100%

Partial Withdrawal (From Tier 1)

• Allowed after 3 years of account opening
• Maximum 25% of your own contributions (employer contributions excluded)
• Allowed for specific reasons: children's education/marriage, home purchase/construction, medical treatment, skill development, starting a business
• Maximum 3 partial withdrawals during the entire NPS tenure

Deferment Option

• You can defer withdrawal up to age 75 — your money continues to grow
• You can defer lump sum, annuity, or both

NPS vs PPF vs EPF — Comparison

Key takeaway: NPS gives the highest tax benefit (₹2 lakh) and potentially higher returns, but it's not fully tax-free like PPF. Use NPS for the extra ₹50,000 deduction under 80CCD(1B) even if you already max out PPF.

Related guides: PPF Account Guide | EPF Withdrawal Guide | Income Tax Return Filing

NPS Tax Benefit Calculator — Quick Approach

Here's how to estimate your NPS tax saving:

1. Your tax slab rate — 20% or 30% (old regime)
2. 80CCD(1B) contribution — ₹50,000
3. Tax saved = ₹50,000 × your slab rate

If your employer also contributes under 80CCD(2), the total tax benefit increases further. For salaried individuals in the 30% bracket contributing ₹50,000 to NPS with employer matching 10% of basic salary, the effective annual tax saving can be ₹30,000–₹60,000+.

How to Check NPS Account Balance

1. Online: Log in to CRA-NSDL portal with your PRAN and password
2. eNPS: Check via eNPS portal
3. UMANG app: Download the UMANG app → NPS section
4. SMS/Missed call: Not available currently — use the online portals

Frequently Asked Questions (FAQ)

1. Can NRIs open an NPS account?

Yes, NRIs can open an NPS account. However, OCI (Overseas Citizen of India) cardholders are not eligible. NRI accounts are subject to RBI and FEMA regulations. If the NRI's citizenship status changes, the account will be closed.

2. Can I have two NPS accounts?

No. Each individual can have only one PRAN (Permanent Retirement Account Number). If you already have an NPS account through your employer, you can use the same PRAN to make personal contributions via eNPS.

3. What happens to my NPS if I change jobs?

Your NPS account is portable. Your PRAN stays the same regardless of your employer. Simply inform your new employer of your existing PRAN, and they can start contributing to it.

4. Is NPS better than mutual funds for retirement?

NPS has a tax advantage (extra ₹50,000 under 80CCD(1B)) and lower fund management charges (0.01% vs 1–2% for mutual funds). However, mutual funds offer more flexibility — no lock-in, no annuity requirement, and a wider range of fund options. A combination of both often works best.

5. What is the annuity requirement at age 60?

You must use at least 40% of your NPS corpus to purchase an annuity plan from a PFRDA-empanelled insurance company (LIC, SBI Life, ICICI Prudential Life, HDFC Life, etc.). The annuity provides you a regular monthly pension for life.

6. Can I change my pension fund manager or asset allocation?

Yes. You can change your PFM once per year and change your asset allocation twice per year through the CRA portal or eNPS.

7. What are the charges in NPS?

NPS has very low charges:

• PRA opening charge: ₹200 (one-time, eNPS) or ₹400 (PoP)
• Annual PRA maintenance: ₹75 per year (NSDL CRA)
• Fund management charge: 0.01% (among the lowest in the world)
• Transaction charges: ₹3.75 per contribution (CRA) + ₹0.50 (NPS Trust)

Important Links

• eNPS Portal (Open/Contribute): https://enps.nsdl.com/eNPS/NationalPensionSystem.html
• NPS CRA (Account Management): https://npscra.nsdl.co.in
• PFRDA (Regulator): https://www.pfrda.org.in
• NPS Trust (Fund Performance): https://npstrust.org.in

Also read: Atal Pension Yojana (APY) Guide — a simpler government pension scheme with guaranteed monthly pension of ₹1,000–₹5,000.