A National Pension System (NPS) account can be opened online without visiting any bank branch. The banks designated and appointed by PFRDA for this purpose are called Points of Presence (POPs). POPs provide services like subscriber registration, issuance of statement etc. So, there are charges that are levied by POPs while opening of an NPS account. Also, the Central Recordkeeping Agency (CRA) conducts the administration and record-keeping for NPS subscribers. NSDL e-Governance Infrastructure Central Recordkeeping Agency (CRA) and Karvy Computershare are two such CRAs. Some of the NPS charges are levied at the POP level while some at the CRA level.
The most important of all the charges is the ‘fund management cost’ and has a direct impact on the effective returns. The fund management charge in NPS is called Investment Management Fee and is 0.01 per cent. Overall, there are quite a few charges which the Pension Fund Regulatory and Development Authority (PFRDA), a government body, regulates. The charges are well-defined and even have an upper limit.
The NPS charges are levied broadly across 5 levels:
1. CRA – NSDL and Karvy are the two CRAs
2. POP
3. Custodian
4. Investment Management Fee
5. NPS Trust
I. CRA CHARGES
At the CRA level, there are three sub-heads:
a) Opening charges
b) Annual Maintenance cost per account
c) Charge per transaction
All these three charges excluding taxes for the private sector NPS subscriber will depend on mode of transaction – offline or Online
A) Opening charges – NSDL CRA
CRA charges for account opening if the subscriber opts for Physical PRAN card: 40
CRA charges for account opening if the subscriber opts for ePRAN card (in Rs.)
Welcome kit sent in physical: 35
Welcome kit sent vide email only: 18
This means, by applying online and opting for ePRAN with kit being delivered online, you end up paying Rs 18 compared to Rs 40 in the offline mode.
Opening charges – Karvy CRA
CRA charges for account opening if the subscriber opts for Physical PRAN card: 39.36
CRA charges for account opening if the subscriber opts for ePRAN card (in Rs.)
Welcome kit sent in physical: 39.36
Welcome kit sent vide email only: 4
This means, by applying online and opting for ePRAN with kit being delivered online, you end up paying Rs 4 compared to Rs 39.36 in the offline mode.
B) Annual Maintenance cost per account
NCRA: Rs. 95
KCRA: Rs. 57.63
C) Charge per transaction
NCRA: Rs. 3.75
KCRA: Rs. 3.36
II. Point of Purchase (POP)
A) Initial subscriber registration and contribution upload: 200
B) Any subsequent transactions: 0.25% of contribution (Min. Rs. 20 Max. Rs. 25000; Non-Financial Rs. 20)
C) Persistency: For more than 6 months and Rs 1000 contribution: Rs. 50 per annum
D) Contribution through eNPS: 0.10% of contribution (Min. Rs.10 Max. Rs.10,000)
III. Custodian charges
Asset Servicing charges: 0.0032 per cent per annum for the electronic segment and physical segment
IV. PF charges
Investment Management Fee: 0.01 per cent per annum.
V. NPS Trust
Reimbursement of Expenses: 0.005 per cent per annum.