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National Pension System

What is NPS?:

About NPS

National Pension System (NPS) is an investment cum pension scheme initiated by Government of India to
provide old age security and pension of all citizen of India. NPS was rolled out for all citizens of India on
May 01, 2009. The Scheme is regulated by Pension Fund Regulatory and Development Authority (PFRDA).
The prime objective of the scheme is to provide social security to all citizens of India with an attractive
long term savings avenue to plan for retirement through safe and reasonable market based returns.

A Citizen of India including NRI between age group of 18 and 65 years can join this Scheme. Subscriber can
continue investing in the Scheme till the age 70 years after joining it.

*OCI and PIO are not eligible to join NPS

How NPS works?

The scheme is based on unique Permanent Retirement Account Number (PRAN) which is allotted to each
subscriber upon joining. Subscriber contributes towards NPS periodically to accumulate corpus for
retirement during his / her working life. On retirement or exit from the scheme, Corpus is made available
to him / her with a mandate to invest some portion in annuity post retirement to get monthly pension.

Types of NPS accounts

Each subscriber who joins the NPS is allotted a unique Permanent Retirement Account Number (PRAN).
There are two types of accounts available to subscribers.
Tier I account is known as Pension Account where subscribers contribute his / her savings for retirement.
This account has limited withdrawal options. All Investments for availing of Tax Benefits is done only in
NPS Tier I Account.
Tier II account is known as Investment Account and optional to the subscribers. Subscribers are free to
withdraw their savings as per their requirement without any exit load. An active Tier I account is a pre
requisite for opening of a Tier II.

Operating Tier I and Tier II NPS account:

Particulars Tier I Account Tier II Account

Minimum Initial contribution required Rs. 500 Rs. 1000

Minimum Annual contribution required Rs. 1000 Nil

Minimum contribution at any time Rs. 500 Rs. 250

Minimum no. of contributions required per annum 1 Nil

*Tier I and Tier II account are tagged to same PRAN #. It’s mandatory to open Tier I account once subscriber opts for
NPS however opening Tier II account is optional.
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Tax Benefits under Investment in NPS:

NPS Account Tax Benefit

Tier I Self - Employed Individuals:
• Investment up to 20% of Gross Annual Income is deductible from taxable income u/s
80CCD (1) of Income Tax Act, 1961 subject to 1.5 lakhs limit of section 80C
• Additionally, investment up to Rs.50,000 is deductible from taxable income u/s 80CCD
(1B) of Income Tax Act, 1961
Salaried Individuals:
• Investment up to 10% of Salary (Basic + Dearness Allowance) is deductible from taxable
income u/s 80CCD (1) of Income Tax Act, 1961 subject to 1.5 lakhs limit of section 80C
• Additionally, investment up to Rs.50,000 is deductible from taxable income u/s 80CCD
(1B) of Income Tax Act, 1961
Tier II There is no tax benefit on investment towards Tier II NPS Account

Other Features of the scheme:

• Simple and Easy to understand: NPS scheme remains same irrespective of the Service
Provider. All applicant has to do is to open an account with any one POPs and get a
Permanent Retirement Account Number(PRAN)
• Low Cost: Compared to similar market linked Pension schemes, NPS is the lowest cost
pension scheme. Administrative charges and fund management fee are also lowest.
• Portability: NPS account is fully portable across different jobs and locations. NPS account
number remains the same throughout irrespective of change of job or location of the
Subscriber
• Online accessibility: Upon joining Subscriber receives CRA enabled online system access
details (login ID and Password) to access his / her investment details online
• Flexible Contribution mechanism: Subscribers can chose to make Lumpsum adhoc
contribution or set up ECS in his / her NPS account. He can choose to make increase /
decrease contribution amount along with change in frequency as per his / her choice.
• Prudently Regulated: Transparent investment norms, regular monitoring and
performance review of funds by NPS Trust

NPS Architecture and Intermediaries:

NPS has un-bundled architecture where different activities are performed by different
entities (intermediaries) as shown below:

Activity Who manages it

Sourcing of Customers It is managed by financial institutions registered with PFRDA. They are called Point of
Presence (POP)
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Back office Operations Activities like NPS account opening, system support, call centre support, customer
grievance redressal support etc are managed by separate entity and is known as
Central Recordkeeping Agency (CRA) – Karvy / NSDL.

Fund Management Fund houses having strong patronage and track record of providing superior market
based returns have registered with PFRDA and are known as Pension Fund Managers
(PFM). Currently eight Pension Fund Managers are appointed by PFRDA

Providing Pension It’s taken care of by Life Insurance companies. They are called Annuity Service
Providers (ASP) – Currently Five Annuity service providers are appointed PFRDA for
NPS subscribers

Custody of funds Custodians are responsible for the custody of underlying assets bought by PFMs. It is
taken care of by Stockholding Corporation of India Limited. (SHCIL)

Channelization of money Channelization of money from POP to PFM and PFM to Customer is taken care
through a designated bank. It is known as Trustee Bank (TB) – AXIS Bank is Trustee
bank

Pension Fund Managers:

There are currently 8 Pension Fund managers registered with PFRDA:
HDFC Pension Fund Management Company Limited
Reliance Capital Pension Fund Limited
UTI Retirement Solutions Limited
Kotak Mahindra Pension Fund Limited
LIC Pension Fund Limited
SBI Pension Funds Limited
ICICI Prudential Pension Funds Management Company Limited
Birla Sunlife Pension Management Limited

Investment Pattern:
NPS offers below funds options for investment to its Employees:
Equity (E): A ‘high return – high risk’ fund that invests predominantly in equity market
instruments. (It is capped at 50% under Active choice.)
Corporate Debt (C): A ‘medium return – medium risk’ fund that invests predominantly in fixed
income bearing instruments (such as bonds issued by entities other than Central and State
governments)
Government Securities (G): A ‘low return – low risk’ fund that invests purely in fixed income
bearing instruments (such as bonds issued by Central and State government)
Alternate Investment Fund (A) : Investment under this Fund is made in commercial mortgage
based securities or Residential mortgaged based securities, units issued by Real Estate
Investment Trusts regulated by SEBI, Asset backed securities regulated by SEBI, units of
Infrastructure Investment Trusts regulated by the SEBI. (It is available in Active choice only and
capped at 5%
Further NPS offers its Subscribers the flexibility to design their own portfolio via below two investment
approaches –
Active choice: Depending on the risk appetite of the Subscriber, he/ she can design his/ her portfolio by
allocating funds across any of the four asset classes. Under Active choice, Investment towards Equities
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and Alternate Investment Fund is capped at 75% and 5% of the total contribution respectively. However if
any subscriber wants to contribute 100% of contribution towards Corporate Bonds or Government
securities that is allowed.
Auto-choice / Life cycle Fund: In this approach, the pension fund will be invested in the three asset
classes (E, C and G) in the defined proportions based on the age of the Subscriber as per the chosen Life
Cycle Fund. For e.g. For Subscribers in younger age group, higher exposure to Equities would be available
and as the age nears the retirement exposure to Government securities would be increased. Auto choice
further offers the employee the choice between the below Life Cycle Funds as per his/her risk appetite:
LC- 75 Aggressive life Cycle Fund
LC- 50 Moderate life Cycle Fund
LC- 25 Conservative life Cycle Fund
Investment Pattern chart for LC - 75 42 36 23 41
Aggressive life Cycle Fund is stated below: 43 34 22 44
44 32 21 47
45 30 20 50
Age of
E C G 46 28 19 53
Subscriber
< = 35 years 75% 10% 15% 47 26 18 56
36 71% 11% 18% 48 24 17 59
37 67% 12% 21% 49 22 16 62
38 63% 13% 24% 50 20 15 65
39 59% 14% 27% 51 18 14 68
40 55% 15% 30% 52 16 13 71
41 51% 16% 33% 53 14 12 74
42 47% 17% 36% 54 14 12 74
43 43% 18% 39% 55 14 12 74
44 39% 19% 42% Investment Pattern chart for LC -
45 35% 20% 45% 25 Conservative life Cycle Fund is
46 32% 20% 48% stated below:
47 29% 20% 51%
48 26% 20% 54% Age of
49 23% 20% 57% E C G
Subscriber
50 20% 20% 60% < = 35 years 25% 45% 30%
51 19% 18% 63% 36 24% 43% 33%
52 18% 16% 66% 37 23% 41% 36%
53 17% 14% 69% 38 22% 39% 39%
54 16% 12% 72% 39 21% 37% 42%
> = 55 years 15% 10% 75% 40 20% 35% 45%
Investment Pattern chart for LC - 50 41 19% 33% 48%
Moderate life Cycle Fund is stated below: 42 18% 31% 51%
43 17% 29% 54%
44 16% 27% 57%
Age of 45 15% 25% 60%
E C G 46 14% 23% 63%
Subscriber
< = 35 years 50% 30% 20% 47 13% 21% 66%
36 48% 29% 23% 48 12% 19% 69%
37 46% 28% 26% 49 11% 17% 72%
38 44% 27% 29% 50 10% 15% 75%
39 42% 26% 32% 51 9% 13% 78%
40 40% 25% 35% 52 8% 11% 81%
41 38% 24% 38% 53 7% 9% 84%
54 6% 7% 87%
55 5% 5% 90%

• Subscriber can switch between Pension Fund Managers once in a financial year
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• Subscriber can switch between Investment Pattern i.e. from active to auto choice or vice-
versa and asset allocation twice in a financial year

Charges applicable under NPS (Exclusive of GST)

Frequency of Mode of
Intermediary Charge Head Charges
deduction deduction

Subscriber
Rs.200/- One time
Registration
From the
Contribution contribution
0.25% amount / paid
Processing*
POP (Service On each by subscriber
Provider) Non – Financial transaction up front
Transaction Rs.20/-
Processing
Per annum after
Persistency Charge# Rs.50/-
first year From NPS
PRAN Generation Rs.39.36/- One time Account (by
cancelling the
Account units) on the
Rs.57.63/- Per annum
Maintenance last day of the
CRA (Karvy)
Financial calendar
On each quarter
Transaction Rs.3.36/-
transaction
Processing
Investment
Fund Manager 0.01%
Management
Recovered
Custodian Asset Servicing 0.0032% Per annum through NAV
deductions
NPS Trust Trust Management 0.005%

*Minimum Rs.20 and Maximum Rs.25,000 per contribution

# Applicable only on Retail NPS accounts

Partial withdrawal from NPS Tier I account:

• Partial withdrawal is allowed after three years from the date of Tier I account opening
• Subscriber can withdraw up to 25% of his own Contributed amount (and not the Corpus)
from Tier I Account
• Partial withdrawal is allowed only for specific emergencies like child’s marriage, higher
education, buying home, treatment of critical illness etc
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• Maximum 3 withdrawals are permitted during entire life span

Exiting NPS membership

Subscriber can close his / her NPS account after 10 years of account opening or attaining the age
60 years whichever comes first

Pre- Mature Exit: Closure of NPS account before attaining the age 60 years
• Up to 20% of Corpus can be withdrawn in lump sum
• Balance Corpus mandatorily to be invested in Annuity
• If the total Corpus is less than or equal to Rs. 1 lakh, there is no mandate to invest in to
Annuity
Exit on Maturity: Closure of NPS account on attainment of 60 years
• Up to 60% of Corpus can be withdrawn in lump sum
• Balance Corpus mandatorily to be invested in Annuity
• If the total Corpus is less than or equal to Rs. 2 lakh, there is no mandate to invest in to
Annuity

Subscriber can avail either of the below flexibilities on exit at the age of 60 years:
Continuation with the Account till 70 years
• Subscriber gets the flexibility to keep investing till the age 70 years
Deferment of Investment in Annuity
• Subscriber can defer annuity investment upto 3 years from the retirement age
• The amount will remain invested with the Fund Manager and will keep on growing
Deferment of Corpus withdrawal
• Subscriber can withdraw the amount any time before attaining the age 70 years
• Subscriber can withdraw the amount in lump sum or in installments (maximum 10
installments allowed)
• The amount will remain invested with the Fund Manager and will keep on growing

For customers who joined NPS after 60 years of age, below Exit rules apply to them:

Exit on Maturity:
• Subscriber can exit after completion of 3 years from the date of joining NPS
• Up to 60% of the corpus can be withdrawn in lump sum and balance has to be annuitized
Pre-Mature Exit:
• Subscriber exiting before completion of 3 years would be considered as
Premature exit
• Up to 20% of corpus in lump sum can be withdrawn and balance has to be
annuitized
Subscribers joining NPS post 60 yrs can continue to contribute max till 70 yrs however
they do not have the option to defer annuity or lump sum withdrawal

*In case of death of the subscriber during fund accumulation phase, the corpus accumulated in
the NPS account can be claimed by the nominee/ legal heir
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Tax Treatment at the time of Exit from NPS Tier I account:

o Tax Treatment on Lumpsum corpus withdrawal

• Partial Withdrawal: Corpus withdrawn is tax exempt
• Pre-Mature Exit: Corpus withdrawn in lump sum is tax exempt
• Exit on Maturity: 40% of Corpus withdrawn in lump sum is tax exempt. subscriber
can take out balance 20% of Corpus by paying tax (if falling into tax bracket) or
invest in Annuity
The Union Cabinet in its Meeting on 6th December, 2018 has enhanced the Tax exemption limit
for lump sum withdrawal 60% from 40% . With this, the entire withdrawal will now be exempt
from income tax. This is expected to happen effective 1st April 2019 with appropriate change in
tax rule.

o Tax treatment on Annuity

• Amount invested in Annuity is tax exempt
• Pension received out of investment in annuity is treated as Income and will be taxed
appropriately, if subscriber is falling into any tax bracket

Investment in Annuity
• On retirement / exit from NPS before retirement, Subscriber needs to select an Annuity
Service Provider and Annuity Scheme to avail of monthly Pension out of the investment
towards Annuity
• Annuity Service Providers (Life Insurance Companies)
o HDFC Standard Life Insurance Company Limited
o ICICI Prudential Life Insurance Company Limited
o LIC Of India
o SBI Life Insurance Company Limited
o Star Union Di-ichi Life Insurance Company Limited
• Subscriber can compare the annuity rates of the above ASP under the below are the
Annuity Schemes and chose annuity plan and annuity service provider at the time of
Exit:

1. Pension payable for life at a uniform rate to the Subscriber only

2. Pension for life with return of purchase price on death of the Subscriber
3. Pension for life with a provision of 100% of the annuity payable to spouse of the
annuitant during his/her lifetime on death of the annuitant
4. Pension for life with a provision of 100% of the annuity payable to spouse of the
annuitant during his/her lifetime on death of the annuitant with return of
purchase price on death of last survivor
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National Pension System (NPS)

Important initiatives for Central Government employees
covered under NPS:
A New Pension Scheme (Contribution based Pension Scheme) now called National
Pension System (NPS), was introduced for Central Government employees vide
Ministry of Finance (Department of Economic Affairs) Notification No. 5/7/2003-
ECB & PR dated 22nd December, 2003. NPS was made mandatory for all new recruits
to the Central Government service (except the armed forces) from 1st January, 2004.

After the enactment of the PFRDA Act, 2013, as per Section 20 of the Act, the pension
scheme notified on 22.12.2003 has become the National Pension System under the
Act. NPS is now regulated under PFRDA Act, 2013 and regulation framed thereunder
by Department of Financial Services and PFRDA

With the introduction of NPS w.e.f. 01.01.2004, amendments were made on

30.12.2003 to Central Civil Services (Pension) Rules, 1972, Central Civil Service
(Commutation of Pension) Rules, Central Civil Services (Extraordinary Pension)
Rules, General Provident Fund Rules and Contributory Provident Fund Rules to the
effect that the benefits under these rules would not be applicable to the Government
employees appointed on or after 1.1.2004 and covered by NPS.

(A) Initiatives by Department of Pension and Pensioners’ Welfare

• Department of Pension and Pensioners’ Welfare O.M. No. 38/41/06-

P&PW(A) dated 05.05.2009- Benefits under CCS(Pension) Rules, 1972 or
CCS(Extraordinary Pension) Rules, 1939 were extended to the Central
Government employees covered under NPS vide Department of Pension
and Pensioners’ Welfare O.M. dated 05.05.2009 in the event of in-service
death of Government servant or his discharge from Government service on
account of invalidation or disablement.

Government servant can submit his option in this regard. In the case
Government servant avails the benefits under the old pension scheme in
the event of in-service death or discharge from service on invalidation or
disablement, the Government contribution and returns thereon in the
accumulated pension fund of the Government servant under NPS would be
surrendered into the Government account and employees contribution
with return thereon would be returned to the Government servant or his
family.

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• Department of Pension and Pensioners’ Welfare O.M. No. 7/5/2012-

P&PW(F/B) dated 26.08.2016- The benefit of retirement gratuity and death
gratuity have been extended to the Central Government employees covered
under NPS vide DoPPW O.M. dated 26.08.2016 on the same terms and
conditions as are applicable under CCS(Pension) Rules, 1972.

• DoPPW O.M. No.7/5/2012-P&PW(F/B) dated 12.02.2020 has been issued

for providing instructions regarding counting of service for the purpose of
grant of gratuity or grant of pro-rata gratuity in case of mobility of a Central
Government employee to other organizations through proper channel.

• DoPPW OMs. No. 28/30/2004-P&PW(B) dated 26.07.2005 and

28.10.2009- Instructions were issued by DoPPW vide OM dated 26.07.2005
for counting of past service rendered in a Government service or service of
an autonomous body having CCS(Pension) Rules and appointed on or
before 31.12.2003 on mobility to Central Government service / service of
an autonomous body on or after 01.01.2004 after submitting technical
resignation from previous service to provide for the continuance of
pensionary benefits based on combined service in accordance with CCS
(Pension) Rules, 1972.

DoPPW OM dated 26.07.2005 was further modified vide OM dated

28.10.2009 allowing counting of past service rendered by an employee in
Central Government / State Government / autonomous body under
CCS(Pension) Rules or other pension scheme similar to CCS(Pension)
Rules,1972, who was appointed prior to 01.01.2004 and moved to Central
Government service/Service of an Autonomous body on or after
01.01.2004 after tendering technical resignation from previous service for
the purpose of their continuation under old pension scheme.

• DoPPW OM No. 1/3/2019-P&PW(E) dated 01.01.2021- Instructions have

been issued vide DoPPW OM dated 01.01.2021 that if a Government
employee appointed on or after 01.01.2004 and covered under NPS is
disabled, he shall also be eligible to receive a lump sum compensation
computed in terms of rule 9(3) of CCS(Extraordinary Pension) Rules, if the
disablement is attributable to Government service and the Government
employee is retained in service in spite of such disablement.

• DoPPW OM No. 57/4/2019-P&PW(B) dated 17.02.2020 - An OM dated

17.02.2020 has been issued by Department of Pension and Pensioners’
Welfare providing that in all cases where the results for recruitment were
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declared before 01.01.2004 against vacancies occurring on or before

31.12.2003, the candidates declared successful for recruitment shall be
eligible for coverage under the Central Civil Services (Pension) Rules, 1972.
Accordingly, such Government servants who were declared successful for
recruitment in the results declared on or before 31.12.2003 against
vacancies occurring before 01.01.2004 and covered under the National
Pension System on joining service on or after 01.01.2004, may be given a
one-time option to be covered under the Central Civil Services (Pension)
Rules, 1972.

• CCS (Implementation of National Pension System ) Rules, 2021 were

notified on 30.03.2021 for regulating service related matters for Central
Government employees covered under NPS.

(B) Initiatives by Department of Financial Services

• National Pension System (NPS) was introduced for Central Government

employees vide Ministry of Finance (Department of Economic Affairs)
Notification No. 5/7/2003-ECB & PR dated 22nd December, 2003. NPS is
now regulated under PFRDA Act, 2013 and regulation framed thereunder
by Department of Financial Services and PFRDA.

• Under the NPS, every Government servant is registered and allotted a

Permanent Retirement Account Number (PRAN). Before 1.4.2019, a
Government employee had to mandatorily contribute 10% of pay and
Dearness Allowance (DA) and an equal amount of 10% was contributed by
the Government to the employee’s pension fund.

• The contribution made by the employees and contribution from the

Government were invested by Pension Fund Managers in accordance with
the investment pattern prescribed by the PFRDA for Central Government
employees. There were three PSU Pension Fund Managers for Government
employees. Government employees had no choice for Pension Fund
Managers or investment pattern.

• On exit from NPS on superannuation, an individual is mandatorily required

to invest at least 40% of the accumulated pension corpus in Tier-I to
purchase an annuity from an Annuity Service Provider an Insurance
Regulatory and Development Authority (IRDA) regulated Insurance
Company registered with PFRDA and a maximum of 60% of the
accumulated corpus in the Tier –I account is given to the individual in lump-
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sum. If the Government servant exits from NPS before superannuation (i.e.
before 60 years of age), he/ she has to invest at least 80% of the
accumulated corpus to purchase an annuity and the remaining 20% can be
withdrawn as lump sum.

• Department of Financial Services notification dated 31.01.2019 – In

implementation of the recommendations of the committee constituted for
suggesting measures for streamlining implementation of NPS, Department
of Financial Services vide their notification dated 31.01.2019 extended
following benefits to Government employees covered under NPS:

(i) Employee contribution 10% of the salary and DA with matching

contribution @ 14% by the Government w.e.f. 01.04.2019.

(ii) Investment of NPS wealth upto 95% in infrastructure/Debt funds

and 5-15% in equity for Government employees. Life Cycle based
funds viz. LC-50 and LC-25 also available w.e.f. 01.04.2019.

(iii) Option for investment choices and Pension Fund made available to
Government servants w.e.f. 01.04.2019.

(iv) Investment in NPS Tier II has been brought under Section 80 C for
tax exemption w.e.f. 01.04.2019.

(C) Initiatives by Department of Personal and Training

• DOPT OM No. No. 28020/1/2010-Estt.(C) dated 17/08/2016 –

Department of Personal and Training have issued consolidated guidelines
on technical resignation and lien for Government employees covered under
NPS. Instruction contained in the OM are related to carry forward of leave
and LTC, Pay Protection, seniority, retention of Lien, Joining Time,
Travelling Allowance, transfer of service book etc. on mobility to other
organization after technical resignation from previous organization.

• DOPT OM 28035/2/2014-Estt.(A) dated 10/06/2019 - Instructions were

issued by Department of Personal and Training on withdrawal of
resignation of Central Government servants appointed after 31.12.2003
covered under the National Pension System (NPS).

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(D) Initiatives by Ministry of Health and Family Welfare

• Ministry of Health and Family Welfare OM No. S.11011/10/2012-CGHS

(P)/EHS dated 28.03.2017 – Ministry of Health and Family Welfare issues
instruction on extending benefit of CGHS to Government employees
covered under NPS, subject to conditions that:

i. Minimum years of qualifying service for eligibility of CGHS membership

after retirement- 10 years.

ii. No minimum qualifying years of service for availing CGHS facilities in

case of. death/disability.

iii. Other conditions such as definition of family, CGHS contributions,

conditions of dependency etc will be applicable as per existing rules.

------ End ------

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FREQUENTLY ASKED QUESTIONS ON

NATIONAL PENSION SYSTEM – ALL CITIZENS MODEL

 What is National Pension System?

NPS is an easily accessible, low cost, tax-efficient, flexible and portable retirement savings
account. Under the NPS, the individual contributes to his retirement account and also his
employer can also co-contribute for the social security/welfare of the individual. NPS is
designed on Defined contribution basis wherein the subscriber contributes to his account, there
is no defined benefit that would be available at the time of exit from the system and the
accumulated wealth depends on the contributions made and the income generated from
investment of such wealth.

The greater the value of the contributions made, the greater the investments achieved, the
longer the term over which the fund accumulates and the lower the charges deducted, the
larger would be the eventual benefit of the accumulated pension wealth likely to be.

Contributions + Investment Growth – Charges = Accumulated Pension Wealth

(Individual contribution as well as
co-contribution from Employers)

 Who can Join NPS?

Any citizen of India, whether resident or non-resident, subject to the following conditions:

 Individuals who are aged between 18 – 60 years as on the date of submission of his/her
application to the POP/ POP-SP. The citizens can join NPS either as individuals or as an
employee-employer group(s) (corporates) subject to submission of all required
information and Know your customer (KYC) documentation. After attaining 60 years of
age, you will not be permitted to make further contributions to the NPS accounts.
 Can an NRI open an NPS account?
Yes, a NRI can open an NPS account. Contributions made by NRI are subject to regulatory
requirements as prescribed by RBI and FEMA from time to time. If the subscriber's
citizenship status changes, his/ her NPS account would be closed.

 If I have invested in any other Provident Fund, can I still invest in NPS?
Yes. Investment in NPS is independent of your contribution to any Provident Fund.

 I have invested in pension funds of non-government / private entities. Can I still invest in NPS?
Yes. Investment in NPS is independent of your subscription to any other pension fund.

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 How and where can I open a NPS account?

NPS is distributed through authorized entities called Points of Presence (POP’s) and almost all
the banks (both private and public sector) are enrolled to act as Point of Presence (POP) under
NPS apart from several other financial institutions. To invest in NPS, you will be required to
open a NPS account through the Point of Presence (POP) and who will assist the subscriber in
opening the account including the filling up of necessary forms, providing the information about
NPS and any other relevant information in this regard.

 Who is a POP/POP-SP and what is their role?

Points of Presence (POPs) are the first points of interaction of the NPS subscriber with the NPS
architecture. The authorized branches of a POP, called Point of Presence Service Providers (POP-
SPs), will act as collection points and extend a number of customer services to NPS subscribers
including requests for withdrawal from NPS.

 How can we find location/address of POP-SP nearest to the place where I live for opening a
NPS account?
POP-SP location can be accessed through website of PFRDA. This can also be accessed through
below mentioned link of CRA’s website:
https://www.npscra.nsdl.co.in/pop-sp.php

 How will I know about the status of my PRAN application form?

Subscriber can check the status by accessing CRA website: https://cra-nsdl.com/CRA/ by using
the 17 digit receipt number provided by POP-SP or the acknowledgement number allotted by
CRA-FC at the time of submission of application forms by POP-SP. Once the PRAN is generated,
an email alert as well as a SMS alert will be sent to the registered email ID and mobile number of
the subscriber.

 What are the documents that need to be submitted for opening a NPS account?
The following documents need to be submitted to the POP for opening of a NPS account:
a. Completely filled in subscriber registration form
b. Proof of Identity
c. Proof of Address
d. Age/date of birth proof.

 What are the features of the retirement account provided under NPS?
The following are the most prominent features of the retirement account under NPS:
 Every individual subscriber is issued a Permanent Retirement Account Number (PRAN)
card and has a 12 digit unique number. In case of the card being lost or stolen, the same
can be reprinted with additional charges.
 Under NPS account, two sub-accounts – Tier I & II are provided. Tier I account is
mandatory and the subscriber has option to opt for Tier II account opening and
operation. The following are the salient features of these sub-accounts:

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 Tier-I account: This is a non-withdrawable retirement account which can be

withdrawn only upon meeting the exit conditions prescribed under NPS.
 Tier-II account: This is a voluntary savings facility available as an add-on to any
Tier-1 account holder. Subscribers will be free to withdraw their savings from
this account whenever they wish.
 Will the government also contribute anything to my NPS account?
No. The Government will not be making any contribution to your NPS account. The Government
of India may however, make contributions to the accounts of NPS account holders who opt for
Swavalamban scheme subject to conditions stated in Swavalamban scheme.

 In what way is the NPS Portable?

The following are the portability features associated with NPS
 NPS account can be operated from anywhere in the country irrespective of individual
employment and location/geography.
 Subscribers can shift from one sector to another like Private to Government or vice versa
or Private to Corporate and vice versa. Hence a private citizen can move to Central
Government, State Government etc with the same Account. Also subscriber can shift
within sector like from one POP to another POP and from one POP-SP to another POP-SP.
Likewise an employee who leaves the employment to become a self-employed can
continue with his individual contributions. If he enters re-employment he may continue
to contribute and his employer may also contribute and so on.
 The subscriber can contribute to NPS from any of the POP/ POP-SP despite not being
registered with them and from anywhere in India.

 Can I have more than one NPS account?

No, multiple NPS accounts for a single individual are not allowed and there is no necessity also
as the NPS is fully portable across sectors and locations.

 Are there any minimum annual contribution requirements under NPS? How can I reactivate /
unfreeze the account if frozen due to minimum contribution requirements?

Yes, A subscriber has to contribute a minimum annual contribution of Rs.6000/- for his Tier I
account in a financial year and if not contributed the account will be frozen. In order to
unfreeze the account, the customer has to pay the total of minimum contributions for the
period of freeze, the minimum contribution for the year in which the account is reactivated and
a penalty of Rs.100/-. In order to unfreeze an account the subscriber has to approach the Point
of Presence (POP) and pay the required amounts. The following table provides the complete
information on the minimum contribution requirements:

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For All citizens model Tier I Tier II

Minimum Contribution at the time of account
Rs. 500 Rs. 1000
opening
Minimum amount per contribution Rs. 500 Rs. 250
Minimum total contribution in the year Rs. 6000 Rs. 2000
Minimum frequency of contributions 1 per year 1 per year

 How are the funds contributed by the subscribers managed under NPS?
The funds contributed by the Subscribers are invested by the PFRDA registered Pension Fund
Managers (PFM’s) as per the investment guidelines provided by PFRDA. The investment
guidelines are framed in such a manner that there is minimal impact on the subscribers
contributions even if there is a market downturn by a judicious mix of investment instruments
like Government securities, corporate bonds and equities. At present there are 8 Pension Fund
Managers (PFM’s) who manage the subscriber funds at the option of the subscriber.

At present, Subscriber has option to select any one of the following 8 pension funds:

 ICICI Prudential Pension Fund

 LIC Pension Fund
 Kotak Mahindra Pension Fund
 Reliance Capital Pension Fund
 SBI Pension Fund
 UTI Retirement Solutions Pension Fund LIC Pension Fund
 HDFC Pension Management Company
 DSP Blackrock Pension Fund Managers
Since registration of PFMs is an ongoing process, this list will be updated from time to time.
 What are the different Fund Management Schemes available to the subscriber?

The NPS offers two approaches to invest subscriber’s money:

 Active choice – Here the individual would decide on the asset classes in which
the contributed funds are to be invested and their percentages (Asset class E(maximum
of 50%), Asset Class C, and Asset Class G )
 Auto choice - Lifecycle Fund- This is the default option under NPS and wherein
the management of investment of funds is done automatically based on the age profile
of the subscriber. For full details, one may go through our website www.pfrda.org.in
wherein the full details of the investment choices and fund management details are
provided.
 Can I switch from one investment scheme to another and/or Pension Fund Manager and if so,
how?
Yes, NPS offers to its subscribers the option to change the scheme preference. Subscriber has
option to realign his investment in asset class E, C and G based on age and future income

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requirement. Also, the subscriber has option to change the PFM and the investment option
(active /auto choice).

 Is there any default Pension Fund Manager (PFM) Option provided under NPS?
Yes, there is a default PFM provision under NPS and SBI Pension Funds Private Limited acts as
the default Pension Fund Manager.
 Can I have a different Pension Fund Manager and Investment Option for my Tier I and Tier II
account?
Yes. You may select different PFMs and Investment Options for your NPS Tier I and Tier II
accounts.

 Can I appoint nominees for the NPS Tier I and Tier II Account?
Yes, you need to appoint a nominee at the time of opening of a NPS account in the prescribed
section of the opening form. You can appoint up to 3 nominees for your NPS Tier I and NPS Tier
II account. In such a case you are required to specify the percentage of your saving that you
wish to allocate to each nominee. The share percentage across all nominees should collectively
aggregate to 100%.
 I have not made any nomination at the time of registration. Can I nominate subsequently?
What is the process?
If you have not made the nomination to your NPS account at the time of registration, you can do
the same after the allotment of PRAN. You will have to visit your PoP and place Service Request
to update nominations details.
 Can I change the Nominees for my NPS Accounts?
Yes. You can change the nominees in your NPS Tier I account at any time after you have received
your PRAN.
 Are there any charges for making a nomination?
If you are making the nomination at the time of registering for PRAN, no charges will be levied
to you. However, a subsequent request for nomination updation would be considered as a
service request and you will be charged an amount of Rs. 20/- plus applicable service tax for
each request.
 What income tax reliefs are available to the individuals contributing to NPS?
Tax benefit to employee:
Individuals who are employed and contributing to NPS would enjoy tax benefits on their own
contributions as well as their employer’s contribution as under: -
(a) Employee’s own contribution - Eligible for tax deduction up to 10% of Salary (Basic + DA)
under Section 80 CCD(1) within the overall ceiling of Rs. 1 lac under Sec 80 CCE.
(b) Employer’s contribution – The employee is eligible for tax deduction up to 10% of Salary
(Basic + DA) contributed by employer under Sec 80 CCC(2) over and above the limit of Rs. 1 lac
provided under Sec 80 CCE.
Tax benefit for self-employed:
Eligible for tax deduction up to 10 % of gross income under Sec 80 CCD (1) with in the overall
ceiling of Rs. 1 lac under Sec 80 CCE.

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 What are the applicable provisions for withdrawal of the accumulated pension wealth once I
attain 60 years of age?
At least 40% of the accumulated pension wealth of the subscriber needs to be utilized
for purchase of an annuity providing for the monthly pension of the subscriber and the
balance is paid as a lump sum payment to the subscriber.

 What will happen to my savings if I decide to retire or does not want to continue in the NPS
before age 60?
In such an eventuality, at least 80% of the accumulated pension wealth of the subscriber
needs to be utilized for purchase of an annuity providing for the monthly pension of the
subscriber and the balance is paid as a lump sum payment to the subscriber.

 In the event of the death of subscriber before attaining the age of 60 years, what will be the
benefit that is payable and who will get the benefits ?
In the unfortunate event of death of the subscriber, the entire accumulated pension
wealth (100%) would be paid to the nominee / legal heir of the subscriber and there
would not be any purchase of annuity/monthly pension.

 How to withdraw the benefits available under NPS?

The subscriber wishing to exit from NPS has to submit a withdrawal application form to the
concerned POP along with the documents specified for withdrawal of the benefits and the POP
in turn would authenticate the documents and forwards them to CRA M/s NSDL. CRA in turn
would register your claim and forward you the necessary application form along with the
procedure to be followed and documents that need to be submitted. Once the documents are
received, CRA processes the application and settles the account.

 What are the documents that need to be submitted along with the withdrawal forms?
Following documents are required to be submitted along with the withdrawal forms in order to
settle the claims:
1. PRAN card in original
2. Attested copy of Proof of Identity (e. g. Passport, Aadhar Card, PAN Card, Valid Driving
License, Voter ID Card etc.)
3. Attested copy of Proof of Address (e. g. Passport, Aadhar Card, Valid Driving License,
Voter ID Card etc.)
4. Cancelled cheque (containing Subscriber Name, Bank Account Number and IFS Code) or
Bank Certificate Containing Name, Bank Account Number and IFSC code, for direct
credit or electronic transfer.
Note: An illustrative list of documents acceptable as proof of identity and address can be
seen at PFRDA circulars available on PFRDA’s website pfrda.org.in

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 Can a NPS subscriber defer his lump sum withdrawable amount (up to 60%) under NPS at the
time of exit on 60 years?
Yes, one can defer the withdrawal of the eligible lump sum amount payable under NPS till the
age of 70 years
 What will happen to my withdrawal if my PRAN is in frozen or inactive state at the time of
withdrawal?

The withdrawal will be processed like a normal withdrawal but in addition deduct the penalty
that is applicable for unfreezing of such an account without seeking to reactivate the account by
the subscriber or payment of amounts necessary to activate the account. In essence, the CRA
will unfreeze the account by charging the penalty applicable and process the withdrawal claim.

 What is an annuity?
An annuity is a financial instrument which provides for a regular payment of a certain amount of
money on monthly/quarterly/annual basis for the chosen period for a given purchase price or
pension wealth. In simple terms it is a financial instrument which offers
monthly/quarterly/annual pension at a specified rate for the period you chose.
 What are the Annuity Service Providers under NPS and what are their names?
Indian Life Insurance companies which are licensed by Insurance Regulatory and Development
Authority (IRDA) are empanelled by PFRDA to act as Annuity Service Provider’s to provide
annuity services to the subscribers of NPS. Currently, the following are the ASPs empanelled by
PFRDA.
1. Life Insurance Corporation of India
2. SBI Life Insurance Co. Ltd.
3. ICICI Prudential Life Insurance Co. Ltd.
4. Bajaj Allianz Life Insurance Co. Ltd.
5. Star Union Dai-ichi Life Insurance Co. Ltd.
6. Reliance Life Insurance Co. Ltd.
7. HDFC Standard Life Insurance Co. Ltd
Note: The ASP empanelment process is an ongoing process and the list of ASPs may grow in
future.
 What are the different types of annuities providing for monthly pension available to the
subscribers of NPS?
The following are the generic annuities that are offered by Annuity Service Providers to the
subscribers of NPS. However, some of the ASP’s may offer some variants which have slightly
different or combination type of annuities.

1. Pension (Annuity) payable for life at a uniform rate to the annuitant only.
2. Pension (Annuity) payable for 5, 10, 15 or 20 years certain and thereafter as long as
you are alive.
3. Pension (Annuity) for life with return of purchase price on death of the annuitant
(Policyholder).
4. Pension (Annuity) payable for life increasing at a simple rate of 3% p.a.

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5. Pension (Annuity) for life with a provision of 50% of the annuity payable to spouse
during his/her lifetime on death of the annuitant.
6. Pension (Annuity) for life with a provision of 100% of the annuity payable to spouse
during his/her lifetime on death of the annuitant.
7. Pension (Annuity) for life with a provision of 100% of the annuity payable to spouse
during his/her lifetime on death of the annuitant and with return of purchase price on
death of the spouse. If the spouse predeceases the annuitant, payment of annuity will
cease after the death of the annuitant and purchase price is paid to the nominee

 What are the factors that determine the annuity income when you buy an annuity?
The Size of your pension wealth/corpus determines your monthly annuity/pension that you
receive. Bigger the accumulated pension wealth or corpus used for purchase of annuity, the
bigger would be the monthly pension that is received. Besides that, amount of annuity may vary
according to the type of annuity variant selected by the subscriber.
 What is the default annuity scheme and default ASP under NPS?
The following default annuity service provider along with the annuity scheme is available to all
the subscribers under National Pensions System.
1. Default Annuity Service Provider – Life Insurance Corporation of India (LIC)
2. Default Annuity Scheme - Annuity for life with a provision of 100% of the annuity payable to
spouse during his/her life on death of annuitant’ and under this option, payment of monthly
annuity would cease once the annuitant and the spouse die or after death of the annuitant if the
spouse pre-deceases the annuitant, without any return of purchase price.
However, it may be noted that default option is being purely provided in the subscribers’
interest and to avoid any delay in claim processing and is not with a view to endorse/promote
any particular ASP or annuity variant being offered by the ASP. If the amount available in NPS
account of subscriber is not adequate to buy the default annuity variant and from the default
ASP, the subscriber has to compulsorily choose an ASP who offers an annuity at the available
corpus in the account of the subscriber.
 Can I use more than 40% of my accumulated pension wealth to purchase the annuity at the
time of exit from NPS upon attaining the age of 60 years?
Yes, a subscriber at the time of attaining the age of 60 years can purchase annuity up to 100% of
his accumulated pension wealth.
 Can a NPS subscriber defer his annuity purchase under NPS at the time of exit on 60 years?
Yes, one can defer the mandatory purchase of annuity for a maximum period of 3 years, at the
time of exit from NPS.
 To whom the claim for withdrawal of benefits needs to be submitted?
 The All citizen model sector including corporate and NPS Lite-Swavalamban subscribers
have the option of submitting their request to the nearest PFRDA registered POP/POP-
SP/AGGREGATOR.
 The subscriber needs to submit specified application form along with the full set of
documentation as prescribed.

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 The Exit rules applicable for All citizen model sector subscribers are
1. Upon attaining the age of 60 years
2. Exit from NPS before the age of 60 years
3. Upon Death of the Subscriber
 How the annuity OR monthly pension is paid?
Monthly pension /Annuity will be paid through direct bank transfer to the specified subscribers
account only through Annuity Service Providers.

 I have a NPS account and have a grievance on the services provided.

To whom shall I report and how?
The subscriber can raise grievance through any of the modes mentioned below:
 Call Centre/Interactive Voice Response System (IVR)
 The Subscriber can contact the CRA call center at toll free telephone number
1-800-222080 and register the grievance by using T-PIN.
 Dedicated Call center executives.
 Physical forms direct to CRA
 The Subscriber may submit the grievance in a prescribed format to the POP – SP
who would forward it to CRA Central Grievance Management System (CGMS).
 Subscriber can directly send form to CRA.
 Web based interface
 The Subscriber may register the grievance at the website www.npscra.nsdl.co.in with
the use of the I-pin allotted at the time of opening a Permanent Retirement Account.

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NPS MCQs

Q1. What is the full form of NPS?

a) New Pension Scheme
b) No Pension Scheme
c) National Pension System
d) None of these
Answer: c) National Pension System

Q2. National Pension System is effective from

a) 01.01.2004
b) 01.07.2004
c) 01.04.2004
d) None of these.
Ans: a) 01.01.2004 (rbe 225/03, secr 14/04)

Q3. New entrants in Railway Service will come under National Pension System
a) Automatically
b) By option
c) On Administrative option
d) None of these.
Ans: a) Automatically

Q4. National Pension System is

a) Contributory
b) Non contributory
c) None
d) All are correct.
Ans: a) Contributory

Q5. The contribution payable by the employee in National Pension System is

a) Monthly basis
b) Quarterly basis
c) Half yearly basis
d) Yearly basis
Ans: a) Monthly basis

Q6. The Employee’s contribution towards National Pension System is

a) @ 8% of basic pay + DA
b) @ 9% of basic pay + DA
c) @ 10% of basic pay + DA
d) @ 12% of basic pay + DA
Ans: c) @ 10% of Basic Pay + DA

Q7. Employer’s contribution under National Pension System is

a) 10% of Basic pay and DA
b) 11% of Basic pay and DA
c) 12% of Basic pay and DA
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d) 14% of Basic pay and DA
Ans: d) 14% of Basic pay and DA (w.e.f. 01-04-19)

Q8. Full form of PFRDA is

a) Provident Fund Regulatory and Development Authority
b) Public Provident Fund Regulatory and Development Authority
c) Pension Fund Regulatory and Development Authority
d) None of these
Ans: c) Pension Fund Regulatory and Development Authority

Q9. How many Central Record Keeping Agency(ies) has/have been appointed by PFRDA under NPS?
a) One i.e. National Securities Depository Ltd (NSDL)
b) Two i.e. NSDL and M/s Karvy Computershare Private Limited
c) Three i.e. NSDL, M/s Karvy Computershare Private Limited and LIC of India
d) None of these
Ans: b) Two i.e. NSDL and M/s Karvy Computershare Private Limited

Q10. Under NPS, which of the following banks has been designated as Trustee bank?
a) Bank of India
b) Axis Bank
c) State Bank of India
d) ICICI Bank
Ans: b) Axis Bank

Q11. At the time of retirement on superannuation under NPS, minimum what percentage shall be
invested for annuity in IRDA regulated life Insurer?
a) 60% of the corpus at the time of retirement
b) 100% of the corpus at the time of retirement
c) 40% of the corpus at the time of retirement
d) 80% of the corpus at the time of retirement
Ans: c) 40% of the corpus at the time of retirement

Q12. If a Railway servant covered under NPS dies in harness, his/her spouse shall invest minimum
______ for annuity in IRDA regulated life Insurer
a) 60% of the corpus at the time of death
b) 100% of the corpus at the time of death
c) 40% of the corpus at the time of death
d) 80% of the corpus at the time of death
Ans: d) 80% of the corpus at the time of death

Q13. In case of death in service of a Railway servant covered under NPS, pension will be paid to the
eligible family members in the following order
a) Spouse, Children and Parents
b) Spouse, Parents and Children
c) Spouse, Mother of subscriber and Father of subscriber
d) Spouse, Son and Daughter
Ans: c) Spouse, Mother of subscriber and Father of subscriber

Q14. Staff covered under NPS are

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a) Eligible for Death-cum-Retirement Gratuity
b) Not eligible for Death-cum-Retirement Gratuity
c) Eligible for Death-cum-Retirement Gratuity only in case of death
d) Eligible for Death-cum-Retirement Gratuity only in case of retirement
Ans: a) Eligible for Death-cum-Retirement Gratuity

Q15. Under NPS, partial withdrawal is allowed after a minimum service of

a) 10 years
b) 5 years
c) 3 years
d) None of these
Ans: c) 3 years

Q16. Maximum how many times partial withdrawal is allowed under NPS?
a) 5 times
b) 3 times
c) No limit
d) 10 times
Ans: b) 3 times
Q17. What is the minimum gap between two partial withdrawals under NPS, except in case o with
drawal on medical ground?
a) 10 years
b) 5 years
c) 3 years
d) None of these
Ans: b) 5 years

Q18. For what purpose partial withdrawal is allowed from NPS?

a) For higher education of children/adopted child
b) For marriage of children/adopted child
c) For purchase or construction of residential house/flat
d) All the above
Ans: d) All the above
Q19. Maximum what amount may be withdrawn in the first partial withdrawal under NPS?
a) 25% of subscriber’s contribution
b) 25% of both subscriber’s and Employer’s contribution
c) 1/3rd of subscriber’s contribution
d) None of these
Ans: a) 25% of subscriber’s contribution
Q20. In the second and subsequent partial withdrawal under NPS, maximum what amount is allowed
to be withdrawn?
a) 25% of subscriber’s contribution
b) 25% of the incremental contributions made by the subscriber after the date of first/next subsequent
withdrawal Prepared by – H L Nayak, Ch SWI & Instructor(P)/MDZTI/SECR/BSP
c) 1/3rd of subscriber’s contribution
d) None of these
Ans: b) 25% of the incremental contributions made by the subscriber after the date of first/nex
subsequent withdrawal

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Q21. Which of the following agencies is the regulator and administrator for the national Pension
System?
a) National Pension Regulatory Authority
b) Department of Personnel and Training
c) Securities and Exchange Board of India
d) Pension Fund Regulatory and Development Authority
Ans: d) Pension Fund Regulatory and Development Authority
Q.22 When a Railway servant covered under National Pension System (NPS) is under suspension, the
amount of contribution towards NPS for the period of suspension will be
a) 10% of Basic pay and Dearness allowance
b) 5% of Basic pay and Dearness allowance
c) No contribution
d) 10% of Basic pay only
Ans: c) No contribution
Q23. The unique Permanent Retirement Account Number (PRAN) allotted to the members of National
Pension System has ____ digits.
a) 10
b) 11
c) 12
d) 14
Ans: c) 12
Q24. Which of the following are reckoned as pay for payment of contribution towards National Pension
System?
a) Basic pay
b) 30% pay element for running staff
c) Non-Practicing Allowance for doctors
d) All the above
Ans: d) All the above

1. Under default NPS scheme, funds are allocated by the PFRDA among the _ Public Sector
Undertaking fund managers based on their past performance in accordance with the guidelines of
PFRDA for Government employees?
(A)three
(B)two
(C)four
(D)five
Ans: (A)three

2. What is the percentage of Government Contribution under NPS in respect of individuals who are
not Government Employees?
(A)10% of basic salary
(B)14% of basic salary
(C)Individual can choose while joining the scheme
(D)No contribution
Ans: (D)No contribution

3. New Pension Scheme is mandatory for all new recruits joining the Central Government Service
from?
(A)1st January, 2004
(B)1st January, 2003
(C)1st January, 2006
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(D)1st July, 2005
Ans: (A)1st January, 2004

4. Individuals can normally exit at or after age ____ years for Tier-I of the New Pension system?
(A)50 years
(B)55 years
(C)56 years
(D)60 years
Ans: (D)60 years

5. Under NPS, Individuals would have the flexibility to leave the pension system prior to age 60. In
this case, the mandatory annuitization would be __% of the pension wealth?
(A)80%
(B)60%
(C)50%
(D)90%
Ans: (A)80%

6. Contributions and investment returns in respect of Central Government Employees under NPS are
deposited in?
(A)Tier-I account
(B)Tier-II account
(C)Tier-III account
(D)Employee can choose either Tier-I or Tier-II at the time of joining
Ans: (A)Tier-I account

7. At exit under NPS, the individual would be mandatorily required to invest ______ percent of
pension wealth to purchase an annuity (from an IRDA-regulated life insurance- company)?
(A)50%
(B)60%
(C)40%
(D)20%
Ans: (C)40%

8. On superannuation, a request is received from a subscriber other than NPS-Lite, having pension
wealth less than _____ may opt for withdrawal of total pension wealth?
(A)one lakh rupees
(B)two lakh rupees
(C)Fifty Thousand
(D)Five lakh rupees
Ans: (B)two lakh rupees

9. Choice of Pension Fund and investment pattern in Tier-I of NPS has been introduced with effect
from?
(A)1st April 2019
(B)31st January 2019
(C)1 July 2020
(D)1 January 2020
Ans: (A)1st April 2019

10. What is the percentage of monthly contribution by the employee under NPS?
(A)5% of Basic Pay plus DA
(B)10% of Basic Pay plus DA
(C)14% of Basic Pay plus DA
(D)20% of Basic Pay plus DA
Ans: (B)10% of Basic Pay plus DA
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11. Name the withdrawable account under NPS that can be joined by the individual voluntary?
(A)Tier-I account
(B)Tier-II account
(C)Tier-III account
(D)Employee can choose either Tier-I or Tier-II at the time of joining
Ans: (B)Tier-II account

12. What is PFM under NPS?

(A)Pension Finding Managers
(B)Pension Fund Meeting
(C)Pension Fund Managers
(D)Prior Fund Management
Ans: (C)Pension Fund Managers

13. Pension Fund Regulatory and Development Authority Act, 2013 received the assent of the
President on?
(A)22 July 2013
(B)8 December 2013
(C)18 September 2013
(D)24 January 2014
Ans: (C)18 September 2013

14. What is the percentage of monthly contribution by the Central Government under NPS?
(A)5% of Basic Pay plus DA
(B)10% of Basic Pay plus DA
(C)14% of Basic Pay plus DA
(D)20% of Basic Pay plus DA
Ans: (C)14% of Basic Pay plus DA

15. Subscribers under NPS are allowed to choose any one of the pension funds including Private
sector pension funds at an interval of?
(A)Every Six months
(B)Once in two years
(C)Once in a year
(D)There is no such option under the present NPS scheme
Ans: (C)Once in a year

1. Under premature exit from NPS, if the accumulated pension wealth of the subscriber is equal to or
less than _ rupees, such subscriber shall have the option to withdraw the entire accumulated pension
wealth without purchasing any annuity? [Now Rs.2.5 Lakh from June 2021]
Rs.2 Lakhs
Rs.1 Lakh
Rs.3 lakh
Rs.50,000/-
Correct answer
Rs.1 Lakh

2. Under NPS pre-mature exit, in case of disability/incapacitation of subscriber minimum

annuitisation is _ percentage of accumulated wealth?
20%
40%
60%
80%

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Correct answer
40%

3. Under NPS pre-mature exit, in case of disability/incapacitation of subscriber maximum Lump sum
withdrawal is _ percentage of accumulated wealth
60%
80%
40%
20%
Correct answer
60%

4. Which among the following is/are correct with regard to benefits on retirement/superannuation
from NPS? i. Minimum Annuitisation- 40% of accumulated wealth. ii. Maximum Lump sum
Withdrawal- 60% of accumulated wealth. iii. The Subscriber may choose to purchase an annuity for
an amount greater than 40 percent also.
Only i and ii are correct
Only i and iii are correct
Only iii is correct
All the above are correct
Correct answer
All the above are correct

5. Under NPS Normal Exit, if the accumulated pension wealth of the subscriber is equal to or less
than __ rupees, or a limit to be specified by the Authority, such subscriber shall have the option to
withdraw the entire accumulated pension wealth without purchasing any annuity? [Now Rs.5 Lakhs
w.e.f June 2021]
one lakh
two lakhs
three lakhs
Rs.50,000/-
Correct answer
two lakhs

6. In the case of unfortunate death of NPS Subscriber, minimum Annuitisation is _ percentage of

accumulated wealth?
40%
60%
80%
100%
Correct answer
80%

7. In the case of unfortunate death of NPS Subscriber, maximum Lump sum Withdrawal
is _ percentage of accumulated wealth?
20%
40%
60%
80%
Correct answer
20%

8. If the accumulated pension wealth of the subscriber is equal to or less than __ rupees, such
nominees/ legal heirs shall have the option to withdraw the entire accumulated pension wealth without
purchasing any annuity? [Now Rs.5 Lakh w.e.f June 2021]
Rs.50,000/-
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Rs.1 Lakh
Rs.3 Lakh
Rs.2 Lakh
Correct answer
Rs.2 Lakh

9. On retirement under NPS, the lump sum can be deferred till the age of _ years?
62 years
65 years
68 years
70 years
Correct answer
70 years

10. Annuity purchase on retirement under NPS can also be deferred for maximum period of _ years?
10 years
3 years
5 years
2 years
Correct answer
3 years

11. Can a subscriber keep on contributing in Tier-1 account even after retirement / superannuation?
Yes
No
Cannot be determined
None of the above
Correct answer
Yes

12. A subscriber wishing to keep on contributing in Tier-1 account even after retirement /
superannuation should submit the request atleast __ days prior to the age of attaining 60 years?
25 days
20 days
15 days
10 days
Correct answer
15 days

13. Subscriber who wish to continue with his individual pension account under NPS beyond the age
of sixty years or the age of superannuation may do so by making an application in writing with
reasons for such delay to the National Pension System Trust, within _____days of attaining such age
or superannuation?
30 days
60 days
90 days
180 days
Correct answer
180 days

14. Can a subscriber continue Tier-2 account after closure of his Tier-1 accounts under NPS?
Yes
No
Cannot be determined
None of these

8 
 
37
Correct answer
No

15. Which among the following is the default scheme for annuity available under New Pension
Scheme?
Annuity for life of the subscriber and his or her spouse (if any) with provision for return of purchase
price of the annuity
Annuity for life with return of purchase price (amount given to annuity service provider) on death)
Annuity guaranteed for 5, 10, 15 or 20 years and for life thereafter
On death during the guarantee period
Correct answer
Annuity for life of the subscriber and his or her spouse (if any) with provision for return of purchase
price of the annuit

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