NPS is administered and regulated by Pension Fund Regulatory and Development Authority (PFRDA).State Bank of India (SBI) offers National Pension System (NPS) with an objective to provide social security to all citizens of India.
NPS is a defined contribution pension system introduced by the Government of India as a part of pension sector reforms.
It is administered and regulated by Pension Fund Regulatory and Development Authority (PFRDA), according to SBI's website- sbi.co.in.
An NPS account, which can be opened by individuals between 18 and 65 years of age, offers market-linked investment returns, noted SBI.Types of accountsNPS offers two types of accounts: Tier 1 and Tier 2.
While the Tier 1 NPS account is strictly a pension account which doesn't allow withdrawals, the Tier 2 account - known as investment account - allows withdrawals, according to SBI's website.Minimum contributionsSubscribers must make a minimum contribution of Rs1,000 per annum for the tier 1 account.
For the tier-2 account of NPS, there is no minimum requirement of contribution, according to the lender.Interest ratesThe interest rate on NPS contribution is dependent on the pension fund manager (PFM) the account holder chooses.
Subscriber is also allowed to change PFM once during a financial year.Maturity period and withdrawalsIn an NPS account, the corpus stays locked-in till the age of 60 years.Withdrawal before 60 is also allowed but in that case at least 80 per cent of the corpus ought to be allocated to annuity, which is a tax-free withdrawal, according to SBI's website.Tax benefitsThe Tier 1 NPS account offers tax benefits while the Tier 2 NPS account doesn't offer any such benefit.I