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About

National Pension System (NPS) was initially introduced for the Central Government employees who joined on or after 01.01.2004.  The NPS was made available to all citizens of India on 1st May 2009. Later, in order to facilitate the organised entities, including public sector organisations, a customised version of NPS, known as the NPS Corporate Sector Model, was introduced in December 2011.    

NPS Corporate Sector Model offers a robust platform for employers to extend old age social security benefits to their employees, allowing for flexible contributions from both employer and employee. It is a cost-effective alternative to self-administered pension schemes, as employers are not required to manage recordkeeping, investments, or annuity-related activities—these are handled by specialised intermediaries under NPS, which are registered and regulated by the PFRDA. This model can seamlessly complement existing retirement benefit schemes like EPF and SAF. Employers have the flexibility to centrally select the Point of Presence (PoP), Pension Fund (PF), and investment options for all employees, or allow individual employees to make these choices independently. Both employers and employees can avail tax benefits under this model. Employers can claim their contributions as a business expense, while employees benefit from tax deductions on their own contributions as well as those made by the employer. The portability of the NPS account (PRAN) makes it particularly suitable for corporate sector employees, ensuring continuity in retirement savings despite frequent job changes.
 

Eligibility

Eligible Employees:
Indian citizens, including Resident Indians, NRIs (Non-Resident Indians), and OCIs (Overseas Citizens of India) who are employees of a corporate entity that has adopted the National Pension System (NPS), are eligible to enrol under the NPS Corporate Sector Model.
• Age: 18 to 70 years
• Mandatory: Completion of Know Your Customer (KYC) norms
• Registration must be done through the employer

Eligible Corporate Entities for NPS Registration:
The following types of organisations can adopt NPS as a retirement benefit scheme for their employees:
1. Companies registered under the Companies Act, 2013
2. Co-operative societies registered under applicable state or central laws
3. Government bodies or entities established under any Act of Parliament or State Legislature
4. Public Sector Enterprises (PSEs) or Government companies
5. Registered Partnership Firms
6. Limited Liability Partnerships (LLPs)
7. Proprietary Concerns
8. Trusts and Societies
9. Foreign companies registered under Sections 591–608 of the Companies Act, 1956, for their eligible Indian employees
10. Foreign diplomatic missions in India (e.g., Embassies, High Commissions, Consulates)
11. International organisations operating in India (e.g., UN, WHO, World Bank, ADB, IMF)

How to Register for the NPS Corporate Sector Model?
To implement NPS for its employees, a corporate entity must register with the Central Recordkeeping Agency (CRA) under the NPS Corporate Sector Model. This may be done by submitting a Corporate Registration Form (CHO) through a registered Point of Presence (PoP).

Benefits for Corporates and Employers

Organizations that adopt the National Pension System (NPS) under the Corporate Sector Model enjoy several strategic and financial advantages:

1. Voluntary and Flexible Implementation

  • NPS can be offered alongside other retirement schemes such as Provident Fund (PF) and Superannuation Fund, enhancing employee retirement planning options.
  • Corporates have the flexibility to define contribution structures:
    • Equal contributions from employer and employee (e.g., 10% each)
    • Unequal contributions (e.g., 10% by employee, 14% by employer)
    • Contribution by only the employer or only the employee

2. Cost-Effective Retirement Management

  • NPS eliminates the need for self-managed pension administration such as maintaining a trust, record-keeping, or annuity processing—making it a low-cost pension solution for employers.

3. Customizable Investment Options

  • Employers can select a Pension Fund (PF) and asset allocation strategy on behalf of their employees. Alternatively, this decision can be left to individual employees also.

4. Corporate Tax Benefits

  • Employer contributions to NPS (up to 14% of salary, i.e., Basic + DA) are treated as a business expense and can be claimed as a deduction under Section 36(1)(iv)(a) of the Income Tax Act, 1961.

Benefits for Employees

Employees enrolled in the NPS Corporate Sector Model enjoy a host of retirement and tax-related benefits:
  1. Lowest Cost Pension Scheme in India

  • NPS offers one of the most cost-effective retirement solutions, with low fund management and administrative charges.

  2. Multiple Investment Choices

  • Employees can choose from various Pension Fund Managers and flexible investment patterns to suit their risk profile.

  3. Full Transparency and 24/7 Online Access

  • Subscribers can monitor their NPS account online anytime, with transparent NAV disclosures and real-time fund updates.

4. Attractive Tax Benefits under Income Tax Act, 1961:

  • Section 80CCD(1): Employee contributions eligible for deduction up to:
    • 10% of salary (Basic + DA)
    • 20% of Gross Income for self-employed

         (Subject to Rs. 1.5 lakh limit under Section 80CCE)

  • Section 80CCD(1B): Additional tax deduction of Rs. 50,000
  • Section 80CCD(2): Employer contributions deductible up to:
    • 10% of salary for employees under Old Tax Regime
    • 14% of salary for employees under New Tax Regime

  5. Portability and Flexibility

  • NPS accounts are unique and portable, remaining active across jobs and geographic locations.
  • Post-retirement options: Continue investing beyond superannuation and defer annuity or lump sum withdrawal up to the age of 75 years.

  6. Efficient Grievance Redressal

  • Subscribers can raise and track complaints through the Centralised Grievance Management System (CGMS) for timely resolution.

  7. Tier II Account for Additional Investments

  • An optional Tier II NPS account allows unrestricted withdrawals and no additional annual maintenance charges, making it ideal for managing surplus funds.

Funds and investment options of NPS.

Account Options

The National Pension System (NPS) offers two types of account options for subscribers under the Corporate Sector Model:
  1. Tier-I Account – Primary Retirement Pension Account

  • The Tier-I NPS account is the mandatory and core retirement account under the NPS architecture.
  • Contributions to this account can be made by both the employer and employee, building a long-term retirement corpus.
  • Withdrawals and exits from Tier-I accounts are governed by the PFRDA (Exits and Withdrawals Under the NPS) Regulations, 2015, and amendments issued thereunder.
  • Income tax benefits are available on both employee and employer contributions under the Income Tax Act, 1961.
  • Designed specifically for retirement planning, having restricted premature withdrawal, with specific provisions for exit.

  2. Tier-II Account – Voluntary Investment Account

  • The Tier-II NPS account is an optional and flexible investment account, available only to existing Tier-I account holders.
  • It provides access to the same NPS fund management framework at a very low cost, making it ideal for additional savings and short-term investments.
  • No lock-in period: Subscribers can withdraw funds anytime, offering complete liquidity.
  • No tax benefits: Contributions and returns under Tier-II accounts are not eligible for tax deductions or exemptions.
  • Zero Annual Maintenance Charges (AMC): There are no additional charges for maintaining a Tier-II account.
  • Switching facility: Subscribers can transfer funds from Tier-II to Tier-I account as per guidelines.
  • Activation of Tier-II account can be done simultaneously with Tier-I account registration or at any time later.
     

Contribution

The National Pension System (NPS) offers a flexible contribution structure under the Corporate Sector Model, allowing both employers and employees to customize their retirement funding approach.

Types of Contribution Options in NPS
Organizations and employees can select from the following contribution models:

  • Equal contributions by employer and employee (e.g., 10% each)
  • Unequal contributions (e.g., 14% by employer, 10% by employee)
  • Contribution by either party – only by employer or only by employee

This flexibility helps align retirement contributions with the company’s compensation policy and the employee’s financial planning goals.

Minimum Contribution Requirements
For Tier-I Account (Mandatory Retirement Account)

  • Minimum amount per contribution: Rs. 500
  • Minimum contribution per year: Rs. 1,000
  • Minimum number of contributions per year: 1

Note: If the subscriber fails to meet the minimum contribution criteria, the Tier-I NPS account will be frozen until compliance is restored.

 

For Tier-II Account (Voluntary Investment Account)

  • Initial contribution at the time of activation: Rs. 1,000
  • Minimum amount per subsequent contribution: Rs. 250

The Tier-II account offers complete withdrawal flexibility and can serve as an additional investment avenue, although no tax benefits are applicable.
 

Investment Choices

The National Pension System (NPS) offers flexible investment choices to suit the financial goals and risk appetite of both employers and employees under the Corporate Sector Model.

1. Flexibility in Pension Fund and Asset Allocation Selection

Under the NPS Corporate Model, the employer has the option to:

  • Select the Pension Fund (PF) and investment strategy centrally for all employees, or
  • Allow individual employees (subscribers) to make their own selection.

If the employer chooses the Pension Fund and asset allocation on behalf of the employee, the employee may revise their choices after 1 year (365 days), provided the employer permits it.

2. Selection of Pension Fund (PF)

  • Employers or individual subscribers (as allowed) can select any Pension Fund(s) registered with PFRDA.
  • To view the latest list of approved Pension Funds, visit the List of Pension Funds under NPS.

3. Asset Allocation Options under NPS

Subscribers can choose between two investment strategies:

A. Active Choice – Self-Directed Allocation
This option allows the Corporate/Subscriber to actively decide the distribution of investments across the following asset classes:

  • Equity (E): Up to 75%
  • Corporate Bonds (C): Up to 100%
  • Government Securities (G): Up to 100%
  • Alternate Assets (A): Up to 5%

B. Auto Choice – Life Cycle-Based Allocation
In this option, asset allocation is automatically adjusted based on the age of the subscriber. The equity exposure reduces gradually as the subscriber ages. The following predefined Life Cycle Fund options are available:

  1. LC25 – Conservative Life Cycle Fund
  2. LC50 – Moderate Life Cycle Fund (Default option)
  3. LC75 – Aggressive Life Cycle Fund
  4. BLC – Balanced Life Cycle Fund (Modified LC 50)
Age Aggressive Life Cycle Fund (LC-75) Moderate Life Cycle Fund (LC-50) Conservative Life Cycle Fund (LC-25) Balanced Life Cycle Fund (BLC)
Asset Class (%) Asset Class (%) Asset Class (%) Asset Class (%)
E C G E C G E C G E C G
Upto 35 years 75 10 15 50 30 20 25 45 30 - - -
36 years 71 11 18 48 29 23 24 43 33 - - -
37 years 67 12 21 46 28 26 23 41 36 - - -
38 years 63 13 24 44 27 29 22 39 39 - - -
39 years 59 14 27 42 26 32 21 37 42 - - -
40 years 55 15 30 40 25 35 20 35 45 - - -
41 years 51 16 33 38 24 38 19 33 48 - - -
42 years 47 17 36 36 23 41 18 31 51 - - -
43 years 43 18 39 34 22 44 17 29 54 - - -
44 years 39 19 42 32 21 47 16 27 57 - - -
45 years 35 20 45 30 20 50 15 25 60 50 30 20
46 years 32 20 48 28 19 53 14 23 63 48 28 24
47 years 29 20 51 26 18 56 13 21 66 46 26 28
48 years 26 20 54 24 17 59 12 19 69 44 24 32
49 years 23 20 57 22 16 62 11 17 72 42 22 36
50 years 20 20 60 20 15 65 10 15 75 40 20 40
51 years 19 18 63 18 14 68 9 13 78 39 18 43
52 years 18 16 66 16 13 71 8 11 81 38 16 46
53 years 17 14 69 14 12 74 7 9 84 37 14 49
54 years 16 12 72 12 11 77 6 7 87 36 12 52
55 years & above 15 10 75 10 10 80 5 5 90 35 10 55


For detailed investment guidelines refer to the Circular Section of PFRDA website.

Charges

Charges related to Tier-I account can be borne either by the Corporate/Employer or the Subscriber, at the discretion of the Corporate.

Intermediary Service Service Charges* Method of Deduction
Point of Presence (POP) Initial Subscriber registration Up to Maximum ₹400 (negotiable) To Be collected Upfront
Initial Contribution Up to 0.5% of contribution, subject to Max ₹25,000
All Subsequent Contribution
All Non-Financial transactions Up to maximum ₹30
eNPS (for subsequent contribution) Up to 0.20% of contribution, subject to max ₹10,000
Trail commission for D-Remit Up to 0.20% of contribution, subject to max ₹10,000 Through unit deduction
Processing of withdrawal / exit Up to 0.125% of corpus, subject to max ₹500 To be collected upfront
Central Recordkeeping Agency (CRA) Account Opening Charges With physical PRAN card Protean KFintech CAMS Through cancellation of units
₹40 ₹39.36 ₹40
With ePRAN & physical kit ₹35 - -
With ePRAN & email kit ₹18 ₹18 ₹18
Annual Account Maintenance ₹69 ₹57.63 ₹65
Charge per transaction ₹3.75 ₹3.36 ₹3.50
Pension Fund Investment Management Fee 0.03% - 0.09% of AUM p.a. Charged by adjustment of NAV
NPS Trust Reimbursement of Expenses 0.003% of AUM p.a.
Custodian Asset Servicing charges 0.000000001770% of assets p.a.

Tier-II transaction charges are the same as Tier-I.

Quick Links
Circulars NPS Corporate Sector Presentation FAQs

Toll Free No:

1800 110 708

SMS NPS 56677