National Pension System

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Agenda
National Pension System- Introduction
How does it work?
Tax benefit & NPS illustration
NPS features
Fund options & Performance IPRU PFM
NPS: Charges
Why ICICI Pru PFM
Ease of Signing up
3
Agenda
National Pension System- Introduction
How does it work?
Tax benefit & NPS illustration
NPS features
Fund options & Performance IPRU PFM
NPS: Charges
Why ICICI Pru PFM
Ease of Signing up
National Pension System-
Introduction
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NPS is a pension scheme introduced by Pension Fund
Regulatory and Development Authority (PFRDA), a
government entity to administer the National Pension
System.
What is it?
Objective
A retirement savings product introduced to promote old age
income security, available on a voluntary basis to all
citizens of India
NPS
Corporate
NPS corporate is a variant of the NPS model designed for
companies
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Agenda
National Pension System- Introduction
How does it work?
Tax benefit & NPS illustration
NPS features
Fund options & Performance IPRU PFM
NPS: Charges
Why ICICI Pru PFM
Ease of Signing up
Why ICICI Pru PFM?
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IPRU PFM is wholly owned subsidiary of ICICI Prudential Life Insurance
Company Limited (IPRU Life)
We have been managing pension funds for NPS since its inception
The ICICI Prudential fund management team has expertise of managing
employee pension funds for over 10 years
We manage pension funds for more than 450 customers across India.
Currently, along with our parent company we manage ~ 65,000 crs of
customer funds
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Agenda
National Pension System- Introduction
How does it work?
Tax benefit & NPS illustration
NPS features
Fund options & Performance IPRU PFM
NPS: Charges
Why ICICI Pru PFM
Ease of Signing up
POP is the interface
between
corporate/employee
all transactions routed
through POP
CRA
(NSDL)
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Corporate
Corporate desirous of
extending NPS to their
employees
POP
(ICICI Bank)
Money collected by POP, then
will be invested by the PFM in
choice of asset allocation
PFMs
IPRU PFM
PFMs manage the
retirement savings of
the employees under
NPS
PFRDA
A government entity to
administer the National
Pension System.
CRA, keeps records of
the employee and
issue PRAN (unique
ID)
Annuity Service
Providers
Responsible for delivering a
regular monthly pension to
employee for
the rest of his/her life.
How does it work?
Click for NPS intermediaries
Employee
Employee desirous of
availing NPS benefit
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Agenda
National Pension System- Introduction
How does it work?
Tax benefit & NPS illustration
NPS features
Fund options & Performance IPRU PFM
NPS: Charges
Why ICICI Pru PFM
Ease of Signing up
Tax benefits
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Employer
Employers contribution towards employees pension can be
claimed as Business Expense
Employee
Contributions towards an employee up to 10% of basic salary
are exempt in the hands of employee. This is in addition to ` 1
lac under section 80C of the income tax act
Click here for details
Tax treatment in NPS
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NPS
Employer's contibution - At first,taxable as a salary perquisite

- Subsequently deduction u/s 80CCD(2) upto 10% of salary
( over an above 1Lakh limit of 80C )
Employees contibution Deduction u/s 80C upto 10% of salary
Interest Credited in Fund NA
Lumpsum Payment/Withdrawal of accumulated balance Taxable unless the amount is used for purchasing an annutiy plan
Pension Taxable
Compare with
Superannuation
NPS- Tax FAQs
Q1. If my employer contributes towards my NPS plan, will the contribution be
considered as my taxable salary?
A1: Yes, employers contribution towards your NPS will be considered as taxable
salary and shall be treated as perquisites received by you. However if the NPS
contribution is not more than 10% of your annual basic salary, the entire amount can
be claimed as deduction U/S 80CCD under the income tax act 1961.

Q2. If I contribute to my NPS scheme, will that amount qualify as deduction in
Income tax?
A2. Yes, upto 10% of your annual basic salary is available for deduction U/S 80C of
the Income tax act 1961

Q3. Will my corpus be taxed, if I plan to withdraw it as a lumpsum?
A3. Yes, lumpsum withdrawal of the corpus will be taxed as per Income tax act
1961, unless the amount is used for purchasing annuity.

Q4. Will my monthly pension be taxed?
A4. Yes, your monthly pension will be taxed as per Income tax 1961


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NPS- illustration
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Agenda
National Pension System- Introduction
How does it work?
Tax benefit & NPS illustration
NPS features
Fund options & Performance IPRU PFM
NPS: Charges
Why ICICI Pru PFM
Ease of Signing up
NPS features
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Flexible Single scheme for pension, savings and liquidity
Portable
Option allows employee to carry his fund to a
new employer
Fund options
Choice of 3 fund options to suit the risk appetite
of the employee
Investment
choice
Active & Auto investment choice based on
employees investment knowledge
Transparent
NPS is a government regulated pension scheme
with complete transparency
Click for more info
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Two tiered account
Tier I Employer/ Employee can contribute for
retirement into this non- withdrawal account
IT tax benefits for both as per IT Act, 1961
Charges can be borne either by Corporate or
Subscriber, at discretion of Corporate
Tier II
Savings account with no restrictions on withdrawal
Charges borne by subscriber only
Tier II accumulations can be switched to Tier I
account but not vice versa
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Two tiered account
The NPS platform can handle all three variations of
contributions from employer and employee
Equal contributions by employer and employee
Unequal contribution by the employer and the employee
Contribution from either the employer or the employee
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Tier I Tier II
Minimum amount per
contribution Rs. 500 Rs. 250
Minimum contribution per
year Rs. 6000
Minimum balance of Rs. 2000/-
at the end of each financial year
Minimum number of
contributions 1 per year 1 per year
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Benefits Payable







Vesting criteria Benefits
At any point in time
before 60 years of
age
i. 80% of the pension wealth to purchase a life annuity
from any IRDA regulated life insurance company
ii. Balance 20% of the pension wealth can be withdrawn
as lump-sum
On attaining the age
of 60 years and up
to 70 years of age
i. Min 40% of the pension wealth to purchase a life
annuity from any IRDA regulated life insurance company
ii. Balance 60% of the pension wealth can be withdrawn
as lump-sum at age 60 or in a phase manner between
age 60 and 70
Death due to any
cause
i. Nominee to receive 100% of pension wealth in lump-
sum; or
ii. Can continue NPS by new subscription individually
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Agenda
National Pension System- Introduction
How does it work?
Tax benefit & NPS illustration
NPS features
Fund options & Performance IPRU PFM
NPS: Charges
Why ICICI Pru PFM
Ease of Signing up
20
Fund options
R
i
s
k

a
p
p
e
t
i
t
e

Returns
E
C
G
Low
High
High
Low
High risk appetite;
High Return
Moderate risk appetite;
Moderate Return
Low risk appetite;
Low Return
Fund Performance - IPRU PFM
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Since Inception Annualized Returns
Returns as on March 31, 2012
6.78%
5.00%
10.91%
7.36%
8.25% 8.26%
0%
2%
4%
6%
8%
10%
12%
Pension G Pension C Pension E
Scheme Return Benchmark Returm
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Agenda
National Pension System- Introduction
How does it work?
Tax benefit & NPS illustration
NPS features
Fund options & Performance IPRU PFM
NPS: Charges
Why ICICI Pru PFM
Ease of Signing up
NPS: Charges
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Agency Service Charge
1
Mode
CRA
Account opening

` 50
Through cancellation of
units Annual maintenance charge
` 280*
Per transaction
` 6*
PoP
(Max permissible
charge )
Registration
` 40
Upfront payment
Per transaction
0.25% of the contribution with
Min of ` 20 & Max of ` 25,000
Trustee bank
Per transaction at RBI location NIL
Through NAV deduction
Per transaction at non-RBI
location
` 15
Custodian
(on asset value)
Asset servicing
Electronic segment: 0.0075% per
year
Physical segment: 0.05% per
year
Through NAV deduction
Fund manager Investment management 0.25% per year Through NAV deduction
Service tax and other levies as applicable
*Once there are 3 million CRA accounts the annual maintenance charge will decrease to ` 250 and per transaction charge to Rs 4.
1
Service tax and other levies, as applicable, will be levied as per the existing tax laws.
There are no additional CRA charges for the maintenance of Tier II account.
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Agenda
National Pension System- Introduction
How does it work?
Tax benefit & NPS illustration
NPS features
Fund options & Performance IPRU PFM
NPS: Charges
Why ICICI Pru PFM
Ease of Signing up
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Online calculator
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Online calculator
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Online calculator
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Online calculator
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Online application form
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Online application form
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Online application form
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Online application form
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Online application form
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Online application form
Thank you
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Back-up Slides
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NPS Account types
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Tier I
Non-withdrawal Account
Contributions can be withdrawn only by way of
Annuities
Tier II
Withdrawal Savings Account
Introducing market linked savings scheme
Investment choice
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Active
Choice
Subscriber decides allocation to each of the funds
Equity allocation allowed upto 50%
Allocation can be changed periodically
Auto
Choice
Easy option for participants having limited
knowledge to manage investments.
Asset allocation between E, C, G depends on life
cycle subscriber
Allocation upto 35 years 50:30:20
Allocation at 55 years 10:10:80
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Features: Tier I & Tier II
Tier I Tier II
Type Pension Savings & Investment
Contributio
n
Minimum 1 contribution per year
Minimum contribution ` 6000 p.a.
Minimum contribution ` 500 per
contribution
Minimum contribution of `1000 at the
time of Account opening
Minimum contribution ` 250 per
contribution
Minimum balance of `2000 at the
end of each financial year
Withdrawal One time withdrawal of upto 20%
before 60 years, balance 80% has
to go for Annuity
At 60 years can withdraw 60% and
balance 40% needs to go into
Annuity
No limit on withdrawal
Transfer to Tier I allowed
Pension
Payout
Customer to choose for Annuity
Fund
Pension will be paid till the age of
70 years and balance amount to be
withdrawn
Not mandatory to purchase Annuities
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Annuity Purchase Options
Description Annuity Option
Annuities payable for annuitants life Life Annuity
Annuities payable for annuitants life
Return of original purchase price to beneficiary on
annuitants death
Life Annuity with return of
purchase price
Annuities payable to annuitant/ beneficiary for
5/10/15 years irrespective of the annuitants
existence
If annuitant lives beyond the stated years, annuities
payable for his/her life
Life Annuity guaranteed for
5 years
10 years
15 years
Annuities payable to annuitant for life and after
death to his/her spouse (if alive) for life
Joint Life Last survivor
Annuities payable to annuitant for life and after
death to his/her spouse (if alive) for life
Original purchase price returned to beneficiary on
spouses death
Joint Life Last survivor with
return of purchase price
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NPS Intermediaries
Intermediaries Role/Function Participants
Central
Recordkeeping
Agency (CRA)
Recordkeeping, administration & customer service
functions
Issue of PRAN
Operational interface NSDL
NPS Trust Trustee for the funds under NPS Bank of India
Pension Fund
Managers (PFMs)
Fund management
NAV declaration
ICICI Prudential Pension
Funds Management
Company Limited
Subscribers Registered employees of the corporate entity Corporate
Point of Presence
(POP)
Interface
Registration/Know Your Customer (KYC)
Servicing ICICI Bank Limited
Annuity Service
Providers
Providing a regular monthly pension to
subscribers To be decided
Custodian
Responsible for the custody of underlying
assets SHCIL
Assessing market value
Excerpts from Income tax act
As per the provisions of section 80CCD, where an assessee, being an individual
employed by the Central Government on or after the 1st day of January, 2004, has
in the previous year paid or deposited any amount in his account under a pension
scheme as notified vide Notification No. F.N. 5/7/2003- ECB&PR dated 22.12.2003,
he shall be allowed a deduction in the computation of his total income, of the whole
of the amount so paid or deposited as does not exceed ten per cent of his salary in
the previous year.

The benefit of NPS has been extended to any other employees (also self employed
person) w.r.e.f 1/04/09 and deduction is allowed to employees upto 10% of salary in
the previous year and in other cases upto 10% of his gross total income in the
previous year. Further it has been specified that w.r.e.f 1/04/09 any amount received
by the assessee from the new pension scheme shall be deemed not to have
received in the previous year if such amount is used for purchasing an annuity plan
in the previous year.
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Excerpts from Income tax act
It may be noted that the contribution made by the Central Government or any other
employer, towards a pension scheme notified for section 80 CCD, shall be allowed
as deduction in the computation of total income of the employee to the extent that it
does not exceed ten percent of employees salary. W.e.f. 01.04.2011 (FY 2011-12),
the amount of deduction so allowed shall be outside the overall limit of Rs one lakh
under section 80CCE of the Income Tax Act, 1961. It is therefore, clarified that
contribution made by an employee alone will be eligible to deduction limit of upto
Rs.one lakh. The contribution made by the Central Government or any other
employee to a pension scheme u/s 80CCD(2) shall be excluded from the limit of one
lakh rupees provided under Section 80CCE.
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Trustee Bank would manage the
banking of pension funds
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Corporate
Corporate desirous of
extending NPS to their
employees
POP
(ICICI Bank)
POP is the interface
between corporate
subscriber and the
NPS architecture
Trustee Bank
BOI
Money collected by POP, then
will be transferred to the NPSs
Trustee bank
PFMs
IPRU PFM
PFMs manage the
retirement savings of
the employees under
NPS
NPS Trust
Trust established by
PFRDA Indian Trusts
Act, 1882, responsible
for taking care of
funds under NPS
Custodian
(SCHIL)
The Custodian is
responsible for the
custody of underlying
assets.
CRA
(NSDL)
PFRDA
A government entity to
administer the National
Pension System.
CRA, keeps records of
the employee and
issue PRAN (unique
ID)
Annuity Service
Providers
Responsible for delivering a
regular monthly pension to
employee for
the rest of his/her life.
How does it work?
Click for NPS intermediaries
On boarding process
Step 1: MoU & Corporate Registration Form to be processed by PoP
IPru to handover the CRF to PoP for further processing
PoP will submit CRF and MoU to NSDL for generation of Corporate registration
number (CRN)
CRN will be mailed to both PoP and Corporate by NSDL within 15 days.

Step 2: Individual account opening
Individual accounts to be opened once CRN received Help desk can be set up by PoP
Individual subscriber registration form will be filled by PoP and shared with NSDL for
PRAN generation
Incase of member level choices, PoP person to pitch for IPru PFM, with the help of
proper marketing material like past performance

Step 3: Account activation
Client to transfer funds to PoP, along with MIS
PoP to coordinate with NSDL and PFM at do the processing.

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Compare with SA
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Appr oved Super Annuat i on Fund NPS
Employer's contibution -Upto 1 Lakh : Tax exempt
- Above 1 Lakh : Taxable as a salary
- At first,taxable as a salary perquisite

- Subsequently deduction u/s 80CCD(2)
upto 10% of salary
( over an above 1Lakh limit of 80C )
Employees contibution Deduction u/s 80C Deduction u/s 80C upto 10% of salary
Interest Credited in Fund Exempt NA
Lumpsum Payment
/Withdrawal of accumulated
balance
Exempt on following
- On Death or
- In lieu or commutation of annuity on
retirement or after specified age or on
becoming incapacitated before
retirment or
Taxable unless the amount is used for
purchasing an annutiy plan
Pension UncommutedTaxable.
1/3 commuation tax free
Taxable