pension schemes
FAQs
Public Provident Fund
Individuals who are residents of India are eligible to open their account under the Public Provident Fund scheme.
Yes, an individual may open one Public Provident Fund account on behalf of a minor child of whom he is the guardian.
Only one PPF account can be opened by an individual. For minor accounts, PPF account can be opened as guardian.
A minimum yearly deposit of Rs. 500 is required to open and maintain a PPF account.
A maximum deposit of Rs.1.5 lakhs can be made in a PPF account in any given financial year.
The current rate of interest is 7.1% per annum compounded annually.
No, only single holding is allowed.
Interest is totally tax free
Deposits can be made in lump-sum or in 12 installments
If the funds contributed have been credited to the PPF account on or before the 5th of the month, the contribution would receive the interest applicable for that month.
PPF account may become dormant because of not making minimum deposit into PPF account every year.
To activate a dormant PPF account:
- Write a request letter to bank or post office where the PPF account is.
- Make deposits of minimum Rs 500/- for each year that the account has been inactive and for current financial year.
- Pay penalty of Rs 50 for each inactive year. All payments to be made along with submission of request letter.
- Bank or post office will renew the account after reviewing.
When your PPF account matures, you have the below mentioned options:
- a) You may withdraw the amount along with accumulated interest.
- b) You may continue the PPF account for a block of 5 years by continuing to make contributions.
- c) You may keep the PPF account as it is and continue to earn interest on the account even after maturity without making further contributions.
After your PPF account matures, you need not withdraw and can still keep it active even without making any fresh contributions. The amount in the PPF account will continue to earn tax free interest.
One withdrawal is allowed per financial year.
Yes, you can withdraw once in a financial year but the total amount of all withdrawals in the 5 year extension can not be more than 60% of the balance amount at the beginning of the extension.
In such a case, the minor is treated as subscriber. In case of death of guardian the account of minor remains operative and a new account need not be opened. The surviving natural guardian or a guardian appointed by a competent court may continue the account of minor after producing the necessary guardianship certificate.
Yes, PF or EPF (Employee Provident Fund) is a compulsory deduction from your basic salary. The maximum deduction under PF or EPF is 12% of your basic salary. PPF or Public Provident Fund is a voluntary investment option. To open PPF account, you need to approach a bank or nearest post office. The minimum investment is Rs.500 and upto Rs.1.5 Lakhs in a financial year.
Since the house has been constructed by your father, it will be treated as a self-acquired property. As there was no will made, the rights to property are equally with the legal heirs of your father – your mother, brother, sister and yourself.
Other legal heirs also receive a right in the property. However, all legal heirs can enter into family settlement agreement, mutually agreeing that your mother is a sole owner.
However, without the consent of all the parties (No objection), there would not be any other way to transfer sole interest in favour of your mother
If the said property is in Mr. A’s name he is the sole owner and son X have no right or claim over it. However, if son X can prove his contribution to the development of the said property, he can claim a share in it. The percentage shall be decided by the court.
Generally, an adopted daughter has the right to claim the shares of the self-acquired property of the adoptive parent.
In case a female Hindu dies intestate, the children of her predeceased son can claim their father’s share in the same property, but the widow of the predeceased son cannot claim anything.
According to the facts provided here, if an ancestral property is divided, transferred and registered in the name of the successors, then the property transforms its character. The said property becomes the absolute property of its owners, as it gets transferred in their names.
Your father made a will, which was later changed in terms of beneficiaries, subsequently, during his lifetime, he got a reverse mortgage loan on his property. On his demise, as per the terms of RML, the outstanding amount needs to be paid to the lender by the beneficiaries/heirs. After the receipt of the outstanding amount, the lender will release the mortgage, making the property encumbrance-free for the concerned beneficiary as per the will.
In case a situation arises, wherein the designated beneficiary of the property(as per the recent will) is unable to meet the liability under RML due to paucity of funds, the lender sells the mortgaged property as per the terms of the RML. After recovering the dues, the lender hands over the surplus amount collected from the sales to the designated beneficiary in accordance with the probated will.
The latest will, written before the testator’s demise, is considered to be the valid will, unless it is proved to have been made under suspicious circumstances, These circumstances could be related to either the preparation of the will or the capacity of the testator, or indicate that the testator’s free will was overcast by actions of coercion or fraud. A valid will (earlier or the recent one) would need to be endorsed through the probate process for identifying the legitimate beneficiary
We assume that you and your ex-husband are Hindu. In case of the unfortunate circumstance that you pass away without making a valid will, your ex-husband will not be entitled to inherit from your estate and cannot claim a share in your property. This is because, once a divorce is finalised, spousal relationship does not legally survive and mutual rights of inheritance in each other’s property get extinguished.
Regarding your children, given that a divorce only severs the relationship between the spouses and not between the parent and the child, your children will continue to have the right to inherit your property as well as that of their father.
If you have not remarried when you pass away, then your entire property will go to your children in equal proportion.
If your ex-husband passes away without leaving a will, your children from the marriage will be recognised as class-I heirs of your husband, and their shares in his property will depend on the other class-I heirs who survive your husband, which may include his mother, his wife (if he remarries) and his other children (if he has any upon remarriage). Your children will also continue to remain members of any Hindu Undivided Family (HUF)/ coparcenery (joint heirship) of your ex-husband’s family.
This analysis will be different if you or your ex-husband make a valid will, in which case, the persons who will inherit your respective property will be those who are named in the will.
You should consider making a will so that your property devolves to persons whom you choose as successors, and there is no confusion as to who would inherit it.
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Employee Provident Fund
A part of EPF contribution goes towards EPS (Employee Pension Scheme). This EPS contribution is paid as pension post retirement. There are certain conditions like , one needs to be in continuous service for at least 10 years to be eligible to get pension
Every month 12% of Basic + DA gets deducted from employees salary for contribution to EPF. Equal contribution is made by employer out of which 8.33% goes into Employee Pension Scheme (EPS).
Basic salary for calculation of EPS is capped at Rs 15,000 (unless opted for higher pension during the window which closed on July 11, 2023).
For receiving pension at retirement:
- Minimum 10 years as an EPS member
- Pension received after retirement = (Average of last 60 months salary X no of years of service)/70
- Spouse and children under the age of 25 will receive family pension in case of death of EPS subscriber before or after retirement
- Spouse will receive widow pension equal to up to 50% of pension amount EPS member was eligible for
- Children’s pension will be 25% of widow pension.
Employee Deposit Linked Insurance (EDLI) is an insurance cover provided by the Employee Provident Fund Organisaton (EPFO).
The registered nominee receives a lumpsum payout in case of death of the insured person (employee) during the period of service. Extent of benefit depends on the last drawn salary of insured subject to a maximum of Rs 7 lakhs.
You can withdraw from EPF account immediately if you are relocating to another country by filling out the EPF withdrawal form or by applying for the same online trough UAN’s portal.
If you do not withdraw your EPF, the account would still continue to earn interest even though there are no contributions. However the interest earned is not tax free in the period where there have been no contributions into the EPF account.
Your PF balance on the day of cessation of employment payable to you is exempt from tax if you have rendered continuous service for a period of 5 years or more. If there are more than one employer and you have transferred EPF balance to another employer, then the total period of employment with all the employers is required to be considered for continuous 5 years of service or more.
Hence the EPF amount withdrawn in this case will be exempt from tax.
Yes, you need to surrender the old EPF account and transfer or merge it into the EPF account to the new employer.
With Universal Account number, it has become easy to merge multiple PF accounts. The UAN can be found on your salary slip. If not, you may seek help from your employer. The two accounts can be merged online on the EPFO website provided your KYC and Aadhar details are updated and registered with the EPFO.
As there was no gap in employment, the number of years of service will include the number of years with your previous employer as well. So if you withdraw from EPF after completing 5 consecutiive years of service, EPF corpus would be tax free. Hence it is important to consolidate your EPF accounts.
As you have completed more than 5 years of service in India, you can withdraw your EPF corpus without any tax implications. There are no restrictions on transfer of EPF corpus to NRO account and there would be no TDS deducted.
When a minor turns eighteen years of age, a form needs to be submitted along with the required documents mentioning the minor’s age. The account holder’s signature might be required.
Yes, if an individual opened a Public Provident Fund (PPF) account as an Indian resident and later becomes an Non-Resident Indian (NRI), they can continue to contribute to the account until it matures.
But, NRIs cannot extend the account beyond the lockin period. Once matured, interest will continue, but no further contributions are allowed.
- a)Â Only 1 PPF Account
–Â Â Subscribers with multiple PPF accounts
– To designate one of those accounts as the primary one.
– The money that lies in the secondary account will then be transferred to the first one subject to max deposit limit
– The excess amount in the secondary account will be given back to the investor at 0% interest
- b) Only 1 PPF Account per minor
– One account to be designated as the main account
– Any other PPF account in the name of the minor will be a irregular account
– will earn 4% interest till age 18
- c) NRI PPF AccountsÂ
– NRIs contributing to PPF account without declaring NRI status
– 4% interest till Sept 30,2024
– 0% interest after Sept 30,2024
You can withdraw EPF balance after being out of employment for 60 days or after leaving a job, even if you have not attained the age of 58 years.
You will continue to earn interest on your account balance till the age of 58 even if there is no fresh contribution to your EPF account.
Accumulated balance up to the date of retirement or end of employment is not taxed, any interest earned on the PF account post resigning, retirement, or end of employment is taxable.
Interest earned before retirement will not get taxed irrespective of when it is withdrawn after retirement, but any interest earned post retirement will be taxable in the hands of the account holder.
Yes, even if you do not make future contributions, your EPF account will continue to earn interest till you are 58 years of age.
You can withdraw from EPF account immediately if you are relocating to another country by filling out the EPF withdrawal form or by applying for the same online trough UAN’s portal.
If you do not withdraw your EPF, the account would still continue to earn interest even though there are no contributions. However the interest earned is not tax free in the period where there have been no contributions into the EPF account.
Your PF balance on the day of cessation of employment payable to you is exempt from tax if you have rendered continuous service for a period of 5 years or more. If there are more than one employer and you have transferred EPF balance to another employer, then the total period of employment with all the employers is required to be considered for continuous 5 years of service or more.
Hence the EPF amount withdrawn in this case will be exempt from tax.
Yes, you need to surrender the old EPF account and transfer or merge it into the EPF account to the new employer.
With Universal Account number, it has become easy to merge multiple PF accounts. The UAN can be found on your salary slip. If not, you may seek help from your employer. The two accounts can be merged online on the EPFO website provided your KYC and Aadhar details are updated and registered with the EPFO.
As there was no gap in employment, the number of years of service will include the number of years with your previous employer as well. So if you withdraw from EPF after completing 5 consecutiive years of service, EPF corpus would be tax free. Hence it is important to consolidate your EPF accounts.
As you have completed more than 5 years of service in India, you can withdraw your EPF corpus without any tax implications. There are no restrictions on transfer of EPF corpus to NRO account and there would be no TDS deducted.
Fill Form 13 which is the form for transferring EPF from one employer to another. Enter details of both old and new employer and EPF account details.
Form 13 would be available on the official EPFO website.
Check PF number from salary slip of previous employer and approach EPFO office for further assistance.
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You will continue to earn interest on your account balance till the age of 58 even if there is no fresh contribution to your EPF account.
Accumulated balance up to the date of retirement or end of employment is not taxed, any interest earned on the PF account post resigning, retirement, or end of employment is taxable.
Interest earned before retirement will not get taxed irrespective of when it is withdrawn after retirement, but any interest earned post retirement will be taxable in the hands of the account holder.
Yes, even if you do not make future contributions, your EPF account will continue to earn interest till you are 58 years of age.
From 1st April 2022, the interest received on EPF would be taxable if employee’s (EPF+VPF) contribution goes above Rs 2.5 lakhs in a financial year.
EPF statement will be divided into 2 parts – taxable and non-taxable account. The segregation between taxable and non-taxable contributions and the interest applicable will be done on a monthly basis.
If contribution exceeds Rs 2.5 lakhs in a financial year, EPFO will deduct TDS on the interest earned at 10% before crediting it to the taxable account. If PAN is not provided, TDS will be deducted at 20%.
If information submitted with the claim does not match the information in the EPF database, the claim can get rejected.
- Ensure name, date of birth In EPF database matches with Aadhar records. If not get the same corrected by giving a declaration and proof along with claim form
- If KYC is incomplete in EPF records, claim might get rejected. Hence complete KYC in EPF records
- If bank account is held jointly with any person other than spouse, then claim can get rejected
- Error in bank account details like account number, bank name, branch details, IFSC code etc may lead to claim getting rejected. Correct the bank details in EPF records by uploading a clear scanned image of original cheque leaf with name printed on it or first page of bank passbook
- If date of joining and leaving organization are incorrect, claim might get rejected. Date of leaving organization can be corrected online by employee but for changing date of joining, employee has to approach employer for correction.
- UAN or EPF account needs to be linked to Aadhar. Claim might get rejected if this is not done
Use the appropriate form for withdrawal of money from EPF account so that the claim does not get rejected
When no fresh contributions are made to EPF account and no claim is made for withdrawal of EPF accumulated corpus for 36 months, then the account is considered inoperative. Inoperative accounts stop earning interest.
However if one leaves job and does not apply for withdrawal or transfer within 36 months, then the account continues to earn interest for 3 years after you reach the age of retirement (i.e till the age of 58) as per an amendment made in 2016.
After an account has been inoperative for 7 years, the amount is transferred to Senior Citizen Welfare Fund (SCWF). Amount from SCWF can be claimed within 25 years by the EPFO member or nominee by submitting the prescribed claim forms and documents.
Voluntary Provident Fund
VPF is an extension of EPF. In case of EPF, it is mandatory for employees to contribute 12% of their basic plus DA. In case of VPS, the contribution can vary and maximum is upto 100% of basic plus DA.
Only salaried people who are enrolled under EPF can opt for VPF. Self-employed, businessmen or salaried but not covered under EPF cannot contribute under Voluntary Provident Fund.
Yes. EPF and VPF have same interest rate. Currently, for the Financial year 2023 – 24, the interest is at 8.5% per annum.
Withdrawals from VPF would be possible after 5 years of continuous contribution.
VPF is the extension of EPF. The interest offered on VPF is as per with the EPF scheme and the interest earned is credited to their EPF account. No separate VPF account is maintained.
Yes, It is linked to existing EPF account.
Yes, one needs to inform their organization.
You can contribute 100% of basic plus dearness allowance as investment in VPF.
if you withdraw money within the first 5 years of service, then the interest becomes taxable.
Yes, effective 1st April 2021, the interest earned on an employee’s contribution above Rs 2.5 lakh in a financial year will become taxable in the hands of the employee. Please note that the rule is only for employee contribution and employer contribution is not accounted.
Click hereYou cannot discontinue or withdraw out of a VPF scheme in the middle of the year. It can be done only at the beginning of a financial year.
VPF offers partial withdrawal after a lock-in period of 5 years. If you withdraw from VPF before 5 years, the maturity amount becomes taxable.
National Pension Scheme
Any Indian citizen between 18 and 60 years can join NPS. The only condition is that the person must comply with Know Your Customer (KYC) norms.
Yes, an NRI/OCI can join NPS. However, the account will be closed if there is a change in the citizenship status of the NRI.
You can convert your resident NPS account into an NRI NPS account by submitting the duly filling Subscription Registration form for NRI along with a request letter and necessary documents to your associated PoP.
You should fill the subscriber registration form and submit it along with proof of identity, address, and date of birth to the POP.
Every NPS subscriber is issued a card with 12-digit unique number called Permanent Retirement Account Number or PRAN.
NPS offers two accounts: Tier-I and Tier-II accounts. Tier-I is a mandatory account and Tier-II is voluntary. The big difference between the two is on withdrawal of money invested in them. You cannot withdraw the entire money from Tier-I account till your retirement. Even on retirement, there are restrictions on withdrawal on the Tier-I account. The subscriber is free to withdraw the entire money from the Tier-II account.
No, you cannot open multiple NPS accounts. In fact, there is no need to open a second account as NPS is portable across sectors and locations.
You have to contribute a minimum of Rs.1000/- in your Tier-I account in a financial year.
The minimum amount to be contributed in a financial year in Tier-II account is Rs.250/-.
If you do not contribute the minimum amount, your account will be frozen. You can unfreeze the account by visiting the POP and pay the minimum required amount and a penalty of Rs 100.
No, the government will not contribute to your NPS account.
Convert your existing corporate NPS account into an individual NPS account.
In corporate NPS, the employer too contributes towards your NPS account. Also, additional tax benefits under Sec 80CCD (2) of up to 10% of salary (Basic + DA) would be available under corporate NPS. If employer is providing corporate NPS, it is better to opt for the same.
In Atal Pension Yojana, the maximum pension amount one could get is Rs 5,000/-. Hence NPS would be recommended over Atal Pension Yojana.
No, a subscriber cannot get a loan against the NPS account
The NPS offers two choices:
1) Active Choice: This option allows the investor to decide how the money should be invested in different assets.
2) Auto choice or lifecycle fund: This is the default option which invests money automatically in line with the age of the subscriber.
The Active Choice offers three funds or investment options: Asset Class E (invests 50 per cent in stocks); Asset Class C (invests in fixed income instruments other than government securities); Asset Class G (invests only in government securities). An investor can choose one of these funds or opt for a combination of them.
Yes, you can change your scheme preference and pension fund manager once a year. You can even change your investment option (active and auto choices) up to 4 times a year for both Tier-I and Tier-II accounts.
SBI Pension Funds act as the default pension fund manager. Auto balanced scheme is the default scheme in NPS if you have not selected the scheme.
Default Annuity Scheme – Annuity for life with a provision of 100% of the annuity payable to the spouse during his/ her life on death of annuitant’ and under this option, payment of monthly annuity would cease once the annuitant and the spouse die or after death of the annuitant if the spouse pre-deceases the annuitant, without any return of purchase price
Yes, you can select different pension fund managers and investment options for your NPS Tier I and Tier II accounts.
Yes, you need to appoint a nominee at the time of opening the NPS account in the prescribed section of the account opening form. You can appoint up to 3 nominees for NPS Tier I and NPS Tier II account. You need to specify the percentage of your savings that you wish to allocate to each nominee. The share percentage across all nominees should collectively total up to 100%.
Yes, you can also add nominee later to your NPS account. You can do so after the allotment of PRAN by visiting the Point Of Presence (POP) and placing a service request to update nomination details.
There are no charges levied if you are making the nomination at the time of purchase or registration of PRAN. However, if you are adding the nominee later, it would be considered as a service request and you would be charged for the same at the rate of Rs 20/- plus applicable service tax for each request.
At the age of 60. You can withdraw a maximum of 60%. This amount can be withdrawn either as a lumpsum or in multiple installments till the age of 75.
You must use 40% of the corpus to buy an annuity income from a PFRDA-listed insurance company.
You can withdraw from NPS under the following conditions:
a) On superannuation:
When subscriber reaches the age of 60, they can withdraw 60% of the accumulated corpus as lumpsum. The remaining 40% of the accumulated corpus needs to be compulsarily used to purchase an annuity that would provide a regular monthly pension.
However, if total accumulated corpus is less than or equal to Rs 2 lakhs, subscriber can opt for 100% withdrawal.
b) Pre-mature exit:
After completion of 10 years, one can withdraw from NPS prematurely. In this case, minimum 80% of accumulated corpus needs to be invested into an annuity for providing regular monthly pension. The remaining 20% can be withdrawn as lumpsum.
c) On death of subscriber:
The entire accumulated corpus would be paid out to the nominee/legal heir in case of death of the subscriber.
Yes, you can defer withdrawing the lumpsum amount in NPS until you are 70 years old.
If you are getting out of the scheme before you are 60 years old, you can only withdraw 20% per cent of the accumulated corpus in NPS. You must use 80% per cent of the corpus to buy an annuity.
If you discontinue your investment, your account will be frozen. You can reactivate the account only if you make the minimum contribution required along with the penalty.
If the subscriber dies before 60 years, the entire accumulated corpus would be paid to the nominee/legal heir of the subscriber.
Withdrawal will be processed but penalty will be deducted to unfreeze the account without reactivating the account.
Indian Life Insurance companies which are licensed by Insurance Regulatory and Development Authority (IRDA) are empanelled by PFRDA to act as Annuity Service Provider’s to provide annuity services to the subscribers of NPS.
Currently, the following are the ASP’s empanelled by PFRDA.
1. Aditya Birla Sunlife Insurance Company Limited
2. Bajaj Allianz Life Insurance Co. Ltd
3. Canara HSBC Life Insurance Co Ltd
4. Edelweiss Tokio Life Insurance Co Ltd
5. HDFC Life Insurance Co. Ltd
6. ICICI Prudential Life Insurance Co. Ltd
7. IndiaFirst Life Insurance Co Ltd
8. Kotak Mahindra Life Insurance Co. Ltd
9. Life Insurance Corporation Of India
10. Max Life Insurance Co. Ltd
11. PNB Metlife India Insurance Co. Ltd
12. SBI Life Insurance Co. Ltd
13. Star Union Dai-ichi Life Insurance Co. Ltd
14. Shriram Life Insurance Co. Ltd
15. TATA AIG Life Insurance Co. Ltd
There are 5 different annuity payout options in NPS and subscriber can choose one or multiple options from the same.
Below are the various annuity options in NPS
| Option | Frequency of payment | Payable till | Maximum payable time |
| life time | |||
| Annuity for life | Monthly | Subscriber | Through out life |
| Annuity for life with return of purchase price on death | Monthly | Subscriber | Through out life and original investment to nominee upon death of subscriber |
| Annuity payable for life with 100 % annuity payable to the spouse on the death of annuitant | Monthly | Subscriber | Through out life and monthly income continues to spouse upon death of subscriber |
| Annuity payable for life with 100 % annuity payable to the spouse on the death of annuitant Plus return of principal to nominee | Monthly | Subscriber | Through out life .Monthly income continues to spouse upon death of subscriber. Original investment to the nominee upon death of last survivor |
| Annuity is payable to self, spouse, parents and then nominee | Monthly | Subscriber Plus Spouse | Upon death, these pay-outs would be made to the subscriber’s mother and after her, to the father. On the death of the father, the purchase price would be refunded to the annuitant’s child/nominee. |
Yes, a subscriber at the time of attaining the age of 60 years can purchase annuity up to 100% of accumulated pension wealth.
Yes, one can defer the mandatory purchase of annuity for a maximum period of 3 years from the date one turns 60 or reaching superannuation age.
There are no tax benefits for investment towards Tier II NPS account.
Any individual who is a subscriber of NPS can claim tax deduction up to Rs 50,000 under Sec 80 CCD (1B). This is over and above the Rs 1.5 lakhs deduction under Sec 80C.
The annuity income will be added to your income and taxed as per the income tax slab applicable to you.
The company will no longer make contributions towards your NPS account and the same would be frozen. You can convert the existing corporate NPS account into an individual account by submitting the requisite forms.
During the entire tenure of subscription under NPS, subscribers can make partial withdrawals upto maximum of three times.
As on the date of application for withdrawal, a subscriber is allowed a partial withdrawal of maximum of 25% of contributions made by him.
Individual contributions to NPS qualify for tax exemption up to Rs 50,000/- under Sec 80 CCD (!B). This is over and above the Rs 1.5 lakhs benefit of Sec 80C.
There are no tax benefits of investing in NPS Tier 2 account.
NPS Tier 1 account matures when the subscriber reaches the age of 60. At the age of 60, 60% of corpus can be withdrawn tax free either as a lumpsum or in installments till the age of 75.
The remaining 40% of corpus is mandatorily invested into annuities. Pension received from annuities is taxable as per tax slab.
The annuity amount is exempt from tax but the pension received in subsequent years (annuity income) will be subject to tac as per your tax slab.
- loss of income;
- loss of business profits or contracts;
- business interruption;
- loss of the use of money or anticipated savings
- loss of information
- loss of opportunity, goodwill or reputation;
- loss of, damage to or corruption of data; or any indirect or consequential loss or damage of any kind howsoever arising and whether caused
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