Agency
Physical segment: 0.05% a year
* Once there are 1 million CRA accounts the annual maintenance charge will decrease to Rs 280 and per transaction charge to Rs 6. It will go down to Rs 250 and Rs 4 once there are 3 million accounts Source: PFRDA
Thursday, March 25, 2010
Analysis and Charges in NPS (New Pension Scheme)
The new pension scheme is basically a system of fund management for retirement like the EPF, GPF and PPF. Anyone in the age group of 18 to 55 years irrespective of the sector in which he /she works(govt as well as private sector) can apply for the new pension scheme India and get its benefits. It’s a system for financial security for old age when we no longer work.
Once you join the new pension scheme, you would be given a Permanent Retirement Account Number (PRAN). It is something like a account number which will help you to check your funds online or at the point of presence (Pops).The Pension Fund Regulatory and Development Authority(PFRDA) has been assigned the work of protecting the interest of the people participating in the new pension scheme. It’s a Govt regulatory body of India. Signing up and enrollment in the New Pension Scheme.
If you fall in the age group of 18 to 55 years you can approach any one of 17 banks like SBI, ICICI, IDBI, Axis, LIC, Kotak Mahindra and many more through the 285 point of presence (poPs) in India to register and get a Permanent Retirement Account Number(PRAN). The minimum annual contribution to the new pension scheme has been fixed at Rs 6,000 in minimum 4 yearly installments. You can make any number of installations and any amount in the new pension scheme.
A default charge of Rs 100/ year would be charged if you are unable to pay the installments and the minimum amount of Rs 6000/year. The account will then become dormant and can be renewed on request after paying the charges and the contribution of Rs 6000.
Risk Assessment Of the New Pension Scheme.
Just like any other investment instrument, the new pension scheme also doesn’t guarantee a predefined fixed return. It all depends upon the growth of the funds over a period of time. The funds in the new pension scheme will be invested in Equity, debt instruments and government bonds. In the last one year of its operations the new pension scheme has generated a return of 14%.
Till 35 years of age, 50% of the funds invested by a user of new pension scheme will go into the high risk, high return equity class, 20% into govt bonds and rest 30% into debt instruments. After 35 years of age the % of funds invested in equity class comes down and funds invested in govt bonds and securities goes up. While attaining 60 years of age, only 10% of the funds will be into the equities and about 80% in the govt bonds.
Exiting and getting the money back from the new pension scheme.
This is the most important question being looked after many people as of now. Now if you happen to exit the new pension scheme before attaining the age of 60 years, you will be entitled to get 20% of the funds you have invested and the rest has to be invested in annuities in the insurance companies. A annuities will help you to get a steady income the rest of your life. If the subscriber dies, then the nominee will get the whole amount as a lump.
You can exit the new pension scheme anytime you decide to do so. And in case of death the amount in the subscribers account will be transferred to the nominee.
Service
Charge
Mode
CRA
Account opening
Rs 50
Through cancellation of units
Annual maintenance charge
Rs 350*
Per transaction
Rs 10*
PoP (Max allowed)
Registration
Rs 40
Upfront payment
Per transaction
Rs 20
Trustee bank
Per transaction at RBI location
NIL
Through NAV deduction
Per transaction at non-RBI location
Rs 15
Custodian (on asset value)
Asset servicing
Electronic segment: 0.0075% a year:
Through NAV deduction
Fund manager
Investment management
0.0009% a year
Through NAV deduction
Service tax and other levies as applicable
For more details on NPS (New Pension Scheme) kindly click the link below
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