Q: Who can open an NPS account?
A: Any Indian citizen, living in India or abroad, between 18 and 70 years old can open an NPS account.
Q: What are the two types of NPS accounts?
A: The main account is Tier I, which is for retirement and has a lock-in period. Tier II is a second, voluntary account for extra savings with no lock-in, but it has no tax benefits.
Q: What are the tax benefits of NPS?
A: You can save tax on your investment up to ₹1.5 lakh and an extra ₹50,000 just for NPS.
Q: How is my money invested in NPS?
A: You can choose to have your money invested automatically based on your age (Auto Choice), or you can choose where your money goes yourself (Active Choice), such as in stocks or bonds.
Q: Can I take out money from my NPS before I retire?
A: You can take out some money early for special reasons like a medical emergency, but only after 3 years. This is called a partial withdrawal.
Q: What happens to my NPS money when I turn 60?
A: At age 60, you can take out up to 60% of your money as a tax-free lump sum. You must use the other 40% to buy a pension plan (annuity) that gives you a regular income.
Q: Who looks after NPS?
A: A government body called the PFRDA (Pension Fund Regulatory and Development Authority) manages and controls NPS to make sure it is safe.
Q: Is the money in NPS guaranteed to grow?
A: No, the money you earn in NPS depends on the market. It is not like a bank deposit with fixed returns. The value of your investment can go up or down.
Q: What is an annuity?
A: An annuity is a plan you buy with some of your NPS money that pays you a regular amount every month after you retire.
Q: How do I choose the best Pension Fund Manager (PFM)?
A: To choose a PFM, you should look at how well they have managed funds in the past. Also, think about your own comfort with risk. For many people, the Auto Choice option is the easiest.
Q: Where can I see how well NPS funds have performed?
A: You can find official performance reports for all NPS funds on the NPS Trust or PFRDA websites.
Q: What if I want to change my Pension Fund Manager?
A: You can change your PFM once a year if you are not happy with their performance.
