If you have not started investing in the NPS, here’s how you can open the account online to start investing. Currently, the Pension Fund Regulatory and Development Authority (PFRDA) has mandated three central record keeping agencies (CRAs) for opening of NPS accounts of subscribers. These are NSDL, CAMS and KFintech.
Sreekanth Nadella, MD and CEO, KFintech says, “Earlier, the process of opening an NPS account was partially online and partially offline. Once the application was submitted online, the subscriber was required to send physical copies of documents to a CRA. Once the CRA received the documents, they’d process your application and issue your Permanent Retirement Account Number (PRAN). Now that entire process has been completely digitised, making it easier to open an NPS account, and a subscriber is not required to send any documents to a CRA.”
To explain the process step by step, this article uses the process followed by KFintech while opening an account. However, the process to open an NPS account with other CRAs is more or less the same.
Do note that an individual cannot have more than one NPS account. So once you open an account with a CRA, you cannot open another account with another CRA.
Steps to open NPS account online
Step 1: Visit nps.kfintech.com and select “Join NPS”.
Step 2: A new webpage will open on your screen. You will be required to make a registration by entering details such as full name, mobile number, email address, subscriber type (individual or corporate subscriber).
Nadella explains that an individual NPS account is one where an individual contributes to their account, without any contribution from an employer. “However, at a later date, if an individual’s employer wants to contribute to the NPS, it can be made to the same account. On the other hand, if a company wants to open NPS accounts for their employees and make contributions in them, then they will be required to open corporate NPS accounts for their employees. As for an individual account, an individual can make their subscription to the corporate account at any time they choose,” he says.
Step 3: Once you click on “Create Account”, you will receive a one-time password (OTP) on your mobile number. The OTP is valid for 30 minutes. Verify the OTP to go to the next step.
Step 4: The individual has to fill in 5 sections – Personal Details, KYC Details and FATCA, Investment Details, Upload Documents and Payment.
In the personal details’ section, the individual will have to provide details related to residential status, PAN, gender, salutation, date of birth, country of birth, place of birth, nationality, name to be printed on PRAN card, martial status, occupation details.
Step 5: Once the details are added, click on “Save and Proceed”.
Step 6: The next step is KYC Details and FATCA. An individual can do the KYC procedure either via PAN or Aadhaar. Do note that a one-time fee of Rs 125 (plus GST at 18%) is applicable if the individual opts to do KYC with PAN. There are no additional charges on doing KYC via Aadhaar.
“When opening an NPS account with an Aadhaar number, the number linked to one’s account helps ease the backend process. Once the applicant provides their Aadhaar number in the NPS portal, an OTP is generated and sent directly to the subscriber’s mobile number for authentication purposes. When doing KYC via PAN, the details are verified through the subscriber’s bank account. These extra charges are levied by the bank,” says Nadella.
He explains that banks use the Rs 125 for verification process. The payment can be done through net banking, debit card or credit card. “For all successful online payments, the applicant will be provided an online receipt and the PRAN, with an SMS and email alert,” he says.
To do KYC with PAN, one must keep following documents handy:
a) A cancelled cheque’s copy, bank passbook or bank certificate in JPG or PDF or PNG. The size should be 2KB and 3 MB.
b) Photograph should be in JPG format; size of 2 KB and 2MB.
c) Scanned copy of signature in JPG format; size between 2 KB and 2 MB.
If you opt to do KYC via Aadhaar, the website will redirect you to Digilocker – the government website that stores documents digitally. You will be required to enter your Aadhaar number to continue. An OTP will be sent by the UIDAI to the mobile number registered in their records. Enter the OTP – valid for 10 minutes – to continue.
The CRA will ask for e-Aadhaar data on Digilocker. After you give consent, the screen will show your Aadhaar data – photograph, name, date of birth, gender, address.
Click on “Save and Proceed” if the details are correct. If the details are incorrect, you can use the PAN method to do KYC. But remember to correct the data mentioned in Aadhaar.
The next step is to give a FATCA declaration. Here an individual is required to mention the details of the country for taxation.
Step 7: Select the account type – (a) Tier I or (b) Tier I and Tier II. Note that it is mandatory to open a Tier-I NPS account. Tax benefits under Section 80C and 80CCD are available in the Tier-I NPS account. Tier-II is optional and allows an individual the flexibility to invest and withdraw without any restrictions.
Do note that only government employees are eligible to get income tax benefit under Section 80C on a Tier-II account. If a government employee claims tax benefit on a Tier-II NPS account, there is a lock-in period of three years. Once the type of account is selected, click on “Save and Proceed”.
Step 8: The individual is required to enter bank details – the IFS code, bank name, account type (savings or current), account number.
Step 9: The next step is to add nominee details and then “Click to Add Nominee” to proceed.
Step 10: Enter the amount you want to contribute, pension fund and investment options (active or auto).
In active mode, the investor gets to decide how much of her contribution will be invested across four asset classes – equity, corporate debt, government debt and alternate investment funds. The maximum share in equity is 75% till the age of 60. In alternative funds, it cannot exceed 5% of the contribution amount. There are no restrictions for investing in corporate debt and government debt.
If the subscriber choses auto, the investments will be made via a life-cycle fund. The proportion of contribution will be invested across three asset classes (equity, corporate debt and government debt) on the basis of the age. As the age of the subscriber increases, the exposure to equity and corporate debt decreases. The subscriber can pick three types of funds on the basis of her risk appetite – aggressive, moderate and conservative.
Do note that this is the first amount that you will be contributing to the NPS account. Future contributions can be higher or lower.
Further, an individual has to choose from one of the following pension funds:
a) Birla Sunlife Pension Management Ltd
b) HDFC Pension Management Co Ltd
c) ICICI Prudential Pension Fund Management Co Ltd
d) Kotak Mahindra Pension Fund Ltd
e) SBI Pension Funds Pvt Ltd
f) LIC Pension Funds Pvt Ltd
g) UTI Retirement Solutions Ltd
Recently, PFRDA allowed four more asset managers to manage NPS funds – Axis Asset Management, DSP Investment Managers, Tata Pension funds and Max Life Pensions.
Step 11: Here, you have to upload a signature and e-statement/cancelled cheque/passbook. Click on “Save & Proceed”.
The system will now ask if you want to opt for E-Pran or physical PRAN. E-PRAN is cheaper. It will be sent on your registered email ID. Click on “Save & Proceed”.
In the last step, you will be asked to confirm the details. Once you do that, an OTP will be sent to your email ID for confirmation. Enter the number, click on submit – make the payment – and your account will be created. An email will be sent to your registered email ID containing the details.