April 26, 2023

NPS Post Office 2023 - Interest Rates & Account Opening

India Post has come up with some exceptional facilities like deposit schemes, savings accounts, etc. Besides, you can now invest in Government implemented National Pension Scheme with your local post office.

With post office NPS, you can plan your savings through pre-determined contributions and investment plans. This Government aided scheme invests your contributions to equity and debt funds. The final pension amount will depend on the performance of these funds.

What is Post Office National Pension Scheme?

NPS, or National Pension Scheme, is a long-term investment scheme where the common. The NPS will mature at 60 years of age but that can be extended till 70. The Government of India introduced this retirement-oriented NPS in May 2009 for the common public. Although it was launched in 2004 for government employees only. When you invest in this scheme, the money gets allocated to market-linked funds. It will help facilitate an inflation-adjusted growth of your invested capital.

You can withdraw 60% of the invested amount as a lump sum benefit after the maturity period. You will get the remaining part as an annuity for the rest of your life. Thus, the post office National Pension Scheme is a financial support to common Indian citizens for a lifetime post-retirement.

How Does the NPS Works for Post Office?

The post office NPS works in two investment strategies. It is a market-linked scheme without any fixed interest rate. You need to open a compulsory Tier I Account upon subscribing to this pension scheme. The post office NPS offers you an Active Choice and an Auto Choice strategy to invest your money.

Active Choice: With this choice, you can invest in four types of investment funds, namely asset class A, C, E and G. You can invest a maximum of 5% in alternate instruments with asset class A. Depending on your risk appetite and investment preferences, you can also invest in other funds or asset classes.

Auto Choice: This option offers you to choose between an Aggressive, Moderate and Conservative risk profile. Whether your investment is allocated to C, E or G asset classes depends on your risk profile.

You are allowed to change your asset allocation only twice in a financial year.

Besides, you need to choose a pension fund manager from the following eight options to manage your investments perfectly:

LIC Pension Fund
DSP Blackrock Pension Fund Managers
SBI Pension Fund
Reliance Capital Pension Fund
ICICI Prudential Pension Fund
Kotak Mahindra Pension Fund
UTI Retirement Solutions Pension Fund
HDFC Pension Management Company

What Are the Features and Benefits of NPS?

Here are some of the notable features and benefits of a post office NPS that you must know before investing:

You can open a digital NPS account in less than 30 minutes
With the post office's easy investment mode, you can invest your funds easily in NPS scheme
It ensures a regular income for the investors throughout their life, even after getting retired
You can claim a tax deduction of a maximum of ₹1.5 lakh in each financial year as per Section 80CCD(1) and 80CCD(2) on employer and employee’s contributions. There is also an additional tax benefit of up to ₹50,000 for self-contribution as per Section CCD(1B). The 60% corpus that you receive will be exempted from tax deduction.
As the NPS is a long-term venture, the post office allows you to withdraw partial funds from the third year of investment to fulfil essential financial requirements. This is allowed only if you have a Tier II account. Tier I account is non-withdrawable till maturity.
NPS in the post office comes with easy and affordable investment structures. You can invest little amount annually and save a substantial retirement fund.

What Are the Eligibility Criteria for Post Office NPS?

If you are looking forward to opening an NPS account, you need to meet some eligibility criteria set by the post office. They are as follows:

Age: Any common public between the age group of 18 to 65 years can invest in NPS
Nationality: The investor should be an Indian citizen and resident
Minimum Contribution: You should contribute a minimum of ₹ 500 or above for every financial year. If you are a Tier I Account holder, you need to contribute a minimum of ₹ 1000 for every financial year.

What Are the Documents Required to Open Post Office NPS Online?

You need to fulfill the following requirements to open an NPS account in the post office through the 'myNPS’ app:

You need to have a valid Email ID and mobile number
Post office National Pension Scheme allow two modes of registration. They are Permanent Account Number (PAN) based registration and Aadhaar Paperless Offline eKYC-based registration.
You need to produce scanned photographs and your signature in .jpeg/.jpg/*.png format for Aadhaar-based registration. The file size should be between 4KB to 5MB for each document.
You need to contribute an initial payment through internet banking. So, you should have an active bank account with internet banking linked with the Payment Gateway Service Provider.
Provide a scanned copy of the cancelled cheque and PAN card in .jpeg/.jpg/*.png format, and the file size should be between 4KB and 2MB.
You can complete the registration process by eSigning the registration form or through OTP authentication.
If you cannot complete the registration through OTP or eSign, get a printout of your form, paste a photograph and send it to NSDL after signing. Don't sign across the photograph and get the form attested by the nodal office.

Bottom Line

You can apply for post office NPS online or by visiting the nearby post office branch. The PFRDA (Pension Fund Regulatory and Development Authority) authorised Indian post offices as a POP (Point of Presence) for investment schemes. So, you can open an NPS account in any post office that is a POP service provider.