Latest National Pension Scheme for NRIs

NRIs can now invest in the National Pension Scheme to provide them security of income when they return and retire in India. Recently RBI allowed NRIs to subscribe to National Pension Scheme (NPS) that is easily accessible, low cost, tax efficient, flexible and portable retirement savings account. This scheme is governed by Pension Fund Regulatory and development authority. RBI as consultation from the government is going all the way to appease NRI through this scheme and rope them to invest in India.

As per the RBI the investment in this scheme is routed through normal banking channels and the subscription amount is to be paid by NRI either by inward remittance or out of the funds held in their NRE/FCNR/NRO account and there will be no restriction on repatriation of the annuity or accumulated savings.

Eligibility Criteria:

• Any NRI between the age of 18 and 60 years
• This scheme is not valid for the person of Indian origin and overseas Citizenship of India.
• In case the subscriber’s citizenship status changes, his/her NPS account would be closed.
• Investment in NPS is independent of other contribution to any Provident fund.

Source and Minimum contribution to the scheme:

• Minimum contribution at the time of opening the account is Rs. 500/-
• Per year minimum contribution is Rs. 6000/-
• There are no limits for maximum contribution

Following documents are required to be presented:

• Filled subscriber registration form
• Copy of passport
• In case local address is different from the address on passport, proof of address is required to be produced.

Key features:

• Every individual subscriber is issued a Permanent Retirement Account Number (PRAN) card which has a 12 digit unique number.
• Under the scheme, individual has 2 options in terms of accounts- Tier – I and Tier – II. Tier I is mandatory account which will be provided to every subscriber. Tier II account is a voluntary savings facility and is optional and is made available as an add to Tier I account.

Just as entry rules NRI has to follow certain rules regarding partial withdrawal and exit:

• Partial withdrawal is allowed for up to 25 percent of the contributions for those who have subscribed to the scheme for at least 10 years.
• Higher education, marriage of children, purchase of construction of residential flat and treatment of specified illness are the only grounds on which partial withdrawal is allowed
• Premature exit is allowed only after completion of minimum 10 years with the scheme.

Benefits of NRI to invest in NPS:

1. It is best for NRI, who wish to return and retire in India
2. Financial advisors are of the view that the product is not only cost effective but also well regulated.
3. It has the history of delivering 8-10 percent returns over last 10 years
4. As NPS is the combination of debt and equity, it can be considered as a part of one’s portfolio but should not be seen as only retirement product one should possess
5. One should be well aware of foreign exchange risk factor when it comes to withdrawing amount invested in India.
6. Investing in NPS has become progressively attractive to NRIs, who are getting lured to this policy.

List of Pension plans in India for NRI

In order to make NRIs feel at home and to appreciate their investment in Indian economy, Modi government has come out with new policies and schemes that recognize NRI’s contribution and make them feel full members of the Indian community.

NRIs have to plan their retirement policies in advance and for that they have to bear in mind the future value of money, calculate their approximate expenditure and plan their standard of living accordingly.

For transpiring this mission the Indian government has announced alluring pension plans for NRI. Here are few pension plans for NRI:

Pension plans provided by various companies have become great investment options to NRIs. With the use of internet today there are umpteen numbers of NRIs choosing these policies. It is better to compare the investment plan and opt for the one that best fits your needs. As features of these policies often change it is better to consult investment advisor before making investments.

National Pension Scheme	Provide access to age old income security	Investment is routed through normal banking channel and the subscription amount is to be paid by NRI either by inward remittance through normal banking channels or out of the funds held in their NRE/FCNR/NRO account
SBI pension plans – SBI start smart	Provides entire sum that is payable to the nominee of the policy on the death of the policy holder	One time premium payment plan Unit linked plan offering specified returns on annual basis Option of choosing multiple low cost pension plans at once
SBI – Life Long Pension Plans	One can opt for plan providing only pension and plan that provides extra cover along with plan	It promises certain amount of percentage of premium every year It also has option to choose other insurance covers i.e. covers against accident
Aviva pension schemes- Avivia secure pension	Provides certain amount of premium for the first few years of the plan	The minimum sum assured starts from Rs. 1 lakh and there is no maximum limit on the sum assured.
CITI bank retirement plans- 3g Manu life	Option for NRI to choose to hold the amount accrued for about 5 to 10 years after the premium payment term Also he has the option of to choose the annuity payback turn from wide range of options in the years	Provides few special features apart from the regular ones Coupon on annual basis after the 10th year policy Offers insurance covers like critical care, disability etc Loan facility for medical purposes and this loan is free from interest  rate
Life Insurance cooperation- Jeevan Nidhi	Popular for annuity options Guarantees sum of assured sum for first few years of premium payment and later on certain sum as bonus obtained by participation of premiums in company’s profit	Special features like joint life, a percentage hike of 3 % on annuity, grace period etc Other insurance covers available along with this plan but they are optional
LIC – Jeevan Akshay VI	Onetime payment annuity purchase policy NRI must pay lump sum at once and can opt to get annuities for rest of life anytime	Annuities are payable on monthly, quarterly, half yearly or even on annual basis

Check New Pension scheme benefits and features

New pension scheme – New Pension Scheme is the voluntary contribution of retirement savings scheme. It has been framed to enable systematic savings during the subscriber working life.

This scheme is an attempt towards finding an apt solution to provide adequate retirement income to each and every citizen of India. NPS works in the following way:

1. Here individual savings is pooled in pension fund
2. All these funds are invested by Pension Fund regulatory and development authority that is managed by professional fund managers in sync with the approved guidelines of investment in varied portfolios that is of government bonds, bills, shares and corporate debentures.
3. All these contributions will grow and accumulate over the years based on returns earned on investment made.

It offers following benefits:

• This scheme offers spectrum of investment options and choice of pension fund managers for planning growth of investments in proper manner and witness the investment grow. Also individuals can switch from one investment option to another and from one fund manager to another and the returns are totally market related.
• Flexibility to select between active and auto choice for distribution: A subscriber can corner between active choice and auto choice for distribution of his contribution. In case active choice is selected the subscriber must indicate the percentage bifurcation between corporate and equity. The maximum investment allowed in equity is 50%.
• Simplicity: Opening this account with NPS provides Permanent Retirement Account Number which is unique number and it remains with the subscriber all through the lifetime. The scheme is divided into two tiers: Tier I – which is non withdrawal permanent retirement account in which accumulations are deposited and invested as per the option of the subscriber. Tier II –It is voluntary withdrawal account which is allowed only when there is active Tier I account in the name of subscriber. The withdrawals are permitted from this account as per the needs of subscriber.
• It is transparent and is cost effective system in which the pension contributions are invested in the pension fund schemes and the employees will be able to know the value of the investment on daily basis.
• It is easy and portable as each employee is identified by a unique number and has a separate PRAN will remain same even if the employee gets transferred to any other office.
• It is regulated by Pension Fund regulatory and development authority with transparent investment norms and regular monitoring and performance review of fund managers by NPS trust.

Benefits to corporate:

This scheme provides a platform to the corporate to co contribute for the Employees’s pension. Here the corporate can save expenses incurred on self administration of pension functions like setting up separate trust, record-keeping, fund management, providing annuity etc. Also they can exercise the choice of PFM along with investment pattern for its employees or leave the option to employee.

Benefits to subscribers:

NPS allows one to accumulate corpus from the age of 18 years for forty odd years irrespective of geographies and employers in one single PRAN account with minimal leakages in the form of withdrawals for competing consumption expenses, reap compounding effect of tax concessions and minimum fee, invest in corpus as per risk factor that is managed by professionally managed funds that generate optimum returns followed by smooth transfer of retirement wealth from accumulation phase as per the choice on reaching 60 years of age. The additional tax benefit of NPS as per the Income tax act 1961 is the best aspect of this scheme.

Salient features of NPS are:

Portable account: PRAN remains same irrespective of change in employment or geography
Online platform: Each subscriber gets log in ID and password of NSDL system
It offers option of service providers, funds, investment options, pension fund managers, annuity service providers and annuity plans
Subscribers can switch the service provider, fund, investment option and pension fund managers
Flexible contribution mechanism
Prudent regulation
Effective grievance management through CRA/PFRDA call centre etc.
Transparent investment norms
Very low operation cost

For more information:- Alankit Group