STUDY OF NATIONAL PENSION SCHEME

STUDY GUIDANCE & MENTORSHIP

Dr. Ramnath Guthe, WEALTHCON Founder, Guide & Mentor
STUDY LEADER
Dr. Rajnikant Gajjar
STUDY LEADERS
Dr. Priya Chudgar Dr. Vinay Kulkarni
Dr. Harsha Joon Dr. Nachiket Jadhav

VOLUNTEERS TEAM
Dr. Swalehin Bux Dr. Yusuf Bhambhani
Dr .Ramesh Hasani Dr. Jitendra Kumar Giri
Dr.Suresh Nayak Dr. Dhaval Shah
Dr Ashis Patnaik Dr. Jagdish Gosavi

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 NATIONAL PENSION SCHEME
BASIC PRINCIPLES
1. What is NPS?
National pension scheme. It is a scheme by Govt. of India. It was launched in
2004. It is voluntary defined contributory pension system. Initially it was for
central Govt. employees; later on in 2009 it was opened for all citizens of
India.
2. What is GOAL?
It was started with the decision of Govt. of India to stop pension for its all
employees joined after Jan 2004. It is an attempt by Govt. to form pensioned
society.
3. Who can join?
Any citizen of India resident or non-resident.
Age 18 to 65 years
KYC compliant
4. Who administers it?
It is administered and regulated by PFRDA means pension fund regulatory
and development authority of India.

STRUCTURE OF NPS ADMINISTRATION

1. NPS TRUST - safeguards subscribers’ interest.

2. Central record keeping agency CRA - maintains data and records.
3. Point of presence POP - collection distribution and servicing arm.
4. Pension fund managers - manages the investment
5. Custodian - takes care of assets.
6. Trustee bank - manages banking operations.

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 NPS LOGISTICS

A. WHO IS ELIGIBLE?
• All Indian citizens between 18 to 65 years of age including NRIs.
• Indian citizens can open Tier I or Tier I and Tier II both types of account,
but an NRI/OCI individual can open only Tier I account.

B. WHAT DO YOU NEED?

LET ALL THESE BE READY BEFORE REGISTRATION PROCESS STARTS.

• PAN Scanned Copy

• A mobile number,
• Email ID
• Active bank account with the net-banking facility enabled.
• Cancelled Cheque scanned Copy
• Passport Photo in required Format
• Scanned Copy of Bank Signature
• Aadhaar is no longer mandatory to open an NPS account.

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C. WHAT IS THE PROCESS?

CHOOSE THE MODE

ONLINE OFFLINE

CHOOSE THE INVESTMENT STRATEGY

AUTO ACTIVE

CHOOSE THE FUND MANAGER

ADD ALL DETAILS & UPLOAD

MAKE INITIAL CONTRIBUTION OF MINIMUM Rs 500

PRAN GENERATED

SIGN & SEND

E - Sign ONLINE TAKE PRINTOUT TO SIGN & COURIER

1. CHOOSE THE MODE

• Offline: NPS account opening through designated branches of the 26
banks.
• Online: opening of NPS ( E-NPS): This can be done through

Option 1 - Registration using Aadhaar Offline e-KYC (No commission

like POP method)

OR
Option 2 - Registration using PAN (KYC verification by Bank/Non Bank
POP)

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 POP: Points of Presence- Banks and other financial agencies
Disadvantage of POP: POP Trail Commission will be applicable on the
contribution amount @ 0.10% (subject to minimum of ₹ 10 and
maximum of ₹ 10,000 per transaction).

Note: While opening E-NPS account online, third party cookies must be
accepted beforehand so as to seamless transactions.

2. CHOOSE THE INVESTMENT STRATEGY

A. Active- Allows to decide the percentage of monthly contribution to

• E-equity,
• G- government bonds,
• C-corporate and
• A-alternative assets (REIT/InVIT),not offered by all, best if it is ignored
• Maximum percentage you can allot to equity is 75%.
B. Auto-According to your age the relative ratio of equity, corporate
bonds and the government securities keep on changing automatically.

3. CHOOSEWHO WILL MANAGE THE FUND

PFM or pension-fund manager- You need to specify your choice, from a list
of Seven (1)HDFC PF, (2)ICICI PF,(3)UTI RSL, (4)Birla PF,(5)Kotak PF (6)LIC
PF (7)SBI PF.These financial institutions have been approved by PFRDA as of
now, likely to be revised in future for more players, more competitive field.

***YOU CAN CHANGE THE INVESTMENT OPTIONS OR PFM LATER

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 4. FILL THE DETAILS as PROMPTED at each step AND UPLOAD.
Save the acknowledgement number in process, because with
same number, you can restart registration if abandoned for
some reason before it is finalised.

Nominee details have to be filled along witha cancelled cheque from chosen
bank account, a photograph and specimen signature have to be uploaded.

5. INITIAL CONTRIBUTION
• Contribution to NPS to be started with minimal Rs. 500 through net
banking.

PRAN IS YOUR PERMANENT RETIREMENT ACCOUNT NUMBER

• When all the above processes get successful, a PRAN (permanent

retirement account number) is generated.

6. THE LAST STEP

• Finally to complete the account opening, following options are available

➢ Through eSign option online authentication can be done using

Aadhar based OTP method. Service charge for eSign: Rs. 29.5
(including UIDAI charge of Rs. 20)
OR
➢ Completed form should be printed and couriered to Central Record
keeping Agency (CRA) after pasting the photograph and signing.
• Once everything done, then deposit at least Rs. 1000 per year to prevent
the PRAN becoming inactive.

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 D. REGULAR CONTRIBUTION

1. How can a Subscriber contribute to NPS?

To contribute in Tier I and Tier II account, the Subscriber needs to deposit the
contribution amount along with duly filled NCIS (NPS Contribution Instruction
Slip) to any POP-SP or alternatively can visit E-NPS website to make
contribution in NPS. Following are the three ways to contribute in NPS:

a. Fill contribution slip and submit it to any POP-SP

To find the nearest POP-SP, you may visit "Find your nearest POP-
SP"under "Important Links" section available on Home page of this
website.
b. Visit E-NPS website (https://enps.nsdl.com)
Submit your PRAN & DOB to get OTP on your Mobile to contribute
online by Net banking / Debit Card / Credit Card.
c. Download NPS Mobile App and contribute anytime and anywhere
For Android and IOS users

Contribution in NPS using UPI:

With a UPI-enabled bank account, you can simply create a UPI ID(Virtual
Payment Address) which can be used to send/ transfer money.

Steps for Activating UPI:

✔ Download the UPI application from the App Store/Banks website

✔ Register UPI ID (VPA) of your choice e.g., abc@upi

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✔ Set MPIN for authentication of transaction

✔ Link the bank and account number with the VPA

Steps for transaction using UPI:

1. User has to select UPI as mode of payment option. Payment through

your UPI is only up to Rs.2000/-(Including Charges).

2. Provide the Virtual Payment Address (VPA)

3. Payment notification will be received on UPI application

4. User has to login to UPI application and confirm the transaction within
the defined time limit

5. User needs to enter the MPIN to authenticate the transaction

Contribution can be done through UPI mode of payment by selecting

UPI as mode of payment option. Payment through your UPI is only upto
Rs.2000/-(Including Charges).

Best option is Direct Remit by adding virtual account as beneficiary

account in your bank. It is discussed in detail later on

2. What are the minimum contribution criteria under NPS?

A Subscriber is required to make initial contribution (minimum of Rs. 500 for

Tier I and a minimum of Rs. 1000 for Tier II) at the time of registration.

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Subsequently, a Subscriber can make contribution subject to the following
conditions:

Tier I:

a. Minimum amount per contribution - Rs. 500

b. Minimum contribution per Financial Year - Rs. 1,000
c. Minimum number of contributions in a Financial Year – one

Over and above the mandated limit of a minimum of one contribution in Tier I,
a Subscriber may decide on the frequency of the contributions across the year
as per his / her convenience.

Tier II:

a. Minimum amount per contribution - Rs. 250

b. No minimum balance required

3. When will the units be credited to my NPS account?

Units will be credited to the subscriber’s account on the day contribution is

invested by the PFM (Pension Fund Manager). It takes T+2 days to get unit
credited in subscriber account, wherein T being the date of fund receipt
at Trustee bank. This activity is called settlement in CRA system wherein,
contribution is transferred from POP to PFM for investment in predefined
scheme of subscriber and accordingly, the PFM declares NAV of the day and
Units are allotted to the subscriber.

We can understand this with an example as follow:

POP who as an interface for the subscriber in NPS, collects NPS contribution

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from subscriber and uploads the contribution details in the CRA system and at
the same time deposits the contribution to Trustee Bank (Bank designated for
collection of NPS contribution from NPS intermediaries such as POP). The
Trustee Bank, on receipt of contribution, uploads the contribution receipt
details on CRA system. On receipt of these two information (contribution
details from POP and contribution receipt information from Trustee Bank), the
settlement process is initiated in the CRA system.

4. Can a Subscriber make contributions in his / her NPS account before receipt
of the PRAN Card?

Yes. To contribute in NPS, only Permanent Retirement Account Number is

required. Once PRAN is allotted to a Subscriber, contribution can be made
irrespective of whether PRAN card is received or not.

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 ALL ABOUT NPS TIER 2 ACCOUNT

Tier 2 is an add-on account which provides you the flexibility to invest

and withdraw from various schemes available in NPS without any exit
load.

➢ If you have an active NPS TIER 1 account with PRAN number, you are

few clicks away from activating NPS Tier 2 account.

➢ https://enps.nsdl.com/eNPS/submitTier2Request.html

➢ Copy above link in your browser

➢ Open it

➢ There are 2 options Regular & Tax saving (TTS)

➢ Tax saving is permitted as of now, only for government employees. It

works like ELSS with LOCKED period of 3 years.

➢ Regular has no locked period, full liquidity. One can withdraw like open

ended mutual funds.

➢ Opt for Regular & Go ahead; be ready with scanned copies of PAN Card

& Cancelled Bank Cheque of relevant bank to upload as asked.

➢ One can keep bank details, nominee details same as Tier 1 or modify.

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 ➢ Same applies to selection of pension fund manager & investment

options.

➢ It is desirable to have different PFM for diversification.

➢ End process with contribution through designated bank

ADVANTAGES OF NPS TIER 2 ACCOUNTS.

Any time withdrawals is permitted,unlike NPS Tier 1 account.

NPS Tier 1 is for long term goal of Retirement Planning,while NPS Tier 2 is for

short & intermediate term goals like,kid education,festival expenses,big ticket

assets purchase,exotic vacations,kid marriage etc.

Single platform for multiple goals reduces assets management charges &

eliminates duplication efforts.

It is possible to partial lumpsum or total withdrwal of desired fixed

amount,that too,specifically,scheme wise, if so desired

Explore following You Tube Link to learn more

https://www.youtube.com/watch?v=eGNPaWPryJQ&feature=youtu.be

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HOW TO REGISTER FOR SAME DAY NAV BENEFITS BY DIRECT REMIT FACILITY

➢ Copy &paste below link in your browser

https://enps.nsdl.com/eNPS/NationalPensionSystem.html

➢ Open it

➢ Go to Register for D Remit / Get same day NAV.

➢ Follow steps.

➢ Your request will be registered.

➢ You will get Acknowledgement Receipt

➢ After a day or two, you will get email, with Virtual account numbers for both tier

accounts

➢ Go to your bank, add these accounts as beneficiary accounts, following detailed

steps in email to add specified bank, account type, its IFSC code.

➢ If you have downloaded NPS mobile app & still not availed of Direct Remit facility,

once you log in, there is a dialogue box prompting you to register for direct remit

facility, by clicking that link, in less than 5 minutes you will complete registration by

following steps as advised.

➢ Now whenever you pay to these beneficiary accounts, before 9:30 am, you will get

same day NAV instead of T+3 days protocol when done through routine portal.

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 There is no need to go to E-NPS for contribution. Beauty is this one time procedure,

works life time of NPS Account.

➢ Share a short video that guides how to create Virtual account ID for NPS Tier 1 & 2

accounts, it is a You Tube Link.

https://www.youtube.com/watch?v=ps11ky5oua4

➢ D Remit facility can be used to initiate SIP in NPS, just like as in Mutual Funds. Only

job to do is to make use of standing instruction facility of bank to pay respective NPS

Beneficiary account at desired interval & date. To understand it well, explore

following You Tube Link

https://www.youtube.com/watch?v=8goHejhh2DY

FOR WEALTHCON, NPS means Direct NPS (NO INTERMEDIARIES & LOWEST CHARGES)

ONLY, that is E-NPS only & contribution means Direct Remit facility only, by adding virtual

NPS tier 1 & 2 accounts as beneficiary accounts in related bank. Always invest before 9:30

am to get benefits of same day NAV.

Source:

A DIY guide to the NPS | Value Research (valueresearchonline.com)

NPS ki Pathsala & you tube videos

NSDL NPS website:

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 LIQUIDITY
Exit as per PFRDA Regulations 2015
1.Premature Exit
2. Superannuation
3. Upon Death of Subscriber

1. Pre-mature Exit
Definition: - exit before attaining the age of superannuation/attaining 60
years of age
One can exit from NPS only after completion of 10 years.

A. Withdrawal guidelines
• At least 80% of the accumulated pension has to be utilized for purchase
of an Annuity for regular monthly pension.
• The remaining funds can be withdrawn as lump sum.
• If total corpus up to Rs. 1 lakh, 100% lumpsum withdrawal allowed

B. Claim Id
• In case of Pre-mature Exit, the Subscriber needs to contact the POP for
generation of Claim ID for Withdrawal of NPS funds.
• Generation of Claim ID is not required if Withdrawal request is initiated
by POP.

C. Documents Needed
• PRAN card
• Advanced stamped receipt, to be duly filled and cross-signed on the
Revenue stamp by the Subscriber.
• KYC documents (address and photo-id proof)
• ‘Cancelled Cheque' or ‘Bank Certificate’ or ‘Copy of Bank Passbook’
• Withdrawal form

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 D. Conditions which need to be fulfilled for premature withdrawal
• Only after At least 3 years of investment
• Only 25% of self investment
• Only 3 times in the total tenure

E. Conditions in which premature withdrawal allowed

• Critical illness of self
• Children marriage
• Children higher education
• Buying or building a house

2. Upon Death
The entire accumulated pension corpus (100%) would be paid to the
nominee/legal heir of the subscriber.

A. In case of multiple nominees

• Withdrawal form needs to be submitted by all the nominees registered
in CRA system.
• If any nominee/s doesn’t not want to claim the NPS corpus:
o Relinquishment deed (on Rs 100 stamp paper, notarized) is to be
submitted by the nominee/s who doesn’t want to claim the NPS
benefits.
o Indemnity Bond (on Rs 100 stamp paper, notarized) is to be
submitted by the nominee who is claiming the NPS benefits.
• In case one nominee is a major and other is a minor,
o Major nominee will submit Withdrawal form.
o Guardian (on behalf of minor) will submit the Withdrawal form
along with the birth proof of the minor.
B. Documents Needed
Same as above. + Death Certificate

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 3. Superannuation

• Subscriber will have to use at least 40% of accumulated pension corpus

to purchase an annuity. Rest 60% can be withdrawn as lump sum.
• If the total accumulated pension corpus is less than or equal to Rs. 2
lakh, Subscriber can opt for 100% lump sum withdrawal.

Options of exit at 60 yrs age

1. Continuation of NPS account: can continue to contribute to NPS account

Up to 70 years. This is also eligible for tax benefits.
** Prefer this option {If you need neither lumpsom withdrawal nor annuity,
better to continue account with contribution(min 1000/yr) Active account
permits you freedom e.g. changing PFM, Investments schemes etc. Corpus will
grow & you get higher annuity funds. Liberty to discontinue at your
convenience is present.}
2. Deferment: defer Withdrawal and stay invested in NPS up to 70 years of
age. Subscriber can defer only lump sum Withdrawal, defer only Annuity or
defer both.
3. Start your Pension: Initiate exit request and start receiving pension.

4. Withdrawal Claim
• CRA generates a Claim ID six months prior to the date of
superannuation
• Claim ID is intimated to the subscriber vides e-mails, letters, SMS to
enable Subscriber six months before to make any changes (eg DOB,
address ) before initiating withdrawal request.
• Can initiate Online Withdrawal request. Such request needs to be
verified and authorized by POP
• Withdrawal status can be checked online.

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 A. Documents Needed
Same as above

B. Withdrawal of Lumpsum
1. Complete
2. Phased:
Up to 10 installments over the period from 60 years to 70 years are permitted.
Subscriber has to buy Annuity prior to Phased Withdrawal.

5. Annuity Schemes

A. Annuity for life– On death of the annuitant, payment of Annuity ceases.

B. Annuity for life with return of purchase price on death– On death of
the annuitant, payment of Annuity ceases and the purchase price is
returned to the nominee
C. Annuity payable for life with 100% Annuity payable to spouse on
death of annuitant– On death of the annuitant, Annuity is paid to the
spouse during life time. If the spouse predeceases the annuitant,
payment of Annuity will cease after the death of the annuitant.
D. Annuity payable for life with 100% Annuity payable to spouse on
death of annuitant with return on purchase of Annuity– On death of
the annuitant, Annuity is paid to the spouse during life time and
purchase price is returned to the nominee after the death of the spouse.

NPS withdrawal from Tier 2 account

No limit and no restrictions. No lock in, no tax benefits
Only government employees are eligible to claim NPS Tier 2 contributions
also as tax deduction under Section 80C provided the investment remains
locked-in for 3 years.

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 NPS- Taxation

As per Union Budget 2019----EEE status (Tax saving is at time of investing,

during earnings & at exit on lump sum amount.)

EEE Exempt at entry, earning and exit

t
TIER 1 TIER 2

Pension account Savings account

Mainly for retirement planning Safe investment purpose
Mandatory account Voluntary account (Only after Tier
No limit on maximum amount. 1)

Tax benefit Two types:

-Regular
1.5 Lakhs----Section 80 C (similar to
PPF) -TTS (Tax saving scheme)-needs to
be activated at enrollment stage
Additional 50,000---Section 80 After three-year lock in—
CCD(1b) tax deduction benefit under 80 C
(For 30% slab rate-15,600 tax can be claimed for central govt
saved) employees.
Currently not available for non govt
Over and above this 2 lakhs: employees.
For salaried individuals: for
contributions made by
employer:80CCD (2)
-14% Govt sector
-10% private sector

At maturity (60 years) After three years lock in

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60% corpus—tax free and can be Entire amount can be
withdrawn lumpsum withdrawn/premature exit
possible.
40% mandatory to buy an annuity-
Series of payments at equal Taxed as per slab rate.
intervals

If exit before 60 years—80% to buy

annuity.
20% withdrawable, but taxed as
per income tax slab.

Three partial withdrawal Logically only appreciation will be

(Maximum of total 25%) can be taxed.
made after three years of account If investment > 36 months—long
opening. term.
(20% after indexation)
If < 36 months--- short term capital
gain.

Till date no specific provision is

made by govt in income tax act
about Tier II investments

NPS Tier 2- 2 Types

(1)Regular- like other open ended mutual funds

(2) Tax saving (TTS) benefits: (currently for government employees)

for 80 C benefits
TTS activation needed from NSDL website.

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New variant of NPS known as National Pension Scheme Tier- II -Tax Saver
Scheme, 2020
(NPS - TTS).
• Lock-in period of three years.
• Investments eligible for deduction under Section 80C.
• Only for central government employees.
• free to choose a pension fund manager of their choice at the time of
investing.
• Premature withdrawal not allowed.

Shorter lock-in period compared to National Savings Certificate & PPF ,but
ELSS give superior returns. Also not open for general public at present.

ADVANTAGE FOR NPS INVESTORS ON PURCHASE OF ANNUITY PRODUCTS

18% GST is not charged, this amount is significant benefit, considering huge
corpus accumulated at age 60 for compulsory annuity purchase. All other
annuity products are subjected to 18 % GST

Switching from one scheme to another:

For e.g. Equity to debt funds, it will be considered as redemption from one
scheme and hence will attract capital gain tax as per holding period.

How to avail tax benefit?

• Submit transaction statement as investment proof.

• Or Receipt of voluntary contribution made in Tier 1 account.

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 COMPARISON OF NPS 2 SCHEME E with CAARE COMPLIANT MULTICAP EQUITY FUNDS

Fund Name Launch Net Assets (Cr) 5 Yr Ret (%) 3 Yr Ret (%) 1 Yr Ret (%) Expense Ratio (%)
Axis Focused 25 Fund - Direct Plan 2013-01-01 13,359 18.54 13.47 26.73 0.65
Canara Robeco Equity Diversified Fund - Direct Plan 2013-01-02 2,784 14.94 13.15 27.48 0.86
IIFL Focused Equity Fund - Direct Plan 2014-10-30 1,210 18.38 15.72 29.94 0.90
DSP Equity Fund - Direct Plan 2013-01-01 4,314 15.01 10.20 25.07 0.96
Aditya Birla Sun Life Equity Fund - Direct Plan 2013-01-01 12,109 15.25 8.14 22.17 0.98
Parag Parikh Long Term Equity Fund - Direct Plan 2013-05-28 5,757 16.18 15.29 34.53 1.00
UTI Equity Fund - Direct Plan 2013-01-01 13,546 16.37 16.20 37.36 1.26
ICICI Prudential Pension Fund - Scheme E - TIER II 11/1/2010 126.27 13.6 9.53 18.82 0.01
UTI Retirement Solutions - Scheme E - TIER II 14/12/2009 35.07 13.66 9.11 17.53 0.01
LIC Pension Fund - Scheme E - TIER II 3/7/2013 41.86 11.78 7.14 15.73 0.01
HDFC Pension Fund - Scheme E - TIER II 1/8/2013 221.81 14.88 10.32 19.68 0.01
SBI Pension Fund - Scheme E - TIER II 14/12/2009 182.51 13.51 9.25 17.72 0.01
Birla Sun Life Pension Scheme - Scheme E - TIER II 5/5/2017 9.97 0 9.3 19.42 0.01
Kotak Pension Fund - Scheme E - TIER II 1/12/2009 34.89 13.13 7.98 16.34 0.01
AVERAGE
Fund CATEGORY Launch Net Assets (Cr) 5 Yr Ret (%) 3 Yr Ret (%) 1 Yr Ret (%) Expense Ratio (%)
MULTICAP Equity Funds 7,582.71 16.38 13.17 29.04 0.94
NPS Funds 93.20 11.51 8.95 17.89 0.01
*0.25% charges levied on each contribution by POP/ Bank 8,000.00 18.00 14.00 35.00 1.00
7,000.00 16.00 12.00 30.00
0.80
6,000.00 14.00
10.00 25.00
12.00
5,000.00 0.60
10.00 8.00 20.00
4,000.00
8.00 6.00 15.00 0.40
3,000.00
6.00
4.00 10.00 0.20
2,000.00 4.00
1,000.00 2.00 2.00 5.00
0.00
0.00 0.00 0.00 0.00 1 2
1 2 12 12 12
Expense Ratio
Net Assets (Cr) 5 Yr Ret (%) 3 Yr Ret (%) 1 Yr Ret (%) (%)
 COMPARISON OF NPS G SCHEMES WITH CAARE COMPLIANT GOVERNMENT DEBT FUND SCHEMES

Fund Name Category Launch Net Assets (Cr) 5 Yr Ret (%) 3 Yr Ret (%) 1 Yr Ret (%) Expense Ratio (%)
Nippon India Gilt Securities Fund - Direct Plan DT-GL 2013-01-01 1,777 11.37 11.49 12.53 0.62
IDFC Government Securities Fund - Investment Plan - Direct Plan DT-GL 2013-01-01 2,215 10.86 12.16 14.88 0.61
ICICI Prudential Gilt Fund - Direct Plan DT-GL 2013-01-01 4,841 10.51 10.54 13.43 0.61
SBI Magnum Gilt Fund - Direct Plan DT-GL 2013-01-01 4,396 10.44 10.4 12.40 0.47
HDFC Gilt Fund - Direct Plan DT-GL 2013-01-01 2,132 8.88 8.53 11.28 0.39
SBI Dec-09 214.43 10.65 11.28 13.12 0.01
LIC Aug-13 111.35 11.96 13.42 13.23 0.01
UTI Dec-09 33.91 10.42 11.25 12.9 0.01
ICICI Dec-09 125.93 10.62 11.35 13.4 0.01
KOTAK Dec-09 30.80 10.41 10.93 12.7 0.01
HDFC Aug-13 220.48 7.54 11.64 13.4 0.01
BIRLA May-17 9.77 11.22 12.86 0.01

Fund Name Category Launch Net Assets (Cr) 5 Yr Ret (%) 3 Yr Ret (%) 1 Yr Ret (%) Expense Ratio (%)
GOVERNMENT SECURITIES FUNDS 3072.20 10.41 10.62 12.90 0.54
NPS TIER 2 G SCHEMES 106.67 10.27 11.58 13.09 0.01

*0.25% charges deducted on each contribution by POP/ Bank

Net 5 Yr Ret 3 Yr 1 Yr Expense
Assets (%) Ret (%) Ret Ratio (%)
(Cr) 10.50 12.00 (%) 0.6
4000.00 10.40 11.50 13.50 0.4
11.00
10.30 13.00
2000.00 10.50 0.2
10.20 12.50
10.00
0.00 10.10 12 0
12
1 2 1 2
1 2
1 Yr Ret
3 Yr Ret
Net Assets (Cr) (%) Expense Ratio (%)
5 Yr Ret (%) (%)
 COMPARISON OF NPS 2 C SCHEME WITH CAARE COMPLIANT CORPORATE DEBT FUNDS

Fund Name Launch Net Assets (Cr) 5 Yr Ret (%) 3 Yr Ret (%) 1 Yr Ret (%) Expense Ratio (%)
L&T Triple Ace Bond Fund - Direct Plan 1/1/2013 6,557 9.44 10.61 13 0.3
HDFC Corporate Bond Fund - Direct Plan 1/1/2013 29,220 9.27 9.7 12.2 0.3
Sundaram Corporate Bond Fund - Direct Plan 5/13/2013 1,274 9.17 9.35 11.15 0.28
Aditya Birla Sun Life Corporate Bond Fund - Direct Plan 1/1/2013 24,940 9.15 9.62 12.03 0.2
ICICI Prudential Corporate Bond Fund - Direct Plan 1/1/2013 18,155 8.87 9.22 10.73 0.29
Kotak Corporate Bond Fund - Standard Plan - Direct Plan 1/1/2013 8,181 8.89 9.27 10.07 0.32
Invesco India Corporate Bond Fund - Direct Plan 1/1/2013 3,279 8.76 8.87 10.47 0.3
Nippon India Corporate Bond Fund - Direct Plan 1/1/2013 2,355 8.44 8.48 9.91 0.28

LIC Aug-13 29.69 10.25 10.67 15.47 0.01

HDFC Aug-13 131.22 10.21 10.32 12 0.01
ICICI Dec-09 88.32 9.92 9.98 11.52 0.01
SBI Dec-09 123.45 9.73 9.81 11.87 0.01
KOTAK Dec-09 19.7 9.68 9.66 11.9 0.01
BIRLA May-17 6.04 10.18 11.96 0.01
UTI Dec-09 19.94 9.61 9.7 12.42 0.01
AVERAGE
Fund Name Launch Net Assets (Cr) 5 Yr Ret (%) 3 Yr Ret (%) 1 Yr Ret (%) Expense Ratio (%)
Corporate Bond Debt Funds 11,745 9.00 9.39 11.20 0.28
NPS TIER 2 C SCHEMES 60 9.90 10.05 12.45 0.01
*0.25% is charge levied by POP BANK on all contributions. 15,000 10.00 10.50 13.00 0.30
12.50
10,000 9.50 10.00 0.20
*1 = CORPORATE BOND DEBT FUNDS, *2 = NPS TIER 2 C SCHEMES 12.00
9.00 11.50
5,000 9.50 0.10
11.00
8.50
0 12 9.00 10.50 0.00
1 2 1 2 12 1 2
5 Yr Ret
Net Assets (Cr) (%) 3 Yr Ret (%) 1 Yr Ret (%) Expense Ratio (%)
 RESULTS

RESULTS OF RETURN ANALYSIS OF NPS FUNDS AND THEIR COMPARISON WITH

ROUTINEMUTUAL FUNDS OF SIMILAR CATEGORY:

If we compare returns of tier 2 NPS with that of corporate bond debt funds in 1
year, 3 year, and 5 year category then returns of NPS are marginally on higher
side though expense ratio ofboth is near about same.
When we compare multicap equity funds to NPS funds, returns of equity funds
are muchhigher than NPS funds in all 1 year, 3 year and 5 year category. Multicap
equity funds are givingreturns almost one and half times that of NPS. Despite the
fact that expense ratio of NPS ismuch lower.

CONCLUSION

PROs of NPS Tier 2 funds.

1. Marginally Higher ROI in Debt funds Scheme C & Scheme G. The difference
is moresignificant in Scheme C than Scheme G.
2. In Active choice, one can individualize his allocation to Equity, Coporate
bonds, Government securities according to his own risk appetite & risk
tolerance.

Cons of NPS Tier 2 funds

1. At present only 7 Mutual fund options. Less Choice of Funds in NPS as
compared toroutine Mutual funds where best fund can be chosen from 100s of
funds.
2. We Can change Pension fund Manager (Funds) only once in a financial Year.

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3. In Scheme E the best performing is ICICI Pension Fund.
In Scheme C the best performing is LIC Pension fund.
In Scheme G the best performing is SBI Pension fund
However at the time of fund investment in NPS 2 we can choose only one fund
house (Pension Fund Manager) for all three schemes which is a big disadvantage.
4. If we are partly investing in equity and partly in Debt through NPS then we lose
taxationbenefit that is otherwise applicable to equity component of the
investment.
5. No reason to believe that NPS 2 funds have any special lower risk as compared
toroutine mutual funds.

NOTE ABOUT TIER 1 FUNDS

There is no alternative to 80CCD 1B for 50000 Tax benefits & most Doctors being
in 30% slab, NPS MUST be utilized, as Default investments, for accumulation
phase of Retirement planning as one of different asset classes.
Based on one's experience & exposure to these investments over years, one can
decide utility of NPS 2 as practically both are same, from investments
perspectives.
Corporate & Government securities of NPS 1/2 can be a good alternative to one's
Debt Exposure, in old age, that is, distribution phase of Retirement.It being fully
liquid; one can individualize his withdrawal strategy. Always better than Bank FDs
in this respects.
It is essential to note that
NPS CANNOT BE USED FOR WEALTH CREATION FOR AGGRESSIVE YOUNG
INVESTORS. IT IS ONLY A TOOL FOR WEALTH PROTECTION.

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However Investing in NPS 1 while selecting >90% in Scheme G & C ONLY will give
adequate DEBT exposure which is lacking in most of the aggressive portfolios of
young investors.
Investing through Scheme G & C instead of routine Debt funds will also keep in
check the tendency to exit every time there is a market opportunity for equity.
Also 15600 is additional tax saving which can be used for further investment.
Adding the returns of this tax saved amount to the returns of Tier 1 Debt funds
should give a ROI of approx 13-15% which is very good for any capital safe
product. And if we add the lump sum amount that our next of kin gets after us
then the returns will increase even further.
These figures will definitely not compare to equity but will definitely beat routine
Debt funds.
GRED allocation teaches us that all asset classes have a role to play& NPS should
be used accordingly in line with GRED allocation based on the results of this study.
Basically what Team WealthCon expects from us, is, to graduate from KG level
knowledge in Personal Finance, when, teacher asks us to follow, & we follow as
well,
To a PhD level student, who explores all options objectively, collects data &
concludes for himself.
It is a quality one should strive to develop.

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