National Pension Scheme Account With State Bank Of India (SBI)

If you are an individual who wants to plan your retirement, you should consider National Pension Scheme (NPS) as a part of your portfolio for retirement. NPS is a focused investment for one’s retirement. NPS invests the contributions of the depositors into various market-linked instruments such as equity and debts across market segments. 

Let us understand what is NPS scheme, its features and step by step guide for opening an NPS account with SBI.

What Is NPS (National Pension Scheme) Account?

The NPS is a social security scheme launched by the Central Government of India. The New Pension Scheme is a contribution-based scheme that provides market-linked returns to pensioners. Initially, it was aimed at the Central Government employees only. However, NPS was subsequently extended by the Pension Fund Regulatory and Development Authority (PFRDA) to all citizens.

So, now an employee belonging to the private sector or someone who is self-employed can avail of the new pension scheme. It also offers portability across various locations and jobs. SBI is one of the banks where you can open an NPS account.

There are two type of NPS accounts Tier I and Tier II:

• Tier I account allows deduction under section 80C of Rs.1.5 lakh and an additional deduction of Rs.50,000 under section 80CCD(1B). Only partial withdrawals is available from this account subject to conditions. Also, at maturity , 60% of the corpus is tax exempt and can be withdrawn , whereas 40% of balance corpus is used to purchase annuity.
• Tier II account is a voluntary retirement account. This account can be opened only when you have a Tier I account. There is no tax benefit available for the gains arising out of Tier II investment, you're taxed according to the marginal rate charged.

Features Of NPS Account

The following are the salient features for both Tier I and Tier II types of NPS accounts:

• NPS accounts can be opened at Point of Presence-Service Provider (POP-SP) banks.  
• SBI is one such bank that accepts the application form and the required documents, getting the subscribers registered with the Central Record-keeping Agency (CRA) to generate the Permanent Retirement Account Number (PRAN).
• The PRAN will be needed for quoting in all future transactions.
• Tier I and Tier II are the options available.

Eligibility For SBI’s National Pension Scheme

The most important eligibility criteria for an individual to apply for the SBI National Pension Scheme are: 

• An individual should be between the age of 18 to 70 years. 
• Based on the KYC norms, the following documentation is required:
  • Photo ID proof
  • Date of birth proof
  • Address proof
  • Application form
• In the case of Tier I type of NPS account:
  • The minimum contribution for account opening is Rs.500
  • The minimum amount payable for every contribution is Rs. 500
  • The minimum required account balance at the end of every financial year is Rs. 1,000
  • There must be at least 1 minimum contribution during a year.
• In the case of Tier II type of NPS account:
  • The minimum contribution for account opening is Rs.1,000
  • The minimum amount payable for every contribution is Rs. 250
  • There must be at least 1 minimum contribution during a year.
• For an NPS Tier II account, an individual has to first open an active Tier I account for activating the Tier II account. 

Step By Step Guide For Opening NPS Account Online With SBI

Make sure you have the following ready:

• Aadhar card and PAN number; these must be linked with your SBI account
• Access to Net-banking facility
• Scanned image of a passport size photo
• Scanned image of your signature

Follow the below mentioned steps to open an NPS account in SBI:

Step 1: Login to the SBI Netbanking portal.

Step 2: Under the ‘Deposit and Investment’ tab, click on ‘National Pension Scheme (NPS)’ option.

Step 3: On the next page, click on the ‘NPS Registration’ option and select ‘NPS RI Registration’ or ‘NPS NRI Registration’ option, as applicable.

Step 4: The NPS account opening form will appear. Select the account number, enter date of birth and click ‘Submit’.

Step 5: You will get a message with TPRN number. Note down the number for future reference and click ‘Confirm’.

Step 6: Select if you want to open Tier I or Tier II account and click ‘Continue’.

Step 7: Fill out the NPS form with the required details, such as personal details, contact details, bank details, nomination details, contribution details, and declaration. Upload the photo and signature and submit the form.

Step 8: Enter the OTP received on your registered mobile number for validation. Your PRAN will be generated, and an NPS account will be opened.

NPS is a safe pension investment fund that provides attractive market-linked returns. Opening an NPS account in SBI is very convenient and easy. You can open it online by logging into your SBI Net-banking portal or even by visiting the bank branch and filling out and submitting the NPS opening form.  

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