The pension regulator has increased the existing Investment Management Fees (Pension Management Fees) charged by pension funds in the National Pension System-NPS. The changes came into effect from 1 April. Let us tell you that NPS is a long-turn retirement product. It is managed by the Pension Fund Regulatory and Development Authority (PFRDA). The management charge of NPS was earlier just 0.01 percent. Which has now increased to 0.09 percent.
What is the new decision of the government
In the notification issued by PFRDA, it is stated that the Investment Management Fees (IMF) recovered by the pension fund, which is charged on all pension fund schemes, will be on the total AUM of the pension fund under all schemes. In addition, pension fund charges will continue.
According to the new slab, the maximum charge on the fund of the scheme with AUM up to 10,000 crore will be 0.09 per cent. At the same time, charges of 0.06 per cent on AUM ranging from 10,001 to 50,000 crores. 50,001 to 1,50,000 crores to 0.05 per cent, and AUM fur charges of 1,50,000 crores will be 0.03 per cent.
Let’s know about the charges…
To open NPS account offline, you have to go to Points of Presence (POP), which also includes select banks appointed by PFRDA.
Most banks and insurance companies have their own POPs. POPs do all the work associated with NPS.
In this, information about all the things like registration of user, change in scheme, details of account information is available.
These charges are taken from the investor at the time of registration. The rest of the contribution can be given by some percentage of the first contribution – either online or offline.
Both contribute some part of the POP as well. Such as changing an address or mobile number. If you have been with the same POP for more than 6 months, then you will also have to pay a new fee under ‘Persistence’.
Your NPS money is managed by different fund managers. The fee paid for managing this money is called investment management fee.
Stock Holding Corporation of India (SCHIL) has been appointed as the custodian of this asset, to which this fee goes.
NPS Trust Fees PFRDA has established the NPS Trust under the Indian Trust Act 1882. Its Board of Trustees only administers the schemes according to Indian law. The responsibility of a trustee is to oversee the fund of NPS. The trustees’ account is with Axis Bank.
You can save tax under section 80 CCD (2) even after using section 80 CCD (1) and section 80 CCD (1B).
As per the current rules, the company’s contract is exempted in the NPS account of the employee. You can claim maximum deduction up to 10% of salary. Maximum 14 percent deduction is available in the case of central government employees.
Suppose the annual basic salary is 8 lakh rupees. Your company contributes Rs 80,000 to a Tier-1 NPS account. In that case, you can claim deduction of 10% of your basic salary i.e. Rs 80,000.