1

Key Stakeholders

Autonomous body set up Role played by NSDL

by Government of India to
develop & regulate pension
market
CRA - Central Record Keeping Agency
Pension Fund Regulatory & Development Authority

Responsible for custody

of securities
First point of contact for
corporate, subscribers & Role played by Stock
NPS stakeholders Holding Corporation of
India (SHCIL)
Custodian
POP - Point of Presence

Responsible for
Responsible for investment delivering monthly
and management of funds pension to subscriber

PFM - Pension Fund Manager

ASP - Annuity Service Provider

Supervision of PFMs
Role played by Axis Bank;
Manages banking functions
NPS Trust across various entities of NPS

Trustee Bank
 NPS Scheme
details

3
How NPS works

Employee starts investing in NPS

On Exit, a portion of Corpus comes to Employee
directly / through Employer
in lump sum and balance to be invested in
Annuity

Accumulation Phase

Withdrawal Phase

In case of death of Employee, Nominee /

Legal Heir can claim the Corpus Employee starts getting pension depending on
the Annuity scheme selection

4
Types of NPS Account

Tier I NPS Account Tier II NPS Account

Pension Account Investment Account

Mandatory to open to join NPS Optional; can be opened later as well

Withdrawal is restricted and conditional Withdrawal is permitted anytime

Investment for availing of Tax Benefits is done only in Tier I NPS Account.

There is no tax benefits in Tier II NPS Account

5
Investment of Funds
Fund Options
 Equities (E) – exposure in this asset class is
restricted to 75% of Contribution
 Corporate Bonds (C) – employee can
invest up to 100% in this asset class
 Government Securities (G) – employee
can invest up to 100% in this asset class
 Alternative Investment Fund (A) –
exposure to this asset class is restricted to
5% of Contribution
6
Investment Approaches
 Active Choice –
 Employee selects allocation across E,
C, G and A funds as per his / her
choice
 Auto Choice –
 Investment across 3 funds (E, C and
G) in life cycle fund (as per age of
the Employee).
 There are 3 Life Cycle Fund – LC 75,
*LC 50 & LC 25. Please see the chart
in next slide
Funds allocation different Life Cycle Funds
Aggressive Life Cycle Moderate Life Cycle Conservative Life Cycle

Age (Yrs) E C G E C G E C G
< = 35 75 10 15 50 30 20 25 45 30
36 71 11 18 48 29 23 24 43 33
37 67 12 21 46 28 26 23 41 36
38 63 13 24 44 27 29 22 39 39
39 59 14 27 42 26 32 21 37 42
40 55 15 30 40 25 35 20 35 45
41 51 16 33 38 24 38 19 33 48
42 47 17 36 36 23 41 18 31 51
43 43 18 39 34 22 44 17 29 54
44 39 19 42 32 21 47 16 27 57
45 35 20 45 30 20 50 15 25 60
46 32 20 48 28 19 53 14 23 63
47 29 20 51 26 18 56 13 21 66
48 26 20 54 24 17 59 12 19 69
49 23 20 57 22 16 62 11 17 72
50 20 20 60 20 15 65 10 15 75
51 19 18 63 18 14 68 9 13 78
52 18 16 66 16 13 71 8 11 81
53 17 14 69 14 12 74 7 9 84
54 16 12 72 12 11 77 6 7 87
> = 55 15 10 75 10 10 80 5 5 90

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Operating Tier I and Tier II NPS Account

Particulars Tier I Account Tier II Account

Initial Contribution required to open Account Rs. 500* Rs. 1000

Minimum amount of subsequent Contribution Rs. 500 Rs. 250

Minimum Annual Contribution required Rs. 1000 Nil

*This requirement is waived by us for Corporate employees

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 Schedule of Charges (excluding Service Tax)
Frequency
Mode of
Intermediary Charge Head Charge of
deduction
deduction
Subscriber Registration Rs.200 One time From the
contribution amount
POP Contribution Processing* 0.25% / paid by you up front
On each
Non – Financial Transaction transaction at the time of placing
Rs.20
Processing the request
PRA Opening Rs.40 One time From your NPS
Account (by
PRA Maintenance Rs.95 Annual
CRA cancelling the units)
Transaction (Financial / Non – On each on the last day of the
Rs.3.75
Financial) Processing transaction calendar quarter
PFM Investment Management 0.01% Annual
Recovered through
0.0032%(Re
Custodian Asset Servicing Annual NAV deductions
vised)
Trust Fee NPS Trust 0.005% Annual

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

 Value proposition for
Employees

11
 Earning Years
HOUSE HOLD EXPENSES
• Rent, Mortgage, EMI
• Water, Electricity, House Maid
• Gas, Broad Band, Phone

Health & Medical Expenses REGULAR PAYMENTS

• Doctor Visit • Credit Card Bills, EMIs
• Diagnosis • Insurance Premiums, MFs, RDs
• Medicines • Tuition Fees
• Hospitalization

Food Expenses
Daily Expenses • Grocery
• Commutation • Office Snacks
• Tea/Coffee/Snacks • Eating Out

Entertainment
• Movies
• Family Functions
• Vacations

12
 What If ?????
HOUSE HOLD EXPENSES
• Rent, Mortgage, EMI
• Water, Electricity, House Maid
• Gas, Broad Band, Phone

Health & Medical Expenses REGULAR PAYMENTS

• Doctor Visit • Credit Card Bills, EMIs
• Diagnosis • Insurance Premiums, MFs, RDs
• Medicines • Tuition Fees
• Hospitalization

Food Expenses
Daily Expenses • Grocery
• Commutation • Office Snacks
• Tea/Coffee/Snacks • Eating Out

Entertainment
• Movies
• Family Functions
• Vacations

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 National Pension System is the SOLUTION
HOUSE HOLD EXPENSES
• Rent, Mortgage, EMI
• Water, Electricity, House Maid
• Gas, Broad Band, Phone

Health & Medical Expenses REGULAR PAYMENTS

• Doctor Visit • Credit Card Bills, EMIs
• Diagnosis • Insurance Premiums, MFs, RDs
• Medicines • Tuition Fees
• Hospitalization

Food Expenses
Daily Expenses • Grocery
• Commutation • Office Snacks
• Tea/Coffee/Snacks • Eating Out

Entertainment
• Movies
• Family Functions
• Vacations

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Power of Compounding: Benefit of Starting Early
Current Age Yearly Contribution Years of Contribution Corpus at the end of year
20 12500 40 3497263

40 25000 20 1235573

50 50000 10 782274

55 100000 5 633593

The annual rate of compounding is considered as 8% for all ages.

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 National Pension Scheme: Post Retirement Savior
20000000

18000000 1,4018,886
Start your NPS
16000000 investment
14000000 TODAY
Amount in Rs

12000000

10000000

8000000

6000000

4000000 3,177,977

2000000
60,000
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

Total Amount Invested till date NPS Fund Value

•Total Investment of Rs.31* Lakh for a period of 29 years can yield Rs. 1.40 Crs

*Contribution of Rs. 5000 p.m. with 4% increments YoY with a ROI of 10% is considered.

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Exclusive Tax Benefits beyond 80C limit

Contribution by Employee Contribution by Employee

directly through Company

Contribution of up to Rs.50,000 is eligible for Contribution of up to 10% of Basic Salary

tax deduction #u/s80CCD (1B) (with capping of *7.5 Lacs is eligible for tax
deduction u/s 80CCD (2)

Both the tax benefits are mutually exclusive and can be availed of at the same time

*Includes Employer contribution made towards EPF, SAF & NPS

# Can be availed only under old tax regime

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Tax benefits – how it works

Head Particulars Without NPS With NPS

Salary Basic (50% of Gross) 1,000,000 1,000,000

Other Allowances 1,000,000 900,000

Corporate Contribution - NPS 0 100,000

Total Salary 2,000,000 2,000,000

Corporate
Deductions Corporate Contribution – EPF 120,000 120,000
Contribution
for NPS will be
Corporate Contribution - NPS 80 CCD (2) - 100,000 adjusted from
overall CTC
Individual Contribution to NPS 80 CCD 1(B) - 50,000 and will be
invested as
Total Deductions 120,000 270,000 Corporate
NPS.

Taxable Salary 1,880,000 1,730,000

Change in Taxable Salary 150,000

Tax Saved @ 30% 45,000

* NPS will be part of the employee salary structure

Value Proposition for Employees - Others

Portable Transparent

National Pension
System
Simple & Easy to Choice of Funds /
Understand Investment Approaches

Flexible Contribution

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Exit from the Scheme (Closing NPS Account)

Employee can exit from the Scheme after 10 years of account opening or attainment of
retirement age which ever comes first

Vesting Age < Retirement Age defined by Vesting Age = Retirement Age defined by
Corporate Corporate

Up to 20% of Corpus can be withdrawn in Up to 60% of Corpus can be withdrawn in

lump sum lump sum

Balance amount to be invested in Annuity Balance amount to be invested in Annuity

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Exit from the Scheme (Closing NPS Account)
contd…
Upon exit at retirement age defined by the Company, Employee gets following flexibilities

 Defer Annuity investment up to 3 years, or

 Defer Corpus withdrawal till 70 years of age, or

 Withdraw Corpus in lump sum or in installments (max 10)

 Keep on investing in NPS till 70 years of age

In case Employee opts to defer investment in Annuity / withdrawal, the amount remains invested
and keep on growing

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Partial Withdrawal from the Scheme

 Allowed after 3 years of account opening

 Up to 25% of Employee’s own Contribution can be

withdrawn

 Another 2 withdrawals before retirement / exit from

the Scheme

 For specific purposes like Higher Education, Child’s

marriage, buying home or treatment of Critical
illnesses etc

Contribution for availing of tax benefits u/s 80CCD (2) is treated as Employer’s Contribution and
withdrawal is not be permitted on it

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Tax Treatment on Exit from NPS

Partial Withdrawal Pre Mature Exit Exit on Maturity

Amount withdrawn is tax free Amount withdrawn is tax free 60% of Corpus withdrawn in
lump sum is tax exempt

Tax treatment on Annuity

Amount invested in Annuity is tax exempt

Pension received is treated as Income and will be taxed

appropriately, if falling into any tax bracket

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Illustration – 1 (Exit before Superannuation age)

NPS joining Age : 32 years

Exit age : 45 years

Corpus at the time of exit : Rs. 10 lakh

Amt allowed for Withdrawal : Rs. 2 lakh (20% of Corpus; tax free)

Amt invested in Annuity : Rs. 8 lakh (80% of Corpus; tax free)

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Illustration – 2 (Exit on Superannuation age)

Corpus on Maturity : Rs. 30 lakh

Amt invested in Annuity : Rs. 12 lakh (40% of Corpus; tax free)

Amt allowed for Withdrawal : Rs. 18 lakh (60% of Corpus)

Amt eligible for tax exempt : Rs. 18 lakh (60% of Corpus)

25
Illustration – 3 (Partial Withdrawal)

NPS joining Age : 32 years

Yearly Individual Contribution : Rs. 50,000

Total Contribution period : 12 years (before retirement age)

Total Contribution deposited : Rs. 6 lakh (Rs. 50,000 x 12)

Fund Value : Rs. 10 lakh

Amt allowed for Withdrawal : Rs. 1.5 lakh (25% of Rs. 6 lakh)

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Investment in Annuity

Life Annuity with

Life Annuity with Joint Life Annuity Joint Life
Annuity Option ROP on Critical Life Annuity
ROP with ROP Annuity
Illness or Death

Rate Rate Rate Rate Rate

Annuity Frequency Monthly Monthly Monthly Monthly Monthly
(%) (%) (%) (%) (%)

For Purchase
Price
33,480 6.44 33,584 6.46 33,324 6.41 44,138 8.49 37,587 7.23
Annuity Rs.66,15,489
Amount
in Rs. For Purchase
Price
22,372 6.42 22,441 6.44 22,267 6.39 29,515 8.47 25,090 7.20
Rs.44,34,236

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Why enrol for
NPS through
Life99?
Quick Enrollment
Process

Access to one view of

all Retiral Investment
products

Real time update of the

corpus by linking the
accounts on Life99

Retiral Readiness score

which calculates your
readiness for
retirement
One-View

Real-time
Single One-View
Account Linking

Real time update of

A single view of
the corpus by
investment across
linking the accounts
products
on Life99

Manual
Total Corpus Investment
Update

Total investments of Additional

an individual shown information can be
as total corpus added manually
How to sign-up for NPS through
Life99?
For New Customers – NPS Buying Journey
 A unique registration link will be shared with corporate HR along with mailers
 Employees on clicking on the link will land on the registration page

Page 1 Page 2 Page 3 Page 4 Homepage

NPS Account Opening
Click “Buy Now” to invest
in NPS
Escalation Matrix

 Service Escalation Matrix

Level 1 – npscorpqueries@hdfcpension.com

Level 2 - ajay.g235@hdfclife.com

Level 3 - vishnuprakashjj@hdfclife.com

 Product Query Matrix

Level 1 – tinto.j@hdfclife.in

Level 2 – naresh.k17@hdfclife.com
 Thank You

34