Did you know that NRIs or Non-Resident Indians, aged between 18 and 60, can invest in India’s National Pension Scheme, provided they adhere to the Know Your Customer (KYC) norms? However, PIOs (Persons of Indian Origin) and OCIs (Overseas Citizens of India) are not eligible to participate in the NPS, according to an ET report.
NRIs can make contributions to the NPS through their NRE Account (Non-Resident External Account) or NRO Account (Non-Resident Ordinary Account).
Here are the contribution details for NPS as listed in the report:
Minimum contribution at the time of account opening: Rs 500
Minimum amount per contribution: Rs 500
Minimum annual contribution: Rs 6,000
The NPS offers various attractive features for investment choices, including:
Adequate Diversification: NPS portfolios are well-diversified across different financial securities.
Asset Class Mix: NPS provides a balanced mix of investment instruments and asset classes, such as Equity (E), Corporate Bonds (C), and/or Government Securities (G). This diversification helps minimize the impact on returns even during market downturns.
Customizable Investment Mix: Individual subscribers can pick their preferred investment mix (E, C, G) based on their risk appetite.
For NRIs, the NPS offers two fund management schemes:
Active Choice: NRIs have the option to actively decide the asset classes in which their contributed funds are invested, along with the respective proportions.
Auto Choice: This is the default option, where the investment funds are automatically managed based on the subscriber’s age profile. It is a convenient choice for those who prefer a hands-off approach.
Guidelines for exit and withdrawal from the NPS are as follows:
- Upon reaching the age of 60 years: A minimum of 40% of the accumulated corpus must be annuitized, while a maximum of 60% can be withdrawn as a lump sum. Complete withdrawal is allowed if the corpus is less than Rs 2 lakh. Subscribers can continue to stay invested in the NPS until the age of 70 years, with the option to make fresh contributions. Additionally, it’s possible to postpone the withdrawal of the eligible lump sum amount until the age of 70. Annuity purchase can be deferred for a maximum of 3 years when exiting.
- Before the age of 60 years: In this case, a minimum of 80% of the accumulated corpus must be annuitized, while a maximum of 20% can be withdrawn as a lump sum. Complete withdrawal is allowed if the corpus is less than Rs 1.00 lakh.
- In the event of the subscriber’s demise: The nominee has the option to receive 100% of the NPS pension wealth as a lump sum.