
Launched in 2004, the National Pension Scheme (NPS) is a government-sponsored pension scheme that can be of great help. Initially available only for government employees, in 2009, it was opened to all sections.
Financial security during those post-retirement years is a genuine concern that plagues many. Ramakanth Desai (name changed) is a 59-year-old bank employee who is set to retire in less than six months. While he is eagerly waiting for his last day at work, the fear of not having a steady income is something that has been troubling him for a year now.
While he has been financially prudent and made good investments, he feels that the lack of a steady monthly income is something that will need time to settle in to.

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So what can be done to sooth such concerns?
Launched in 2004, the National Pension Scheme (NPS) is a government-sponsored pension scheme that can be of great help. Initially available only for government employees, in 2009, it was opened to all sections.
The scheme allows subscribers to contribute regularly in a pension account during their working life. On retirement, subscribers can withdraw a part of the corpus in a lump sum and use the remaining corpus to buy an annuity – securing a regular income after retirement.
One of the biggest benefits of this scheme is that you can plan your retirement and be sure that you will receive an assured amount of returns at the time of retirement.
Who can buy an NPS scheme?
If you are an Indian citizen between 18 and 60 years, then you are eligible to apply for the NPS scheme.
An NRI can open an NPS account, but their contribution will be subject to regulatory clearance by RBI and FEMA. Such an account would close if the citizenship status of the NRI changes.

Photo Source: Anshu Bhatia
Upon attainment of 60-years-of-age, subscribers will not be permitted to make further contributions to the NPS accounts. The subscriber can also defer withdrawing the lump sum amount until 70-years-of-age.
How to open an NPS account?
You should open an NPS account with entities known as Point of Presence (POP). Most banks, both private and public sector, are enrolled as POPs. Several financial institutions also act as POPs. The authorised branches of a POP called a point of presence service providers (POP-SPs), act as the collection points.
To find a Point of Presence closest to you, you can log in to the official Pension Fund Regulatory and Development Fund, website here.
Once the account is opened, the subscriber will need to make a minimum contribution of Rs 6000 every year. If there is a lapse in payment or the minimum amount is not paid then the account is frozen until the payment of arrears and a penalty amount of Rs 100 is made.
If the subscriber dies before reaching the age of 60, the entire accumulated wealth would be paid to the nominee/legal heir of the subscriber.
Advantages of this scheme:
1. If you plan your investments into this scheme well, you might find yourself in a good financial position post-retirement.
2. The minimum amount needed to be deposited annually is only Rs 6000 – making this an affordable scheme.
3. It is easy to create an account, and it gives the subscriber complete control over investments.
4. Since the NPS scheme is a market-linked investment plan, it provides an option for the investor to choose stocks, government bonds and other securities as they please.
5. The subscriber can keep track of savings online. This helps the subscriber be aware of investments on a day-to-day basis.
6. After the creation of the NPS account, the subscriber is provided with a Permanent Retirement Account Number (PRAN), which is a unique number that stays with the subscriber regardless of job transfers and locations.
If you are eligible to apply for this scheme, do check the details and apply now.
(Edited by Vinayak Hegde)
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