Guide to invest in the National Pension Scheme
Guide to investing in the National Pension Scheme

The pension scheme launched by the Pension Fund Regulatory and Development Authority (PFRDA) is the cheapest market-linked retirement option available in India. Here's how you can invest in this low-cost scheme.

Who is eligible?

All Indian citizens between 18 and 60 years of age can invest in the NPS.

What are the charges?

The NPS funds can charge a maximum of 0.25% of the amount as fund management charges in a year. This makes the NPS the cheapest market-linked financial product in the country

Mini SIPs is a bad idea

Given that many of these are fixed charges, contributing small amounts is not very cost effective. Don't go by intermediaries' claims since are only trying to boost their income. Ten contributions of Rs 500 each will be charged Rs 260, or 5.2% of the investment. However, if Rs 5,000 is invested at one go, the charge will be Rs 26, or 0.52% of the amount.

Apart from the fund management charges, there are other charges you need to pay -
To be charged by the Central
Record-keeping Agency (CRA)
To be charged by the
Account opening (one time) = Rs 50
Registration (one time) = Rs 100
PRA maintenance (payable annually)
= Rs 100
Contribution upload (with each
investment) 0.25% of contribution =
Min. Rs 20 and Max. Rs 25,000
Charge per transaction = Rs 6
Other transactions = Rs 20 each
Decide your asset allocation

The NPS offers three types of funds and you can divide your corpus between these as per your risk appetite. However, the exposure to E class equity funds cannot exceed 50%.
Guide to investing in the National Pension Scheme
If the asset allocation is not specified, the investor's age decides the equity exposure. Up to 35 years, the allocation to equities is 50%. This is reduced every year by 2% after the investor turns 35, till it becomes 10% by the age of 55. You can also opt for the Lifecycle Fund by choice.
Choose a pension fund manager

The retirement savings of government employees are managed by the LIC Pension Fund, SBI Pension Fund and UTI Retirement Solutions. The  
general public can choose from any of the eight pension fund managers.

You can switch from one fund manager to another, but will have to continue with the new fund for at least one year before you can switch again.  
If you do not specify your choice of fund manager, then by default, your money will be managed by the SBI Pension Fund, the largest pension  

You can choose any of the eight pension funds to manage your retirement savings

1. HDFC Pension Management Company = NA
2. ICICI Prudential Pension Funds Management Company = 6.67%
3. Kotak Mahindra Pension Fund = 6.36%
4. LIC Pension Fund = NA
5. Reliance Capital Pension Fund = 5.87%
6. SBI Pension Funds = 5.84%
7. UTI Retirement Solutions = 5.88%
8. DSP BlackRock Pension Fund Managers = NA

Data as on 06 Sept 2013.
Figures are SIP returns since June 2009
Get a PRAN

Go to a point of presence service provider (POP-SP) and apply for a permanent retirement
account number (PRAN). Nearly 9,000 bank branches and post offices act as POPSPs.

For a detailed list, go to: You will get a receipt number.

Use it to track the status of your PRAN application at: //

In a few days, the Central Record-keeping Agency (CRA) shall send your PRAN card and
account details. You can then make a contribution (minimum Rs 500) in any fund of your

The following documents need to be submitted along with the application -

1. Proof of date of birth
2. Address proof
3. Identity proof
4. Self declaration that you are not already a member of NPS
5. Coloured passport size photograph
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