Launched to the public in May 2009, the National Pension Scheme (NPS) has faced several hurdles since its launch. The NPS works on a unique individual Permanent Retirement Account Number (PRAN) created for individual subscribers. The PRAN number remains for the subscriber's lifetime. This system will initially be based on two types of sub accounts created for individual investors--Tier-I and Tier-II.
• Tier-I: This is a non-withdrawal and tax deferred pension account open to all individuals
• Tier-II: This account can be opened only when one has a Tier-I account. This account allows for withdrawals and acts as a savings account with no tax advantages (for all individuals subject to minimum deposits per year in Tier-I account).
There is a third variant of the scheme; the Swavalamban scheme or the NPS Lite. This scheme was mooted by the government to encourage subscribers to save for their old age, where the government contributes Rs 1,000 per year to the pension account NPS Lite, making pension possible for the economically-disadvantaged.
In its current form, the Swavalamban or NPS-Lite scheme is the extension of the variant available to the government employees, with 85 per cent of the money invested in debt and 15 per cent invested in equity as per the government guidelines. And, to avail the benefit of Rs 1,000 in each of these years – 2011-12, 2012-13 and 2013-14 – the subscriber has to deposit a minimum of Rs 1,000 and a maximum of Rs 12,000 during each of these years.
To understand the performance of the NPS funds, we segregated them based on the schemes. So, there is the NPS for the Central Government employees, NPS for the 22 states that have adopted it for its employees, the NPS Lite, the NPS for public at large, and also the NPS account which is voluntary.
The table in the following page indicates the performance of each of the schemes run by specific fund managers and its performance. We will frequently update the performance of the NPS fund performance, to help investors track the performance of their retirement investments.