NPS Charges: Check How National Pension Scheme Costs Will Be Charged?

NPS (National Pension Scheme) can be described as a pension scheme introduced by Indian government in 2004 and managed by the Pension Fund Regulatory and Development Authority (PFRDA) to offer long-term retirement assistances for citizens. NPS lets citizens to invest in different kinds of funds and instruments depending on their financial targets and risk appetite. It is worth noting that there are specific NPS charges linked with using this retirement scheme.

It may include administrative fees, fund management fees, and pension fund charges, among others. It is significant to discover the different types of charges linked with NPS as it can help investors make informed decisions about their investments.

There are 2 types of accounts provided by the National Pension Scheme namely Tier 1 and Tier 2. Under Tier 1, the account seeks to offer long term retirement savings and it can not be withdrawn while in Tier 2, flexibility is available and investors will be able to withdraw funds at any point of time. Tier 2 account serves as a voluntary savings account as well.

The scheme is equipped with several investment alternatives that may include debt, equity, government securities where subscribers may choose their respective asset allocation as per their risk-taking appetite. The scheme is available with tax benefits thus making it an attractive investment option for retirement planning.

National Pension Scheme Charges: The charges under the scheme include all expenses and fees deducted from a subscriber's investment and contribution. NPS charges can be partly categorised into various types that can be described below as:

NPS Point Of Presence (POP) Charges in India: The several POP charges of NPS can be defined here as:

Account Opening Charges: Rs 400
Processing Of Contribution: 0.50%, which can range between a minimum amount of Rs. 30 and a max of Rs. 25,000
Processing Of Non-financial Transactions: Rs 30
Persistency (for active retail customers having a tenure of more than 6 months with POP): For a yearly contribution of Rs. 1000 to Rs. 2999, the charge remains Rs 50 per annum. For yearly contribution of Rs 3000 to Rs 6000, the charge remains Rs. 75 per annum. And, for yearly contribution above Rs 6000, the charge remains Rs 100 per annum. Processing of exit, withdrawal: The charges will remain at 0.125% of corpus with minimum Rs 125 and maximum Rs 500.

NPS Central Recordkeeping Agency (CRA) Charges in India: The different CRA charges of NPS can be described as:
PRA Opening Charges: Rs 50
Per Account Maintainance Cost Of Annual PRA: Rs 225
Per Registration Charges

Other Intermediary Charges for NPS in India: The NPS charges for transactions issues from RBI locations will remain zero. And, charges for transactions issued from Non-RBI locations will be Rs 15.

Pension Fund Manager (PFM) Charges: The NPS charges for fees for management of the investment will be 0.09% up to 10,000 crore, 0.06% from 10,001 upto 50,000 crore, 0.05% from 50,001 upto 1,50,000 crore, and 0.03% above 1,50,000 crore.
Custodian: The Asset Servicing Charges will be 0.05% p.a. for the physical segment and 0.0075% p.a. for electronic segment.

NPS Trust: The expense reimbursement charges are 0.005% p.a.