6 things to know about the New Pension Scheme (NPS)
1) You can open an NPS account at designated banks, post office branches or brokerages. You will be charged a one-time fee of Rs 40. Carry a copy of your PAN, address proof, 3 photographs and your bank details.
2) You will be allotted a Permanent Retirement Account Number. This is the unique identification number given to your NPS account. There is a one-time fee of Rs 50 and an annual maintenance fee of Rs 350.
3) There are two types of NPS accounts. Tier I account is a pension account from which you can’t withdraw before you turn 60. After 60, you have to stop contributing and start withdrawing from it.
4) You can withdraw 60% of the corpus as a lump sum or in a phased manner over the next 10 years till you turn 70. At least 40% will have to be put in an annuity to give you pension. At 70, entire balance is withdrawn.
5) You need to deposit at least Rs 6,000 a year in a Tier I account, with a minimum of four deposits in a year. Don’t make too many small contributions because there is a fixed charge on every transaction.
6) A Tier II account is more like a mutual fund from which you are free to withdraw any time you want. But you can open this only if you have a Tier I account. A Tier II account must have a minimum balance of Rs 2,000.
Source: Economic Times
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