National Pension Scheme- Analysis      
The National Pension System (NPS) is a voluntary, defined contribution retirement savings scheme. The NPS has been designed to enable systematic savings during the subscriber’s working life and is an attempt towards finding a sustainable solution to provide adequate retirement income to every citizen of India.
The amount can be invested across three asset classes based on risk appetite of the individual. They can either opt for an Automatic choice based on age (Auto) or  select the composition of their fund themselves(Active).
The three individual asset classes based on risk and return are as follows:
E –  investments in predominantly equity market instruments classified as  High return, High risk
G -investments in Government securities like GOI bonds and State Govt. bonds classified as “Low return, Low risk”
C –  investments in fixed income securities other than Government Securities or Credit risk-bearing fixed income or corporate bond instruments such as  liquid funds, fixed deposits. It is classified as a Medium return, Medium risk
Types of accounts available Features Benefits Min Contribution(Rs) Max contribution(Rs) Taxation Fund Allocation Withdrawal and Exit Fund management Fees / Charges Types of annuties that can be purchased Special Notes
          On investment On withdrawal Active Auto        
Tier 1  This is a non-withdrawable account meant for savings for retirement into which the accumulations are deposited and invested as per the option of the subscriber.
This is the mandatory pension scheme for central and state government employees.
Corporates can also join and their employees will be eligible for the Tier 1 account.
Subscribers have control on the choice of investment made and the fund manager who manages the investments.  They can switch  from one investment option to another or from one fund manager to another with some restrictions. Minimum annual contribution of Rs6,000  No limit 1. Max of Rs 1.5 Lakh U/S 80CCD
2. Additional 50,000  for Tier 1 only
3. Contribution from the employer up to 10% of Basic Salary + Dearness Allowance is also eligible for deduction under Section 80CCD(2).
1. Income from the annuity is taxed at normal rates
2. For private employees, commuted pension is taxable upto 50% of lumpsum if gratuity is paid, else 33% is taxable,  and it is tax free for government employees.
3. Partial withdrawal shall be taxed in the year of withdrawal as per subscriber’s income tax slab.
One can choose to invest the  entire amount in a combination of any of the asset classes.
Upto 100% investment in C or G asset classes
Upto a maximum of 50% in asset class E (equity )
The auto-choice option does an automatic lifecycle-based investing with maximum exposure to equity in the younger days, which tapers as one reaches the retirement age. 1. If retirement is at  age  60 then upto 60% of accumulated corpus can be withdrawn and rest invested in an annuity on attaining the age of 60.
2. If retirement is before the age of 60, then up to 20% of accumulated corpus can be withdrawn and the rest invested in an annuity at the point of retirement.
3. On premature withdrawal account will be closed & annuity (pension) will be provided from age of 60.
4. On death, nominee receives the entire amount as a lumpsum. 
CRA
 1. Opening charges – Rs 50
 2. Annual Maintainence Charge – Rs 190
3. Any other transaction – Rs 4
POP
1. Initial registration – Rs 125
 2. Initial and subsequent contributions  – 0.25% (min Rs 20 , max Rs 25000)
 3.  Any other transaction – Rs 20
1. Life time annuity.
2. Annuity with specific period (5, 10 & 15 years).
3. Annuity for life with a provision  that on death, 50% of the annuity goes to the spouse  for life.
4. Annuity for life with return of purchase price.
5. Annuity for life increasing at simple rate of 3% p.a.
6. Annuity for life with a provision that on death, 100% of the annuity goes  to the spouse  for life.
7. Annuity for life with a provision that on death, 100% of the annuity is payable to the spouse for life , and return of purchase price on the death of last survivor.
All charges will be paid by employer
Fund management fees are adjusted in NAV.
Fund management fee are 0.0102% for Government employees and 0.25% of the invested amount for private sector.
Tier 2 This is a voluntary withdrawable account which is allowed only when there is an active Tier I account in the name of the subscriber. 
All those eligible for a Tier 1 account can open a Tier 2 account.
Withdrawals are permitted from this account as per the needs of the subscriber. Initial amount of 1000.
Rs 2000 annual contribution
No limit No tax benefits The  money withdrawn as lumpsum is taxed at investor’s tax slab. Same as above Can be withdrawn at any point without penalty. Same as above Can be withdrawn completely, no annuity purchase required Fund management fee are 0.0102% for Government employees and 0.25% of the invested amount for private sector.
NPS Lite (Swavalamban)  NPS-Lite Model” is designed to ensure ultra-low administrative and transactional costs, so as to make investments of smaller size possible.
This is applicable for those who are not part of any other social security schemes.
Rs 1000/- annual contribution from the Government 1000 12000 for Govt contribution
50000 overall maximum
Tax benefit u/s 80CCD. 1. Income from the annuity is taxed at normal rates  
-15% equity,
-upto 45% corporate bonds
-upto 55% Govt. Bonds
The auto-choice option does an automatic lifecycle-based investing with maximum exposure to equity in the younger days, which tapers as one reaches the retirement age. 1. If retirement is at  age  60 then at that point, upto 60% of accumulated corpus can be withdrawn and rest invested in an annuity.
2. If retirement is before the age of 60, then at that point, up to 20% of accumulated corpus can be withdrawn.
3. On premature withdrawal account will be closed & annuity (pension) will be provided from age of 60.
4. On death, nominee receives the entire amount as a lumpsum.
1. Account Opening Charges – Rs. 35 (one time)
2. Annual Maintenance Charges – Rs. 50
These are generally paid by government
1. Life time annuity
2. Annuity with specific period (5, 10 & 15 years)
3. Annuity for  self, spouse & corpus to children
4. Annuity for life with return of purchase price
One cannot open an NPS Lite account if there is an active PF account.
Subscribers of age group 18-40 yrs will migrate to APY 
Atal Pension Yojana (APY) This is a voluntary, periodic contribution based pension system for those who are not members of any statutory social security scheme and who are not income tax payers.  APY will be focussed on all citizens in the unorganised sector.
The age of the subscriber should be between 18 – 40 years. 
 The Central Government
will co-contribute 50% of the total contribution or Rs. 1000 per annum, whichever
is lower from  financial Year 2015-16 to 2019-20.
Rs 42 per month (for 18 yr old subscriber opting for Rs 1000 monthly pension) Rs 1454 per month ( for 40 yr old subscriber opting for Rs 5000 monthly pension) This is not a scheme for tax payers and hence there are no tax benefits Pension is taxable     1. Exit before 60 years of age is generally not permitted
2. At age 60, guarantee of pension.
3. After the subscriber’s demise, the spouse  shall be entitled to receive the same pension amount, until death.
4. After the demise of both the subscriber and the spouse, the nominee of the subscriber shall be entitled to receive the accumulated pension wealth.
POP
1. initial registration – Rs 120-150
2. subsequent contribution – Rs 100 annually
 CRA
1. A/c opening Rs 15
2. Annual maintainence – Rs 40
These are generally paid by government
The charges of the fund managers will be adjusted in NAV
Fixed pension for the subscribers ranging between Rs. 1000 to Rs. 5000, if he joins and contributes between the age of 18 years and 40 years  The beneficiaries covered under other statutory social security schemes are not eligible to receive Government co-contribution under APY.
                         
Annuity Pension Calculator                      
This is an approximate calculation of how much montly pension one can get by investing in the NPS.                  
                         
Age 30                      
Monthly contribution 4,000                      
Total years of Investment 30                      
Expected Return on Investment % 10%                      
Total Pension Wealth(Rs) 9,117,302                      
Reinvested for annuity % 60                      
Amount of Annuity Purchased(Rs) 5,470,382                      
Expected annuity return % 7%                      
Monthly pension(Rs) 31,911 taxable                    
Withdrawal on maturity(Rs) 3,646,920 Commuted amount is tax free                  
                         
                         
                         
Performance                        
TIER 1                        
                         
Central government Auto Plans                      
Portfolio Managers 3 year % 5 yr %                    
LIC 8.74 9.23                    
SBI  8.32 9.1                    
UTI 8.41 9.02                    
                         
                         
Equity                        
Portfolio Managers 3 year % 5 yr %                    
UTI 8.73 6.62                    
SBI  8.18 6.84                    
Reliance 7.97 6.43                    
Kotak 7.96 6.69                    
ICICI 8.13 6.97                    
                         
C Govt Bonds                        
Portfolio Managers 3 year % 5 yr %                    
UTI 7.74 8.42                    
SBI  7.43 9.13                    
Reliance 7.4 8.91                    
Kotak 7.49 8.89                    
ICICI 8 9.1                    
                         
Corporate Debt                        
Portfolio Managers 3 year % 5 yr %                    
UTI 9.47 10.52                    
SBI  9.47 10.74                    
Reliance 9.75 10.45                    
Kotak 9.54 10.98                    
ICICI 10.01 11.23                    
                         
TIER 2                        
                         
Equity                        
Portfolio Managers 3 year % 5 yr %                    
UTI 8.9 6.79                    
SBI  8.19 6.78                    
Reliance 8.09 6.52                    
Kotak 7.97 6.74                    
ICICI 8.06 6.36                    
                         
C Govt Bonds                        
Portfolio Managers 3 year % 5 yr %                    
UTI 7.59 8.4                    
SBI  7.47 9.01                    
Reliance 7.57 8.96                    
Kotak 7.86 8.83                    
ICICI 7.92 9.17                    
                         
Corporate Debt                        
Portfolio Managers 3 year % 5 yr %                    
UTI                        
SBI  9.36 10.58                    
Reliance 8.95 10.02                    
Kotak 9.57 9.78                    
ICICI 9.3 10.2                    
  9.91 11.25                    
                         
NPS Lite (Swavalamban) Plans                      
                         
Portfolio Managers 3 year % 5 yr %                    
UTI 8.23 10.4                    
LIC 8.78 10.31                    
SBI  8.36 10.12                    
Kotak 8.65 8.21                    
 (AUM as on Dec 2015, returns as of 16th Feb 2016)                      
                         
                         
Neena Shastry                        
Research Desk- Dilzer Consultants Pvt Ltd                      
                         
                         
Note:                        
Taxation of NPS withdrawals has not been clarified by authorities. We have assumed normal pension regulations.                
                         
Sources                        
http://www.bemoneyaware.com/national-pension-scheme-nps/                    
https://npscra.nsdl.co.in/                        
http://www.pfrda.org.in/index.cshtml                      
http://www.valueresearchonline.com/NPS/?amc=                      
http://pmjandhanyojana.co.in/atal-pension-yojana/                      
http://www.charteredclub.com/tax-on-pension-income/