Revised NPS Charges by PFRDA: The Pension Fund Regulatory and Development Authority (PFRDA) has recently announced revisions to the fee structure of the National Pension System (NPS), including NPS-Lite and NPS Vatsalya. These changes, which came into effect from January 31, 2025, are aimed at enhancing transparency and making the pension scheme more cost-efficient for subscribers. In this article, we break down the revised NPS charges, how they impact subscribers, and what steps individuals can take to optimize their retirement savings under the new fee structure.
Revised NPS Charges by PFRDA
The latest revisions in NPS charges by PFRDA aim to enhance transparency and efficiency while ensuring sustainability for service providers. While the new structure introduces some additional costs, subscribers can optimize their investments by making informed decisions, such as choosing cost-effective contribution methods and planning deposits wisely.
To give you a quick overview, here is a summary of the revised charges applicable to different NPS transactions.
| Service | Revised Charges (Effective from Jan 31, 2025) |
|---|---|
| Account Opening | Up to ₹400 upfront. Initial contribution fee: up to 0.50% of the contribution amount, capped at ₹25,000. |
| Subsequent Contributions | Subject to the same fee as the initial contribution (up to 0.50% of the contribution amount, capped at ₹25,000). |
| Non-Financial Transactions | Fee of up to ₹30 per transaction. |
| Persistency Charges | – ₹50 per annum for annual contributions between ₹1,000 and ₹2,999. – ₹75 per annum for annual contributions between ₹3,000 and ₹6,000. – ₹100 per annum for annual contributions above ₹6,000. (Applicable only to NPS All Citizen model) |
| e-NPS Transactions | For subsequent contributions: up to 0.20% of the contribution amount, capped at ₹10,000. This fee is collected upfront and applies only to NPS All Citizen and Tier-II accounts. |
| D-Remit Contributions | Trail commission: up to 0.20% of the contribution amount, capped at ₹10,000, deducted periodically through units. |
| Exit/Withdrawal Processing | Up to 0.125% of the corpus, with a maximum fee of ₹500, collected upfront. |
For official details, refer to the PFRDA Master Circular.
Detailed Breakdown of the Revised NPS Charges by PFRDA
1. Account Opening Charges
When you open an NPS account, an initial registration fee of up to ₹400 is applicable. In addition:
- For the first contribution, a fee of up to 0.50% of the contribution amount is charged, with a maximum limit of ₹25,000.
- The same fee structure applies to subsequent contributions.
For example, if you contribute ₹50,000, a charge of ₹250 will be deducted.
2. Non-Financial Transaction Charges
These apply when you make changes to your account without financial transactions, such as:
- Updating personal details (name, address, nominee, etc.).
- Changing fund manager or asset allocation.
- Requesting a PRAN card reissue.
Each non-financial transaction attracts a ₹30 fee.
3. Persistency Charges (NPS All Citizen Model)
To encourage consistent contributions, a new persistency charge applies:
- ₹50 per annum for annual contributions between ₹1,000 – ₹2,999.
- ₹75 per annum for annual contributions between ₹3,000 – ₹6,000.
- ₹100 per annum for annual contributions above ₹6,000.
This charge is deducted annually through unit cancellation.
4. e-NPS Transaction Charges
For online contributions via e-NPS, a fee of up to 0.20% of the contribution is charged, with a maximum limit of ₹10,000.
This fee is collected upfront and applies to:
- NPS All Citizen accounts.
- NPS Tier-II accounts.
For instance, if you contribute ₹1,00,000 via e-NPS, the fee could be ₹200.
5. D-Remit Contribution Charges
D-Remit allows direct contributions from your bank account to NPS. The charges are:
- 0.20% of the contribution amount (up to ₹10,000).
- Unlike e-NPS, this fee is deducted periodically via unit cancellation.
6. Exit/Withdrawal Processing Charges
When you exit or withdraw from NPS, a fee of up to 0.125% of the corpus is charged, with a maximum cap of ₹500.
Example:
- If your NPS corpus is ₹3,00,000, the fee would be ₹375.
- If your corpus is ₹5,00,000 or more, the fee will be capped at ₹500.
How Do These Changes Impact NPS Subscribers?
These revised charges increase transparency and ensure service providers can sustain operations. However, subscribers should be mindful of:
- Higher costs for frequent transactions: Small, repeated contributions may lead to higher cumulative fees.
- Encouragement for lump-sum contributions: Larger, less frequent investments may help optimize charges.
- Unit deduction for persistency charges: Keep track of deductions from your pension corpus.
Practical Tips for NPS Subscribers
To minimize costs and maximize savings, follow these best practices:
- Plan Your Contributions Smartly
- Fewer, larger deposits reduce the impact of contribution-based fees.
- For salaried individuals, consider quarterly or half-yearly deposits instead of frequent small contributions.
- Utilize e-NPS & D-Remit Wisely
- While e-NPS offers convenience, D-Remit provides better cost efficiency since its fees are deducted over time rather than upfront.
- If you plan long-term investments, D-Remit could be a better choice.
- Monitor Your Account Regularly
- Check for any deductions and keep track of persistency charges.
- Stay updated with PFRDA notifications for future fee revisions.
- Consider Auto-Debit Options
- Automating contributions can ensure consistency and help avoid persistency charges.
- Use Standing Instructions (SI) or NACH mandates for systematic investing.
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Frequently Asked Questions (FAQs)
1. Are the new charges applicable to corporate NPS accounts?
Yes, the revised charges apply to all NPS subscribers, including Corporate NPS accounts, NPS-Lite, and NPS Vatsalya.
2. How can I reduce my NPS fees?
To minimize costs, make larger, less frequent contributions and use D-Remit for periodic deductions rather than upfront charges.
3. Do these charges apply to both Tier-I and Tier-II accounts?
Yes, most charges apply to both Tier-I and Tier-II accounts, except for persistency charges, which apply only to the All Citizen Model.
4. Where can I check my NPS account fees and deductions?
You can view all fees and deductions in your NPS account statement via the NSDL or KFintech portal.
