Pension Planning: How To Set up SIP In NPS? Check Step-by-step Guide Now

Systematic Investment Plans (SIPs) within the National Pension System (NPS) provide subscribers with the ease of making consistent contributions, fostering a disciplined and convenient method for retirement savings without the necessity of market timing. Much like mutual funds, SIPs empower NPS participants to take advantage of rupee cost averaging. Modifying current investments becomes simplified, offering the potential for increased returns.

NPS is a government-backed pension scheme launched in 2004. It is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). NPS aims to provide retirement income to Indian citizens.

NPS operates on a defined contribution basis, wherein subscribers contribute regularly towards their pension fund during their working years. These contributions are invested in various financial instruments such as equities, government securities, corporate bonds, and alternative assets.

Upon retirement, subscribers can withdraw a portion of the accumulated corpus as a lump sum, while the remaining amount is utilised to purchase an annuity that provides a regular pension income.

NPS offers tax benefits and flexibility in investment choices, making it a popular retirement savings option in India.

Register for a SIP (Systematic Investment Plan) under NPS (National Pension System)

Benefits of SIP

• Using SIP as a mode of investment makes it simple and hassle-free.
• SIP allows you the convenience of timely and small investments regularly. Ideal for subscribers looking to invest a specified amount regularly and is lighter on your wallet too
• Helps you plan for your goals better as with the setting up of SIP you no longer will need to make lump sum payments for your NPS account
• SIP helps you reap the benefits of the ‘Power of Compounding’ by investing regularly over a long period
• With Rupee Cost Averaging you need not time the market anymore

Steps of Registration of SIP Under NPS

1. An existing subscriber is required to enter the PRAN number and DOB and then select the option i.e., Email ID or Mobile number or Both and click on “Submit OTP”.
2. OTP will be sent to subscribers. Enter the six-digit OTP and “Continue”.
3. Select the option “New SIP Registration in NPS” and “Submit”.
4. Subscriber is required to enter a few details i.e., SIP Amount, Tier Type, SIP Date, Maturity Month and Year and SIP Frequency.
5. Subscriber is required to enter bank details for the online e-mandate process. The amount will be deducted from the same bank account. Click Here for a list of banks empaneled for the SIP Process.
6. Subscriber will be displayed the details entered for the verification process. After verification click on “Continue”.
7. The registration of SIP will be sent for authorisation to the bank. Once authorisation is successful the amount will be debited from Subscribers bank account as per SIP Amount and SIP Frequency.
8. Subscribers can also view the “Status of SIP Registered” and “List of SIP transactions”.

Steps of Cancellation of SIP under NPS

1. An existing subscriber is required to enter the PRAN number and DOB and then select the option i.e., Email ID or Mobile number or Both and click on “Submit OTP””.
2. OTP will be sent to subscribers. Enter the six-digit OTP and “Continue”
3. Select the option “Cancellation of SIP” and “Submit”.
4. Select the SIP ID which needs to be cancelled and click on “Submit”.
5. Your SIP will be eligible for cancellation after the first two SIP renewal dates.