How to do Investment in NPS
To invest in the National Pension Scheme (NPS), you can follow these steps:
- Eligibility: Ensure you meet the eligibility criteria to invest in NPS. The scheme is open to Indian citizens aged between 18 and 65.
- Choose a Point of Presence (PoP): A PoP is a financial institution authorized by the Pension Fund Regulatory and Development Authority (PFRDA) to facilitate NPS investments. Select a PoP that suits your requirements. Banks, stockbrokers, and other financial institutions can act as PoPs.
- Fill the application form: Obtain the NPS application form from your chosen PoP. Fill in the required details such as personal information, investment preference, and choice of pension fund managers (PFMs).
- KYC Documentation: Submit the necessary Know Your Customer (KYC) documents along with your application form. These typically include identity proof, address proof, and a recent photograph.
- Choose an investment option: NPS offers two investment choices: Active Choice and Auto Choice. In Active Choice, you have control over the asset allocation among four asset classes (Equity, Corporate Bonds, Government Securities, and Alternative Investment Funds). Auto Choice adjusts the asset allocation based on your age.
- Nominate beneficiaries: Fill in the nomination details specifying the beneficiaries who will receive the accumulated pension wealth in the event of your demise.
- Contribution details: Decide on the amount you want to invest. NPS has a minimum annual contribution requirement of ₹1,000. You can also set up regular contributions through Electronic Clearing Service (ECS) or Standing Instructions (SI).
- Choose a pension fund manager: NPS offers multiple PFMs. Evaluate their performance, investment strategy, and historical returns before making a decision. You can select up to three PFMs and allocate your investment across them.
- Fund transfer: Provide the necessary funds for your investment to your PoP. You can make the payment through cash, cheque, demand draft, or online transfer.
- Permanent Retirement Account Number (PRAN): Once your application and contribution are processed, you will receive a Permanent Retirement Account Number (PRAN). It serves as your unique identifier for all NPS transactions.
- Accessing your account: You can access your NPS account online through the Central Recordkeeping Agency (CRA) website or the PoP’s online portal. This allows you to track your contributions, investment performance, and manage your account.
It’s advisable to consult a financial advisor or seek professional guidance to make informed investment decisions based on your financial goals and risk appetite.