How to Open AU Bank NPS Account 2024

Offering customised banking products and services to the unreached and unbanked rural and urban population of India, AU Bank has become one of the largest Small Finance Banks in the country. The bank encourages individuals from all sectors to invest in the NPS, one of its offerings, with an aim to secure their future. 

To know more about AU Bank NPS or the post-retirement financial security plan, continue reading this blog.  

What Is the AU Bank National Pension Scheme?

NPS or National Pension Scheme is a government-sponsored pension programme. With AU Bank NPS, employees from private, public, and unorganised sectors can routinely invest in this scheme during their working life. After retirement, account holders can withdraw the principal fund in a lump sum and buy an annuity. It will provide them with regular income.   

Eligibility Criteria for AU Bank National Pension Scheme

If you are a citizen of India or an NRI, you are eligible for the National Pension Scheme. However,  it does not apply to employees from the armed forces.  

Features of AU Bank National Pension Scheme

Here are a few AU bank NPS benefits and features that make it different from other pension schemes: 

1. Easily portable
2. Low-cost product 
3. Flexible contribution and withdrawals 
4. Schemes preferences and choice of funds 
5. Regulated by PFRDA

Tax Benefits For AU Bank National Pension Scheme

There are tax benefits only against Tier I NPS accounts. Here are the details of tax benefits for salaries and self-employed individuals: 

1. Salaried Individuals

1. Under section 80 CCD (2), investment up to 10% of salary is deductible from taxable income. 
2. Under section 80 CCD (1B), investment up to ₹50,000 is deductible from taxable income. 

2. Self-Employed Individuals 

1. Under section 80 CCD (1) investment up to 20% of Gross Annual Income is deductible from taxable income. 
2. Under section 80 CCD (1B), investment up to ₹50,000 is deductible from taxable income.   

Things to Know About AU Bank Bank NPS

Before you start saving with NPS, you need to know the following things about this scheme: 

1. Types 

There are two types of NPS accounts, Tier I and II. 

1. Tier I NPS Account: 

To avail the benefits of NPS, it is mandatory for you to open a Tier I NPS account. Withdrawal from a Tier I NPS account is restricted and conditional. Following are the details regarding contributions to this account: 

1. At the time of account opening, you need to contribute a minimum of ₹500. 
2. You need to contribute a minimum of ₹1,000 per year. 
3. Any time during a financial year you can contribute a minimum of ₹500. 
4. You can contribute a minimum of 1 time per year. 

2. Tier II NPS Account: 

For subscribers, this account is optional. As per the subscriber’s requirement, there is permission to withdraw from this account. Here are the details regarding contributions to this account: 

1. At the time of account opening, you need to contribute a minimum of ₹1,000. 
2. Any time during a financial year you can contribute a minimum of ₹500. 

2. Investment Choice 

You can either take an active or an Auto investment choice. 

1. Active Choice: 

A subscriber can design his/her portfolio depending on his/her risk appetite by allocating funds across any of the following asset classes: Corporate Bonds, Equities,  Alternate Investment Funds, and Government Securities.   

Under the active choice option, your investment towards Alternate Investment Fund and Equities is capped at 5% and 50% of the total contribution, respectively.

2. Auto Choice: 

With this approach, your pension fund will be invested in Equities, Corporate Bonds, and Government Securities. The proportion of the investment would depend on your age as per the chosen Life Cycle. 

AU Bank NPS Withdrawal

After 3 years from the date of Tier I account opening or the last partial withdrawal date, you can only partially withdraw from your NPS account. You can withdraw 25% of your contributed amount. 

However, partial withdrawal is only applicable for specific emergencies like treatment of critical illness, higher education, a child’s marriage, buying a home, etc. 

Exit from NPC

You can close your NPS account after 10 years of account opening or when you reach the age of 60.  

1. Premature Exit:  

Premature exit is the closure of an NPS account after 10 years of account opening and before attaining the age of 60 years. Here are some of its features: 

1. You can withdraw up to 20% of your account balance in a lump sum. 
2. It is mandatory to invest the balance corpus in an annuity. 
3. If the value of the total corpus is ₹2.5 lakhs or less, the mandate to invest in an annuity does not apply. 

2. Exit on Maturity:  

Exit of maturity means a closure of your NPS account on reaching 60 years. Here are some of its features: 

• You can withdraw up to 60% of the corps in a lump sum. 
• It is mandatory to invest the balance corpus in an annuity. 
• If the value of the total corpus is ₹5 lakhs or less, the mandate to invest in an annuity does not apply. 

Investment in Annuity 

To avail monthly pension out of your investment you have to select an Annuity Service Provider and Annuity Scheme after your retirement or exit from NPS before retirement. 

Final Word

As you approach your retirement, your investment in AU Bank NPS throughout your salaried or self-employed career will be ready to offer a stable monthly income. You should contact AU Bank, consult with bank representatives and read all scheme-related documents before you start investing for your post-retirement days.  

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Disclaimer

This article is solely for educational purposes. Stable Money doesn't take any responsibility for the information or claims made in the blog.