InvestorQ : I read that the National Pension Scheme (NPS) is portable. What does this mean?
Tanya Mehta made post

I read that the National Pension Scheme (NPS) is portable. What does this mean?

Answer
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1 year ago


The National Pension Scheme is a voluntary and long-term investment plan for those who want to create their retirement corpus. Under this scheme, one’s savings will be invested in debt and equity market, based on the insured individual’s preference.

The National Pension Scheme, which is voluntary, comes under the purview of the central government as well as the Pension Fund Regulatory and Development Authority (PFRDA).

The scheme allows you to withdraw 60% of the funds at the time of retirement and the remaining 40% is used for the purchase of the annuity. The maturity amount is subject to tax.

The National Pension Scheme is best suited for:

- Those individuals who are risk averse

- Private sector employee

- Any salaried individual who wants to invest in a manner that best utilizes the Section 80C deductions.

Yes, it is true that the NPS is portable. Here’s how:

- The NPS account can be operated from anywhere in the country irrespective of individual’s employment and location/geography

- Subscribers can shift from one sector to another like from private to government or vice versa or private to corporate and vice versa. Hence, a private citizen can move to Central Government, State Government, etc with the same account.

- A subscriber can shift within sector like from one Point of Presence (POP) to another POP and from one Point of Presence Service Providers (POP-SP) to another POP-SP.

- Likewise, an employee who leaves employment to become a self-employed can continue with his individual contributions. Thus, if he enters re-employment he may continue to contribute and his employer may also contribute and so on.

- The subscriber can contribute to NPS from any of the POP/ POP-SP despite not being registered with them and from anywhere in India.