Toll Free - 1800-425-3690 NPS National Pension System (A Government of India Scheme) Way2Wealth is approved Point of Presence under PFRDA Conceived & designed by Govt. of India Regulated by Pension Fund Regulatory & Development Authority Distributed by Way2Wealth Brokers Pvt. Ltd.
Contents HEADING SLIDE NO What is NPS? 3 Details of NPS 4 i. Benefits of NPS ii. Tax Benefits under NPS iii. Eligibility and minimum investment iv. Retirement Options v. Partial Withdrawals vi. Retirement Corpus vii. Saving For Retirement viii. Investment Options a) Active Choice b) Auto Choice v. Pension fund Managers (PFMs) vi. Performance vii. Fee Illustration 4-5 6 7 8 9 10 11 12 13 14 15 16 17-19 20 NPS Architecture 21 Employee exit from company 22 2 Account Opening and Documents 23
What Is National Pension System? National Pension System (NPS) is a retirement focused savings product that allows a subscriber to make regular savings during their working life to build a healthy corpus and enjoy steady income in the form of pensions and lump sum withdrawals on retirement Under the NPS, individual savings are pooled into pension funds which are invested by professional fund managers regulated by PFRDA. These funds are invested into the diversified portfolios comprising of government bonds, corporate debentures and equity markets. 3 3
Benefits Of NPS Transparent Every subscriber under NPS gets a login access which allows tracking individual investments on a real time basis. Portable Permanent Retirement Account number (PRAN) will be issued to every NPS subscriber. This PRAN will remain the same even if a subscriber changes his service / employment and thus helps in seamless transfer of his NPS account. Regulated - NPS is regulated by PFRDA, with transparent investment norms & regular monitoring and performance review of fund managers by NPS Trust Low cost- Annual fees of 0.01% (Rs.10 for Rs. 1,00,000) for fund management; 4 arguably the lowest cost pension plan in the world 4
Benefits Of NPS Choice of Investments - NPS offers a range of investment options and choice of Pension Fund Manager (PFMs) for planning the growth of your investments in a structured manner. Individuals can switch over from one investment option to another or from one fund manager to another Tax Benefits under 3 different sections 1. Sec. 80 CCE / 80 CCD (1) 2. Sec 80 CCD(2) 3. Sec 80CCD (1B) 2 & 3 above are exclusively meant for NPS 5 5
Tax Benefits Under NPS Sec. 80 CCE / Sec. 80 CCD(1) - Deduction upto 10% of salary (Basic + DA) subject to overall ceiling of Rs. 1.50 lacs u/s 80 CCE of Income Tax Act. 1961. Sec 80CCD (1B) - Additional tax deduction on investment up to Rs. 50,000 in NPS has been introduced under sub-section 80CCD (1B). This is over and above the limit of deduction available as mentioned in point above. This is an exclusive tax deduction available only for investment in NPS for all citizens of India and not available for any other investment. Sec 80 CCD(2) Under 80 CCD(2) employer s NPS contribution upto 10 % of salary (Basic + DA), without any monetary limit is deductible from taxable income. This tax benefit is in addition to the above mentioned sections. Please see illustration in the next slide 6 6
Tax Benefits Illustration* SALARY HEAD EXISTING (`) AFTER INCL. NPS (`) Basic + DA 10,00,000 10,00,000 Special Allowance 4,00,000 3,00,000 Contribution towards NPS 0 1,00,000** Total Income 14,00,000 14,00,000 Less: Deduction U/S Section 80CCD (2) 0 1,00,000 Less: Deduction U/S Section 80CCD (1) 1,50,000 1,50,000 Less: Deduction U/S Section 80CCD (1B) (only for NPS) 50,000 50,000 TAXABLE INCOME 12,00,000 11,00,000 Employers Contribution Employer s Contribution Employee s Contribution Employee s Contribution Disclaimer (*) It is an illustration only. ** Contribution made by an employer towards the NPS of an employee Please check with your tax consultant to ensure the actual tax applicable. 7 7
Eligibility And Minimum Investment Eligibility A citizen of India, whether resident or non-resident, subject to the following conditions: Applicant should be between 18 60 years of age as on the date of submission of his/her application to the POP/ POP-SP. Minimum Investment Tier 1 account Minimum amount per contribution -` 500 Minimum contribution per year - ` 6,000 Minimum number of contributions - One per financial year Over and above the mandated limit of a minimum of 1 contribution, you may decide on the frequency of the contributions across the year as per your convenience. 8 8
Retirement Options VESTING OPTIONS BENEFITS On attaining 60 yrs Lumpsum:-Max. 60 % of the pension wealth can be withdrawn in lump sum Alternatively subscriber can withdraw in maximum 10 annual installments upto the age of 70 yrs Min. 40% of the pension wealth to be used to purchase life time annuity At any time before the age of 60 Death due to any cause Max. 20% of the pension wealth can be withdrawn in lump sum Min. 80% of the pension wealth to be used to purchase life time annuity Nominee receives 100% of the pension wealth If nominee wishes to continue he/she shall have to subscribe to NPS individually 9 9
Partial Withdrawals Partial withdrawal upto 25% of the individual s contribution can be made provided the subscriber has been in NPS for a period of 10 yrs from the date of joining. Purposes for which partial withdrawal is allowed - 1. Children s higher education 2. Children s marriage 3. Purchase or Construction of a house 4. Treatment of specified illnesses 10 10
How Much Retirement Corpus Will You Need? Current Monthly Expenses(`) Current Age ( Yrs) Monthly Expenses @Age 58 (`) Corpus Required @ Age 58 (`) Monthly Savings Required To Achieve Required Corpus (`) 25,000 30 1,27,792 2.65 Cr. 16,000 25,000 35 95,493 1.95 Cr. 19,500 25,000 40 71,358 1.15 Cr. 25,500 25,000 45 53,323 1.1 Cr. 36,000 25,000 50 39,846 82 Lac 58,000 25,000 55 29,775 62 Lac 1,50,000 Assumptions:- Retirement age 58 Yrs Return on savings assumed at 10% p.a, Return on retirement corpus assumed at 8% p.a. Inflation assumed at 6% p.a. during the contribution period 11 Life Expectancy 80 Yrs Inflation on retirement is assumed to be 5% p.a. 11
Too Young To Start Saving For Retirement? Here s why it s important If you require (`) 1 Cr. on retirement:- Starting Age(Yrs) TimeFrame(Yrs) Assumed Return (%) Monthly Savings Required (`) Amount Invested (`) Corpus ((`) 25 35 10 3000 12.6 Lac 1.01 Cr. 30 30 10 5000 18 Lac 1.03 Cr. 35 25 10 8500 25.5 Lac 1.04 Cr. 40 20 10 14000 33.6 Lac 1.00 Cr. 45 15 10 26000 46.8 Lac 1.03 Cr. 50 10 10 50500 60.6 Lac 1.00 Cr. 12 12
Investment Options ASSET CLASS E ASSET CLASS G ASSET CLASS C Invests in Equity Instruments(Mkt. Cap> ` 5000 Cr.) Invests in Fixed Deposits in Commercial Banks and other Debt Securities Invests in Government Securities High Risk and High Returns Medium Risk and Medium Returns Low Risk and Low Returns 13 13
Investment Options Active Choice INSTRUMENT (ASSET CLASS) MINIMUM ALLOCATION MAXIMUM ALLOCATION Equity (Mkt. Cap > ` 5000 Cr.) 0% 50% Corporate Bonds 0% 100% Government Bonds 0% 100% 14 14
Asset Allocation - Auto Choice AGE DEBT EQUITY 35 Yrs 50% 50% 40 Yrs 60% 40% 45 Yrs 70% 30% 50 Yrs 80% 20% 55 Yrs 90% 10% The Asset allocation of the NPS life cycle changes with age. Equity Exposure is reduced by 2% every year. The reallocation is done on the investor s birthday every year. 15 15
Pension Fund Managers (PFMs) HDFC Pension Management Company Ltd ICICI Prudential Pension Funds Management Company Ltd Kotak Mahindra Pension Fund Ltd LIC Pension Fund Ltd Reliance Capital Pension Fund Ltd SBI Pension Funds Private Ltd UTI Retirement Solutions Ltd 16 16
Asset Class E Scheme Scheme Name Latest NAV Absolute (%) CAGR (%) 1 M 3 M 6 M 9 M 1 Y 2 Y 3 Y UTI Retirement Solutions Scheme 19.10-2.20-6.15-7.67-10.86-4.99 12.53 10.74 SBI Pension Fund Scheme 16.41-0.73-7.24-8.94-12.72-7.23 12.03 10.29 ICICI Prudential Pension Fund Scheme 19.39-0.54-6.95-8.95-12.74-7.17 12.22 10.27 Reliance Pension Fund Scheme 18.33-0.47-6.80-8.48-12.26-6.73 12.60 9.99 Kotak Pension Fund Scheme 17.85-0.46-6.74-8.46-12.05-6.50 12.54 9.88 HDFC Pension Management Company Limited Scheme 13.94-0.35-7.22-8.95-12.65-7.61 12.50 -- LIC Pension Fund Scheme 12.93-1.05-7.63-9.26-12.79-8.03 10.19 -- Nifty 50 7563.85-0.61-7.64-9.53-13.85-8.65 10.69 8.32 S&P BSE SENSEX 24825.04-0.88-8.33-10.25-14.04-9.54 9.34 8.08 Performance as on Jan 12, 2016; Ranking on the basis of 3 Year Performance 17
Asset Class C Scheme Scheme Name Latest NAV Absolute (%) CAGR (%) 1 M 3 M 6 M 9 M 1 Y 2 Y 3 Y ICICI Prudential Pension Fund Scheme 20.26 0.79 1.26 5.31 7.59 11.09 12.69 10.45 Reliance Pension Fund Scheme 18.28 0.99 1.33 5.45 6.96 9.89 12.12 10.09 UTI Retirement Solutions Scheme 18.46 0.49 1.44 5.02 6.34 9.73 11.81 9.87 SBI Pension Fund Scheme 20.40 0.94 1.35 5.26 6.51 9.71 12.12 9.80 Kotak Pension Fund Scheme 20.14 0.75 1.26 5.18 6.88 9.86 12.20 9.78 LIC Pension Fund Scheme 13.29 0.81 1.44 5.46 6.97 10.74 12.26 -- HDFC Pension Management Company Limited Scheme 13.21 0.86 1.41 5.46 6.98 9.95 12.17 -- Crisil Short Term Bond Fund Index 2590.16 0.70 1.70 4.18 6.18 8.69 9.55 9.11 Crisil Composite Bond Fund Index 2487.98 0.81 1.29 4.76 6.04 8.79 11.33 8.64 Performance as on Jan 12, 2016; Ranking on the basis of 3 Year Performance 18
Asset Class G Scheme Scheme Name Latest NAV Absolute (%) CAGR (%) 1 M 3 M 6 M 9 M 1 Y 2 Y 3 Y ICICI Prudential Pension Fund Scheme 17.31 0.33-0.50 3.88 4.01 7.29 13.02 8.69 UTI Retirement Solutions Scheme 17.06 0.39-0.07 4.06 4.38 7.48 13.20 8.46 Kotak Pension Fund Scheme 17.10 0.25-0.36 3.86 4.21 7.29 12.62 8.25 SBI Pension Fund Scheme 18.59 0.27-0.45 3.91 4.13 7.37 13.09 8.18 Reliance Pension Fund Scheme 16.75 0.42-0.52 3.85 4.07 7.27 12.81 8.12 LIC Pension Fund Scheme 13.25 0.30-0.56 3.87 3.89 7.16 13.16 -- HDFC Pension Management Company Limited Scheme 12.84 0.35-0.41 3.84 3.91 6.71 12.55 -- Crisil 10 Yr Gilt Index 2758.45 0.76 0.52 4.20 5.04 7.33 10.49 6.36 Performance as on Jan 12, 2016; Ranking on the basis of 3 Year Performance 19
NPS Charge Structure Annual Fee Illustration as prescribed by PFRDA Per Annum Comments NPS Contribution by the employee ` 60,000 Contribution of Rs.5000 p.m. POP fee (Way2Wealth) ` 240 25 bps / Min. Rs. 20 per tran. CRA Maintenance charges ` 190 Annual Charge CRA Transaction charge ` 48 Per transaction is Rs 4 (12*4 = 48) Fund Management fee ` 6 0.01% Currently NPS Trust Charges ` 6 0.01% Currently Total Annual Fee ` 490 One time charges: Permanent Retirement Account Number (PRAN) registration fee: ` 50 Initial subscriber registration POP charges: ` 100 20
Architecture Of NPS Information Flow Fund Flow FUND FLOW PFRDA NPS TRUST TRUSTEE BANK CUSTODIAN POP/POP-SP CAMS CRA FUND FLOW PFM 1 PFM 2 PFM 3 SUBSCRIBER OVER INTERNET ANNUITY PROVIDERS 21
Employee Exit From Company 22 22
ACCOUNT OPENING AND DOCUMENTS Step 1 - Resident or NRI should be between 18 yrs 60 Yrs Step 2 - Each subscriber needs to complete subscriber registration form CSRF 1 Link - Form CSRF 1: Subscriber registration Step 3 - Send application form to HR dept. Step 4 - Minimum Initial Contribution : Tier I ` 500 Step 5 - Subscriber receives the PRAN KIT (which includes Pran Card, Internet Pin & Telephone Pin ) KYC Documents: Identity Proof (from the list provided in registration form) Address Proof (from the list provided in registration form) 1 photo (Passport size) Cheque in favor of Way2Wealth Brokers Pvt. Ltd. (` 500) towards subscription Cheque in favor of Way2Wealth Brokers Pvt. Ltd. (` 116) towards charges Cancelled cheque List of documents accepted as identity & address proof are mentioned in the form. The form has to be filled and signed in black ink only. 23 23
Thank You Start saving for your retirement today! if interested, please contact Mr. Prasad Patil / Ms. Shraddha Jethani from Way2Wealth Brokers Pvt. Ltd. Email: prasadpatil@way2wealth.com / shraddhab@way2wealth.com Mobile: +91 9880596755 / 9886020794 24