National Pension Scheme – features – part 2

Enrolling in the National Pension Scheme (NPS) is very simple. You will go to the nearest point of presence (PoP) and do the necessary documentation. Keeping in mind the banking KYC this will involve carrying proof of residence, pan card, 2-3 passport size photograph, etc. and  fill up the prescribed form with the required documents. On registering, the Central Recordkeeping Agency (CRA) will send you a Permanent Retirement Account Number (PRAN). How well the operations will be managed is to be seen – E-access, regular statements, telephonic confirmations, switches, change of address, etc. which we can do very smoothly with mutual funds and life insurance companies – should presumably be in place. This basic hygiene is what most of us take for granted these days.

Unlike PPF (where the interest rates are less flexible for the government of India) in NPS there is no investment ceiling. But the minimum investment limit has been fixed at Rs 500 a month or Rs 6,000 annually. Quarterly and monthly options are available – in fact you can deposit as many times as you wish. However there is a transaction cost each time you transact (unlike in a mutual fund) so for very small amounts this could be a dis-incentive. The charges are Rs. 30 (i.e. 6% if you are investing Rs. 500!). Unless you are doing an investment of Rs. 10,000 per transaction you should choose a different periodicity.

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