What is Corporate NPS?
The Pension Fund Regulatory and Development Authority of India (PFRDA) has introduced the 'Corporate NPS' model, allowing companies to provide NPS investment opportunities to their employees as part of their employer-employee relationship framework.
Corporate Benefits:
Corporates incur no administrative or fund management charges when offering NPS to employees.
Trust formation is not necessary for setting up NPS within the company.
Employees can be added to or removed from the NPS scheme through a straightforward process.
Employers have the flexibility to determine NPS options for employees, including contribution percentage, opt-in/opt-out durations, etc. NPS can be offered as a voluntary scheme to all employees or specific groups.
NPS is voluntary for the private sector and can operate alongside any other corporate retirement benefit programs.
SA Fund Transfer: NPS account holders can transfer their Superannuation funds to their NPS account without tax implications, subject to relevant authority approvals.
Additional Corporate Tax Benefit:
Corporate NPS account holders can invest up to 14% of employees’ basic salary plus dearness allowance. This investment is tax-exempt under Section 80CCD(2) of the Income Tax Act, 1961, up to a cap of ₹7.5 lakh on employer contributions to PF, SA and NPS.
Employees can claim tax exemption of up to ₹50,000 under Section 80CCD (1B), over and above the ₹1.5 lakh limit under Section 80C.
Employees may invest up to 10% of their basic salary plus dearness allowance and claim tax exemption under Section 80CCD(1), subject to the ₹1.5 lakh limit under Section 80C of the Income Tax Act, 1961.
Illustration:
For example, if an employee with a basic salary of ₹10 lakh invests ₹1 lakh in NPS through employer contribution, they can save an additional ₹1 lakh as tax-exempt under Section 80CCD(2). Assuming a 30% tax bracket, the employee would save approximately ₹30,000 on tax payments for one Financial Year.
Services offered by HDFC Bank as a Point of Presence (PoP):
Corporate Registration
NPS implementation and planning at the Corporate Level.
Employee NPS awareness sessions.
Employee enrollment online through the Bank’s website.
Processing employer and employee contributions.
Dedicated desk for query handling and other services.
Switching, withdrawal, scheme change, PFM change, sector shifting, etc.
For further assistance, please contact your HDFC Bank relationship manager.
More About Corporate NPS
Corporate NPS (National Pension System) offers several key features tailored for employees and employers alike.
- Enrollment Simplification: Employers can enroll employees in Corporate NPS without incurring administrative or fund management charges.
- Streamlined Setup: No trust formation is required, making the setup process straightforward.
- Flexibility for Employers: Employers can determine NPS options, including contribution percentages and opt-in/out periods.
- Employee Convenience: Employees can easily join or leave the scheme as per their employment status.
- Tax Benefits: Contributions by employees qualify for tax exemptions under Section 80CCD(1B), while employer contributions are eligible under Section 80CCD(2).
- Integration with Other Schemes: Corporate NPS can operate alongside other retirement schemes, providing flexibility and additional retirement planning options.
- Tax-Free Transfers: SA fund transfers to NPS with approvals are tax-free, enhancing retirement planning benefits under the Income Tax Act, 1961.
Corporate NPS (National Pension System) offers multiple benefits for both employers and employees.
- Cost-Effective Option: Employers can offer NPS to employees without bearing administrative or fund management charges.
- Simplified Implementation: No mandatory trust formation is required, making setup straightforward
- Flexible Participation: Employees can easily join or exit the scheme based on their employment status.
- Employer Autonomy: Employers can determine contribution percentages and enrollment durations according to workforce requirements.
- Complementary Retirement Planning: Corporate NPS can complement other retirement schemes seamlessly.
- Tax-Free Transfers: SA fund transfers to NPS are tax-free with necessary approvals, enhancing retirement planning benefits.
- Tax Benefits: Employees benefit from tax exemptions on contributions under Section 80CCD(1B) and employer contributions under Section 80CCD(2), optimizing retirement saving
For Corporate NPS (National Pension System), employees typically need to submit several documents for enrolment. These include their PAN card, address proof such as Aadhaar card or passport, and a cancelled cheque or bank account details for direct debit of contributions. Additionally, employees may need to provide a passport-sized photograph, proof of age, and a nomination form indicating beneficiaries. Employers must furnish corporate documents like incorporation certificate, PAN card, and KYC (Know Your Customer) documents. These documents ensure compliance with regulatory requirements and facilitate smooth enrolment and management of NPS accounts within the corporate framework.
Select any CRA and proceed to open your NPS Account
Computer Age Management Services Ltd (CAMS) Apply Online
KFIN Technologies Private Limited Apply Online
Protean eGov Technologies Ltd (Formerly NSDL e-Governance Infrastructure Limited) Apply Online
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Frequently Asked Questions
In corporate settings, the National Pension System (NPS) operates as a voluntary retirement savings scheme. Employers can offer NPS to employees, allowing them to contribute a portion of their salary towards their NPS account. Contributions made by employees and employers are invested in various pension funds managed by PFRDA-approved fund managers. Employees have the flexibility to choose their investment options and pension fund managers. Contributions made by employers up to 10% of basic salary plus dearness allowance are tax-exempt under Section 80CCD(2). NPS in corporates offers tax benefits, portability across jobs and flexibility in investment choices for employees planning their retirement savings.
The key difference between NPS (National Pension System) and Corporate NPS lies in their administration and accessibility. NPS is open to all individuals, including self-employed and private sector employees, who can voluntarily contribute towards their retirement savings. On the other hand, Corporate NPS is specifically tailored for employees of organisations where the employer facilitates participation in NPS as part of their employee benefits package. Corporate NPS typically offers streamlined administration, employer contributions (which are tax-exempt under Section 80CCD(2)) and sometimes additional services like employee awareness sessions and support for fund management changes, enhancing retirement planning options within the corporate sector.
If you resign from your job where you were enrolled in Corporate NPS (National Pension System), the handling of your NPS account depends on the policies set by your employer. Typically, you have a few options: you can either transfer your NPS account to another employer who offers NPS, continue contributing to the same account as an individual subscriber, or choose to exit from NPS altogether. If you exit, you can either withdraw a portion of your accumulated corpus (subject to conditions) or convert it into an annuity to receive regular pension payments, ensuring that your retirement savings remain intact and productive.
