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Can we invest in NPS through Zerodha? Yes, on March 13, 2024, Zerodha as a Point of Presence (PoP) started offering NPS (National Pension Scheme) retirement products for its customers. Zerodha users can now invest in NPS on Zerodha Coin and plan a happy retirement. Are you someone who wants to invest in NPS with Zerodha? Here is a complete guide for you.
Read on to know how to open an NPS account with Zerodha, what are the NPS charges, how to invest and withdraw money in NPS with Zerodha Coin and what are the tax benefits of NPS investments.
The acronym NPS stands for National Pension Scheme. It is a retirement pension planning product by the central government and the PFRDA (Pension Fund Regulatory and Development Authority).
Under this scheme, an individual can contribute a fixed amount to their pension account at regular intervals to prepare for retirement. The NPS can invest in various asset classes such as equities, corporate bonds, government securities and alternative asset classes. After retirement, the NPS participant can withdraw a fixed amount as a lump sum and the remaining amount as a monthly pension.
Those who regularly contribute a fixed amount to the NPS account can better prepare for their financial needs in retirement.
Earlier, the NPS was only available to central government employees, but now it is open to all Indian citizens. It is a voluntary scheme and any public or private sector employee who wants to plan for retirement can contribute to the NPS.
Among the numerous retirement products such as PPF, Life insurance pension plans, Atal Pension Yojana, NPS is proving to be the most effective retirement solution which offer higher returns than other retirement products and also offers tax benefits of upto Rs 1.5 lakh.
Any individual resident account holder in Zerodha who are below 65 years of age can invest in NPS and prepare for their retirement.
Currently, NRIs, joint account holders and non-individual account holders such as HUF, corporates or partnerships cannot invest in NPS on Zerodha Coin.
NPS has two types of accounts, a Tier 1 account and a Tier II account.
The Tier 1 NPS account is a mandatory retirement account. Any Indian citizen below the age limit of 65 years can open a Tier 1 NPS account with Zerodha. All contributions made into the Tier 1 NPS account are locked until the subscriber attains the age of 60 years.
The Tier II NPS account is a voluntary retirement savings account that can only be opened if you have an active Tier 1 account. Subscribers can invest or withdraw money from the Tier-II account at any time without any lock-in period. Zerodha does not offer a Tier II account for the NPS.
Check out different types of charges applicable on investment in NPS on Zerodha coin;
Zerodha NPS Account Opening Charges | Rs 200 + 18% GST |
Zerodha NPS Brokerage charges | 0.25% of NPS contribution amount or Rs 30, whichever is higher + 18% GST |
Zerodha NPS account maintenance charges | Free |
Investment in NPS is not held in Zerodha demat account thus, there is no maintenance fee charged to held NPS investment. Zerodha customers can track investment in NPS on the coin platform.
Zerodha users can subscribe to the NPS scheme on its Coin platform. Follow below steps to invest in NPS with Zerodha Coin;
Before subscribing to NPS scheme in Zerodha, keep in mind;
NAV applicability on investment in NPS depends upon the NPS order placement date and time. Check out the NAV applicable rules for investment;
NPS order placement time | Applicable NAV |
NPS order placed before 4:30 PM | T+1 day |
NPS order placed after 4:30 PM | T+2 day |
Note: When you place an order to invest in the NPS scheme, Zerodha will transfer funds to the trustee banks by 6 PM on the same day who will reconcile funds and allocate NPS units as per NAV applicable.
Zerodha Coin is the platform to invest in NPS systems. Any Zerodha individual resident account holder can subscribe to NPS on Coin.
A subscriber cannot withdraw the money invested in the NPS before reaching the retirement age of 60 years. Read the PFRDA rules for the withdrawal of money from the NPS account.
Under certain conditions, a partial withdrawal from the NPS pension account is also possible. If you have completed 3 years as an NPS subscriber, you can partially withdraw the money from the pension account for certain purposes including;
An NPS holder can withdraw upto 25% of the total deposits made to the NPS account. Suppose you have been an NPS subscriber for at least 3 years and have invested a total of 5 lakhs in your retirement account and your balance has grown to 7 lakhs.
As per PFRDA rules, you can withdraw 25% of the total contribution of 5 lakh, i.e. Rs 1,25,000. The balance of Rs 7 lakh is not eligible for partial withdrawal.
Partial withdrawal from the NPS account is possible three times during the NPS tenure. Also, there must be an interval of 5 years between two partial withdrawals. In subsequent withdrawals, 25% of the additional contributions made after the previous withdrawal is allowed.
Early or premature exit or voluntary retirement before the age of 60 years is also possible under several conditions;
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Track investment in NPS online on Zerodha coin following below steps;
No, currently Zerodha does not allow Non-resident Indians or NRIs to invest in NPS on Coin. However, as per PFRDA rules and regulations, eligible NRIs can subscribe to the NPS for retirement planning.
No, Investment in NPS schemes cannot be pledged to get collateral margin.
Zerodha only allows customers to pledge equity and mutual funds holdings for margins at applicable haircut %.
The pension fund manager collects NPS contributions from subscribers and invests them across asset classes like equity, corporate bonds, and government securities.
Auto and Active investment choices are the two ways of asset allocation in the NPS scheme.
All investments made in your NPS pension account can be tracked in the Statement of Transactions.
Zerodha NPS Statement of Transactions