Mutual Funds

NPS by NSDL e-Gov app review: No-frills retirement planning

Satya Sontanam BL Research Bureau | Updated on February 19, 2021

Looks aside, the app delivers on features and low fees

The National Pension System (NPS), which is administered and regulated by the Pension Fund Regulatory and Development Authority (PFRDA), is an important cog in the wheel as India strives to create a pensioned society.

Starting out as a complex and heavily taxed product, the NPS has been tweaked several times in recent years to make it more investor-friendly. This has also burnished its appeal as a defined-contribution retirement savings scheme that offers market-linked returns.

Apart from NPS, pension/retirement plans from mutual funds and insurers, and traditional favourites such as EPFO, retirement gratuity, etc, are jostling for the attention of young savers. Against this backdrop, the mobile app of NPS by NSDL e-Gov serves as a key platform.

Features

The on-boarding process is relatively simple, directing you to the eNPS NSDL website, where the registration can be done either using Aadhaar or PAN. Subscribers can open both Tier I and II accounts using the app. But note that only those with a Tier I account can open Tier II.

In a nutshell, the process may include providing e-KYC (in case of account-opening using Aadhaar), uploading the scanned documents, PAN, a cancelled cheque and use of eSign mechanism. Note that the NPS account-opening process includes making a minimum contribution of ₹500 for a Tier I account. Once registered, you will be allotted a Permanent Retirement Account Number (PRAN), which is important for app login.

The home screen of the app shows the total market value of your investments (both Tier I and Tier II), NAVs and total return on investments (in XIRR format). In addition, the percentage of investment allocation to each asset class — equity/corporate bonds/government securities/alternative investment securities — and number of units purchased in each asset class are also available.

You can make periodical contributions to the NPS account (both Tier I and Tier II) using the app, which provides payment options including UPI, debit/credit card and net banking. There are payment gateway charges for using credit card.

The app also comes handy if you want to change the NPS investment option from auto (equity exposure gradually and automatically reduces with age) to active or vice-versa. If you have chosen an ‘active’ investment option, you can also change the percentage of asset allocation towards each asset class using the app. Note that changing the investment option and the asset allocation is allowed only twice a year under NPS. The NPS app also facilitates switching from one fund manager to another once a year, as per the regulations.

NPS locks in your pension funds in Tier I until 60 years of age. But funds in the Tier II NPS account can be invested and withdrawn any time. You can request to withdraw a fund using the NPS app.

The app provides services such as getting financial year-wise transaction statements and updating email id or mobile number. You can provide nomination details and also make inquires or raise grievances related to NPS.

Note that you can access these options online on the eNPS website as well, but the transactions on the app works much faster since it provides instant access on your mobile phone.

Other options

Investing platforms such as Paytm Money and Groww, too, provide the option to invest and transact in NPS through their apps. While NPS by NSDL e-Gov provides similar services as that of these platforms, the latter have an edge in terms of providing better interfaces including graphical presentation of returns.

Having said that, eNPS stands out in terms of lower costs associated with the NPS account than the investing platforms, which act as PoPs (Points of Presence) to provide services under NPS.

For instance, the maximum account-opening charge through POPs is ₹ 200, while it is only ₹40 through NPS NSDL. Also, the fee for a transaction through a POP is ₹ 20, while through NPS NSDL, it is not more than ₹4.

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Published on February 19, 2021
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