National Pension System

For Corporate Employees

 How NPS works ?

Self Pension
Contribution

Fund is Managed to Grow

StockHolding - POP

Contribution by
Withdrawal
Employer
 INTERMEDIARIES

NPS
TRUST

ASP POP

PFRDA
CUSTO-
CRA
DIAN

TRSTEE
PFM
Bank
 Why NPS ?

Creates Retirement
Portability
01 Wealth
06
02 Exclusive Tax
Transparency
Benefit
05

03
Market Linked 04 Low Cost
Return by 8 PFMs
 NPS TARIFF
• POP : 0.25% (Min. Rs.20 & Max Rs.25,000)
Contribution
• CRA : Rs.3.75 (NSDL CRA) / Rs.3.36 (KARVY CRA)

• POP : NIL for Corp. Sector / Rs.50 for All Citizen

AMC
• CRA : Rs.95 (NSDL CRA) / Rs.57.63 (KARVY CRA)
Modification • POP : Rs.20

A/c Opening • POP : Rs.200

(ONE TIME) • CRA : Rs.40 (NSDL CRA) / Rs.39.36 (KARVY CRA)

NPS CHARGES - Example

CHARGE P.A. Contribution For Corporate Without For each year

Assuming  Rs.10,000 p.m. Sector Modification Except First year

Cost % on
POP CRA TOTAL
Investment

NSDL Rs.140/- Rs.440/- 0.37%

StockHolding Rs. 300/-

Karvy Rs.98/- Rs.398/- 0.33%

 How Much Pension? (Exit at Age 70)
Assuming 10% rate of return and 6% annuity rate

Starting at AGE
(Years) ->
20 30 40 50 60
Contribution
5000 5000 5000 5000 5000
Rupees p.m.->

100% Pension p.m.

4,33,500 1,59,400 56,980 19,142 5,164
Annuity at age 70

Pension p.m.
1,73,500 63,770 22,790 7,657 2,066
at age 70->
40% Annuity
Lump Sum
5,20,50,000 1,91,30,300 68,37,980 22,97,090 6,19,670
Withdraw
 How Much Pension? (Exit at Age 60)
Assuming 10% rate of return and 6% annuity rate

Starting at AGE
(Years) ->
20 30 40 50 60
Contribution
5000 5000 5000 5000 Exit
Rupees p.m.->

100% Pension p.m.

1,59,400 56,980 19,142 5,164 Exit
Annuity at age 60

Pension p.m.
63,770 22,790 7,657 2,066 Exit
at age 60->
40% Annuity
Lump Sum
1,91,30,300 68,37,980 22,97,090 6,19,670 Exit
Withdraw
 Why to start NPS early?
Example

• Age : 30 years • Age : 40 years

• Invest Rs.3000 p.m.
• Invest Rs.4500 p.m.
• Total Investment Rs. 10.8 Lakhs
• Total Investment Rs. 10.8Lakh
Early Starter • Corpus Rs.26,68,263
• Corpus Rs.45,00,886
is RICH by
Rs.18.32 Lakh

Assuming Early Starter Late Starter

@8%p.a. rate of
return Till Age 60

Rupees in Lakh
Corpus for 30 Yr Age 45
Corpus for 40 Yr Age 26.68
Investment value 10.8

0 5 10 15 20 25 30 35 40 45 50
 Subscriber’s Choice
• Tier – I [Mandatory, Tax benefit, Mini. Rs.1000/- p.a.]
Only Pension or Investment • Tier – II [Optional, Any time Withdraw allowed]

Choice of • Active Choice [Subscriber decides Ratio in ECGA]

Investment Style • Auto Choice [Life Style Fund - ECG Ratio as per Age]

Choice of • Government Bond [0% to 100%] Equity [0% to 75%]

Investment Composition • Corporate Bond [0% to 100%] Alternate Invest.. [0% to 5%]

Choice of • 8 PFMs and 5 ASPs

• Corporate level choice (PFM and Investment)
PFM & ASP • Subscriber level choice

• Before 60 Years of age (Min. 80% Annuity)

Flexibility to Exit • At 60 & up to 70 Years of age (Min 40% Annuity)
• In case of Death -Nominee to get 100% of fund value
 Withdrawal
Prior to • Need to complete min 3 years in NPS or on attending 60 years
• 20% can be withdrawn on exit after 10 years
60 years of age • 25% of own contribution can be withdrawn only for 3 times in case of emergency

• To be submitted 15days prior to attending retirement age

Deferment before Retirement
• For Annuity only / Withdrawal only / Both

• Minimum 40% of corpus to annuity

On Superannuation age • Maximum 60% of corpus withdrawal
• Annuity can be deferred for 3 years

Between age of • Minimum 40% annuatisation - tax exempt

60 and 70 years • Maximum 60% withdrawal - tax exempt

• The corpus would be paid to the nominee/legal heir of the subscriber and
On Death there would not be any purchase of annuity/monthly pension.
 NPS – Entry & Extension

Written consent to continue up to 70 yrs Not Applicable

If joined before 60 Year If joined between 60 Yrs and 65 Yrs

Continuation of NPS beyond 60 Yr

Between Age of 18 Yr and 60 Year After age 60 Yr and before 65 Yr

Entry into NPS

 NPS EXIT – Normal & Premature

Which ever is early Which ever is early

After 10 years in NPS On attending 60 yrs age After 3 years in NPS On attending 70 yrs age

If joined before 60 Year If joined between 60 Yrs and 65 Yrs

Normal Exit from NPS

EXIT after 10 years in NPS and before 60 Yr age Not Allowed

If joined before 60 Year If joined between 60 Yrs and 65 Yrs

Premature Exit
 NPS Withdrawal - Partial & Complete

When corpus is less than Rs. 1 Lac When corpus is less than 2 lacs When corpus is less than 2 lacs

Normal Exit before age 60 yrs Normal Exit at/after age 60 yrs Normal Exit

If joined before 60 yrs If joined between 60 yrs and 65 yrs

Complete Withdrawal (No Annuity)

25% of self contribution. Maximum 3 times

After 3 years in NPS After 3 years in NPS

If joined before 60 Yrs If joined between 60 Yrs and 65 Yrs

Partial Withdrawal (Emergency)

 Deferment of NPS & Death of Subscriber

Nominee to get Total Corpus (No Tax) As per the condition of Annuity taken

When NPS is active After exit from NPS

Death of Subscriber

Annuity defer - Up Withdrawal defer- Continue NPS

Not Applicable
to 3 years Till Age 70 yrs beyond age 60 yrs

If joined between 60
If joined before 60 Year
Yrs and 70 Yrs

Deferment
 Tax Benefit on Contribution

Contribution routed through

Self Contribution by Employee
• 80CCD(1) : Investment up to
10% of Salary (Basic+DA) is
deductible from taxable income
subject to 1.5 lakhs limit of 80C
• 80CCD (1B) : Additionally,
investment up to Rs.50,000 is
deductible from taxable income
Employer
• 80CCD(2) : Investment up to
10% of Salary (Basic+DA) is
deductible from taxable
income. There is no cap in
terms of absolute value.

Tax benefit u/s 80CCD (1B) and 80CCD (2) are over and above 1.5 lakhs limit u/s 80C.
 Illustration INR 6 lakhs (CTC)
Particulars PF PF & NPS

Basic (50% of CTC) 3,00,000 3,00,000

30,000 - 80CCD2
NPS Contribution by Employer @10% 30,000

PF Contribution by employer @12% 36,000 36,000

Other Taxable Allowances / Perq. 2,64,000 2,34,000

1,50,000 - 80C
TOTAL CTC 6,00,000 6,00,000 50,000 - 80CCD1B
30,000 - 80CCD2
Gross Taxable Income 5,64,000 5,64,000

Less Deductions 1,50,000 2,30,000

Taxable Total Income 4,14,000 3,34,000

Tax on Total Income 16,892 8,652

Tax Saving 29,458 37,698

 Illustration
With NPS With NPS With NPS
Particulars Without NPS Contribution Contribution by Contribution by
only by employees and employee and
employees employer employer
Salary (Basic+DA) 15.00 15.00 15.00 40.00
Allowances 3.00 3.00 1.50 6.00
NPS Co-contribution by employer - 0 1.50 4.00
10% of salary (No Max Limit)
Total Salary 18.00 18.00 18.00 50.00
Deduction u/s 80ccd(1) self contribution 1.50 1.50 1.50 1.50
10% of salary (Max 1.5 lacs) (Other Tax Saving
Instrument)
Deduction u/s 80 CCD (1 B) Additional 0.50 0.50 0.50
contribution in NPS
Deduction u/s 80 CCD(2) (By Employer) - - 1.50 4.00

Taxable Salary 16.50 16.00 14.50 44.00

Total Tax payable (including Surcharge) 3.17 3.01 2.55 11.66
Tax saving through NPS 0.16 0.62 1.39
 NPS vs. Superannuation
Description NPS
10% of Basic + DA subject to
Contribution limit by Maximum of Rs.1.5 Lakh
employees for Tax Additional Tax deduction on
contribution up to Rs.50,000/-
Employer 10% of Basic + DA
contribution for tax (No Monetary limit)
Purchase of Annuity Minimum 40% of accumulated
corpus.
Lump sump Maximum 60% of the corpus. 40%
withdrawal of corpus will be tax exempt on
withdrawal from F.Y. 16-17
Operation MOU with StockHolding,
Registration for CHO & CBO
Income tax approval Not Required.
Superannuation
Subject to Max 1.5 Lakh
Not taxable up to Rs. 1 lakh p.a. Per employee.
Above 1 lakh is treated as perquisite in hands of
employee.
Limit on lump sum withdrawal.
Rest to be utilised for annuity payment.
1/3rd of the corpus can be withdrawn in case of
gratuity is not paid.
Formation of Irrevocable Trust, appointment of
trustees, other formalities, decision of fund
management.
Required form concerned Income Tax Authority.
 Investment Option – Tax Treatment
Year of Contribution Annual Accretion Year of Withdrawal /
Investment Option (Interest / Maturity Sale
Employee Contribution Employer Dividend)
Contribution
EPF Deduction up to Rs.1,50,000 Exempt up to 12% Fully Exempt Fully Exempt

PPF Deduction up to Rs.1,50,000 NA Fully Exempt Fully Exempt

NPS Deduction up to Rs.2,00,000 Exempt up to 10% Fully Exempt Fully Exempt

Equity Share / MF (E) No Deduction NA Dividend LTCG

Fully Exempt (If sold after 1 year)
Debenture / MF (D) No Deduction NA Interest Taxable (capital gain)
Fully Exempt
FD with Bank Deduction up to Rs.1,50,000 NA Interest is taxable No Tax

No long Term Capital Gain (LTCG) Tax impact on NPS

 Tax Benefit on Withdrawal

Up to 60% of Corpus withdrawn in lump sum is exempt

from tax

Minimum 40% of corpus invested in Annuity is also

fully exempt from tax

Pension received out of Annuity is treated as income

and will be taxed
 Benefits
Government of India Pension Scheme

Regulated by PFRDA

Pension on Retirement

Market Linked Return & Low Cost

Tax Saving

Portable

Flexible Choice

Withdrawal Benefit
 Why one should go for NPS

To create wealth through NPS for retirement

Exclusive tax benefit of Rs. 50,000/- u/s 80CCD(1B).

Additional Tax benefit up to 10% of Basic contributed by Employer.

Fund managed by professional Fund Managers.

I Pin to access own NPS account through internet.

Well established online Grievance Redressal System.

Lowest cost structure scheme.

 List of PFMs and ASPs

Birla Sun Life Pension Management Ltd

HDFC Pension Management Co. Ltd.

ICICI Prudential Pension Fund Magt. Co. Ltd.

Kotak Mahindra Pension Fund Ltd.

LIC Pension Fund Ltd HDFC Standard Life Insurance Co. Ltd.

Reliance Capital Pension Fund Ltd. ICICI Prudential Life Insurance Co. Ltd
SBI Pension Funds Pvt. Ltd LIC of India
UTI Retirement Solutions Ltd
SBI Life Insurance Co. Ltd

Star Union Dai-ichi Life Insurance Co. Ltd

 PROCESS

CHO1, PAN,
CRA Employee
Certificate of CHO & CBO
Registration MOU Awareness
Incorporation, generation
Document Program
Bank Proof

Exit
Modification • Withdraw
• pension
Contribution • Profile
• Scheme
Corporate • Self
module • Employer
Employment access by
Detail Nodal officer
NPS Account Confirmation & see the list
Open / by Nodal of active
Switch Officer PRAN
WEBPAGE
1800 22 9960 sales@stockholding.com
NPS to 5607005 www.stockholding.com