1. What is the National Pension System (NPS)?

The National Pension System (NPS) is a pension cum investment scheme launched by the government of India to provide old age security to its citizens. You can join NPS if you are between 18 and 85 years of age as on the date of submission of your application to the PoP/PoP-SP, or online through e-NPS. A Pension Fund Manager (PFM) manages the scheme.

2. Who is a Pension Fund Manager (PFM)?

A Pension Fund Manager (PFM) is an intermediary under NPS who carries out the following responsibilities:

• Receiving contributions and managing the corpus.
• Making payments to the subscriber through the Central Recordkeeping Agency (CRA).
• Publishing the daily Net Asset Value (NAV) of each scheme as per the guidelines specified by the regulator.

3. What is the Pension Fund Regulatory and Development Authority (PFRDA)?

The Pension Fund Regulatory and Development Authority (PFRDA) regulates NPS. It ensures transparency, conducts performance reviews, and monitors fund managers.

4. Who can invest in NPS?

Resident Indians who hold individual accounts with Zerodha can invest in NPS. The following cannot invest in NPS:

• Non-Resident Indians (NRIs).
• Joint account holders.
• Non-individual account holders (company, partnership, Hindu Undivided Family (HUF), etc.).

5. What is a Permanent Retirement Account Number (PRAN)?

A Permanent Retirement Account Number (PRAN) is a unique identification number for your NPS account.

6. What are Auto Choice and Active Choice in NPS?

You can choose between two asset allocation options:

Auto Choice: The asset allocation between equity, government, and corporate bonds is automatically adjusted based on your age. Depending on your risk appetite, you can also choose between aggressive, moderate, and conservative within the Auto Choice. The investment options under NPS tabulate the exposure to different asset classes.

Active Choice: You can choose the asset allocation yourself, subject to the following limits:

• The maximum allocation to equity is 75%.
• The maximum allocation to corporate bonds is 100%.
• The maximum allocation to government bonds is 100%.

7. What is the lifecycle of an individual participating in NPS from enrollment to post-retirement?

The lifecycle of an individual participating in NPS from enrollment to post-retirement is as follows:

• You decide to join NPS and complete the necessary paperwork through a Point of Presence (PoP) or online registration.
• Upon successful enrollment, you receive a Permanent Retirement Account Number (PRAN), which serves as a unique identification number for your NPS account.
• You start making regular contributions to your NPS account, with contributions allocated to your chosen asset class (equity, corporate bonds, and government securities).
• You can make partial withdrawals up to 4 times during your tenure, once every 4 years, up to 25% of your own contributions. There is no lock-in period on withdrawals.
• Upon reaching the age of 60, you can withdraw up to 60% of your NPS corpus as a lump sum. You must use the remaining 40% to purchase an annuity plan, ensuring a steady income during retirement. An annuity is a product that pays out a regular and predictable income to support your living expenses in retirement.

8. What are the charges to invest in NPS?

To open an NPS account, Zerodha charges a fixed account opening charge of ₹200 + 18% GST along with a commission of 0.25% of the investment amount (capped at ₹25,000). To learn more about charges for investing in NPS, see What are the charges for investing in NPS using Coin?

9. How to invest in NPS through Zerodha?

You can invest in NPS directly through Coin by Zerodha by navigating to the NPS section on your dashboard, completing your profile and nominee details, selecting a pension fund, and making a payment via Net Banking or UPI.

10. What are Points of Presence (PoPs)?

Points of Presence (PoPs) are entities appointed by the PFRDA to assist with opening and maintaining NPS accounts.

11. Can existing NPS subscribers shift from another CRA/PoP to Zerodha?

No, existing NPS subscribers cannot shift from another CRA/PoP to Zerodha at this time. Zerodha is working on enabling the migration of NPS subscribers from one NPS service provider to another.

12. What are Tier I and Tier II schemes?

• Tier I: All investments are locked in until the age of 60.
• Tier II: There is no lock-in period. NPS subscribers can invest and withdraw anytime, similar to mutual funds. Zerodha currently does not offer Tier II schemes.

13. Are NPS investments made through Zerodha in Tier I or Tier II schemes?

NPS investments made through Zerodha come under Tier I schemes. You qualify to invest in Tier II schemes only if you already have an investment in Tier I. If you do, log in to nps.kfintech.com with your PRAN and enable Tier II investments.

14. Can NPS investments be pledged for collateral margin?

No, you cannot pledge NPS investments for collateral margin. You can find the list of stocks and mutual funds that can be pledged with Zerodha for margins, along with the applicable haircut percentage, in this list.

15. Are NPS investments held in the demat account?

No, NPS investments are not held in the demat account. They are held in the Statement of Account (SOA) form, and you can track them on Coin. You can also log in to nps.kfintech.com using your PRAN to track your investments.

16. Why is the error "Your bank details have to be verified to open an NPS account" displayed?

This error appears if your bank account has not been verified by penny drop. Create a ticket and attach the latest month's bank statement or a personalised cancelled cheque of your primary bank account.

17. Why is the error "Photo not found" displayed?

This error appears for older Zerodha account holders. As per the PFRDA, a photograph is required to open an NPS account. Create a ticket and attach a passport-size photograph.

18. What does superannuation mean?

Superannuation refers to the withdrawal of NPS after you attain the age of 60 years.

19. What is the maximum age to subscribe to NPS?

You should be between 18 and 85 years of age as on the date of submission of your application to the PoP/PoP-SP, or online through e-NPS. For more information, visit npstrust.org/eligibility.

20. Does Zerodha provide corporate NPS?

No, Zerodha does not currently offer corporate NPS.

21. What is a Central Recordkeeping Agency (CRA)?

Central Recordkeeping Agencies (CRAs) facilitate the management of NPS investments and provide essential services for investors. Popular CRAs are NSDL Protean, CAMS, and Kfintech.

22. Can NPS investments made through Zerodha be tracked on the CRA website?

Yes, you can track NPS investments made through Zerodha on Kfintech at nps.kfintech.com.

23. What is the minimum investment in NPS?

You need to invest a minimum of ₹1,000 per financial year in NPS under Tier I. If you do not meet this requirement, the CRA will freeze your NPS account. To unfreeze it, you only need to make an investment. There are no lower or upper limits on the number of contributions per year, so you can manage the frequency and amounts of contributions as you choose. Zerodha currently does not offer Tier II schemes.

24. Where can I learn more about NPS?

To learn more about investing in NPS, visit the NPS: National Pension Scheme module.

NPS Vatsalya

1. What is NPS Vatsalya?

NPS Vatsalya is a pension scheme for minors below 18 years of age that encourages saving and financial awareness from an early age. The Union Minister for Finance and Corporate Affairs launched the scheme on 18 September 2024. It aims to build disciplined saving habits while helping children create long-term wealth and a retirement corpus through flexible contribution and investment options.

2. What are the objectives and regulation of NPS Vatsalya?

NPS Vatsalya is designed to help young subscribers build wealth from an early stage, promote long-term financial stability, and support the vision of "Viksit Bharat@2047." The Pension Fund Regulatory and Development Authority (PFRDA) regulates the scheme under the provisions of the PFRDA Act, 2013, along with related rules, regulations, guidelines, circulars, and instructions.

3. What are the benefits of NPS Vatsalya?

NPS Vatsalya fosters early financial planning, disciplined saving, and professional investment of funds dedicated to a child's future financial security, with regulatory safeguards. The account can receive contributions not only from parents or guardians, but also from relatives and friends. All contributions made under NPS Vatsalya are eligible for tax deduction under the provisions of the Income Tax Act, 1961, similar to NPS.

4. Who is eligible to open an NPS Vatsalya account?

NPS Vatsalya is available to all Indian citizens below 18 years of age, irrespective of gender. A parent or legal guardian, including a court-appointed guardian, can open and manage the account by submitting the required court order and KYC documents. The account is maintained solely for the benefit of the minor until they turn 18, after which the subscriber may continue the account up to the age of 21. Once the account is opened, the Central Recordkeeping Agency (CRA) issues a unique Permanent Retirement Account Number (PRAN) in the minor's name.

5. What are the contribution requirements for NPS Vatsalya?

The minimum amount required to open an NPS Vatsalya account is ₹250, and you must contribute at least ₹250 each financial year to keep the account active. There is no upper limit on contributions, and you can make multiple contributions in a year without any restrictions. Even if you do not contribute during a financial year, the account remains active and will not be deactivated until the subscriber reaches 18 years of age.

6. Can a subscriber make changes to their NPS Vatsalya account preferences?

Yes, you have the flexibility to make the following changes:

• Point of Presence (PoP): Anytime, with no restrictions.
• Pension Fund (PF): Once per financial year.
• Central Recordkeeping Agency (CRA): Twice per financial year.

7. What happens if no contribution is made in a financial year?

There is no impact on the account. The account will not be deactivated until the subscriber attains 18 years of age. Continuous contributions are not mandatory.

8. Are NPS Vatsalya contributions eligible for tax deduction?

Yes, contributions made under NPS Vatsalya are eligible for tax deduction under the Income Tax Act, 1961. Parents and guardians can claim a deduction of up to ₹50,000 under Section 124(4) of the Income Tax Act, 2025. This deduction is available under the old tax regime only.

9. How to check NPS Vatsalya investment performance and account statements?

You can track investment performance through the Statement of Transactions (SoT), available online via the CRA website or mobile app. The CRA sends periodic account statements to your registered email ID. If you opt for physical statements, the CRA mails them to your correspondence address for each financial year.

10. When can you make partial withdrawals from NPS Vatsalya?

You can make partial withdrawals after 3 years from account opening for the following reasons:

• Education of the minor subscriber.
• Treatment of specified illnesses.
• Disability above 75%.

Up to 25% of contributions (excluding returns) can be withdrawn per request. A maximum of 2 partial withdrawals are allowed until the subscriber turns 18, and 2 additional withdrawals are allowed between ages 18 and 21. Partial withdrawals permitted under NPS Vatsalya guidelines are tax-exempt under the Income Tax Act, 2025.

11. What happens when the subscriber turns 18?

At age 18, the subscriber must complete fresh KYC and provide nominee details. They may then choose one of the following options:

• Shift the corpus to NPS (All Citizen Model or another applicable model).
• Withdraw up to 80% as a lump sum and use the balance for annuity purchase.
• Withdraw 100% if the corpus is below ₹8 lakh.

The account can continue under NPS Vatsalya until age 21 unless the subscriber exits or shifts earlier.

If KYC is not completed at 18, transactions will be blocked, and the account will become dormant after age 21. If no option is chosen by age 21, the account will automatically shift to NPS under a higher-equity scheme with the same Pension Fund Manager, as per PFRDA regulations. Withdrawals will be allowed only after KYC completion.

12. What happens to the NPS Vatsalya account if the subscriber or guardian passes away?

If the subscriber passes away, the entire accumulated pension wealth is payable to the guardian, nominee(s), or legal heir(s). The recipient may also choose to transfer the proceeds to their own individual NPS account.

If the guardian passes away before the subscriber, a new guardian must be registered by submitting the required KYC documents to continue managing the account. If both parents pass away, a legally appointed guardian may continue operating the account, with or without making further contributions.

13. How to invest in NPS Vatsalya through Zerodha?

Zerodha currently does not offer investments in NPS Vatsalya. However, you can invest in NPS Vatsalya through PensionBox, Zerodha's pension agent. Log in to PensionBox using your Zerodha login credentials and complete your investment from there.