The Safety Net – National Pension Scheme for NRIs

National Pension Scheme for NRIs

 The various appealing investment options that are available in India have made it a preferred investment centre for NRIs. With an increase in the prominence of India as a player in the world’s economy, the investment options for NRIs have increased. The prevailing belief that Indian businesses offer high profits with minimal efforts has increased the willingness of NRIs to invest in these firms more than ever.

The NPS (National Pension Scheme) is one of the many investment options for NRIs, especially for those who are planning to come back to India and use the corpus for their retirement.

The Nation Pension Scheme (NPS) is a contribution scheme initiated by the Indian Government offering various investment options for people looking to build a corpus for their life post retirement.

In this scheme, one can invest in various assets, and the corpus for retirement is dependent on the returns from such assets, which are market linked. Dedicated managers are entrusted with the job of managing the money of the investors.

The investments are made by the professional fund managers regulated by Pension Fund Regulatory and Development Authority (PFRDA).

Eligibility for NRIs to invest in NPS

  • It is open to any NRI between the ages of 18 to 60 years.
  • PIOs/OCIs are not eligible to invest in NPS.
  • The investor should have NRE/NRO account complying with KYC forms.
  • Power of Attorney (POA) is not allowed; therefore, the NRI has to open the account himself.

Contribution to the NPS Account

An NRI can make his/her contribution to the NPS account through NRE or NRO account, subject to foreign exchange conversion norms.

  • Minimum Contribution at the time of account opening – Rs.500
  • Minimum amount per contribution – Rs.500
  • Minimum contribution – Rs. 6000/-per annum

Salient Features of NPS

  • The investment portfolio is diversified across various financial securities in an appropriate manner.
  • The impact on returns that any investor may earn from his/her investment is minimised when an adequate mix of investment assets and instruments classes like Corporate Bonds, Equity and/or Government Securities is made.
  • The amount of risk an investor can withstand can be used as a deciding factor to make the judicious mix of Equity, Corporate Bonds, and Government Securities in investment.

Investment options in NPS

There are two investment options under National Pension Scheme:

  • Active Choice: In this option, an NRI has the choice to decide the classes of an asset in which he/she would like to invest funds and the respective proportions.
  • Auto Choice: This is a default option under NPS investment. Depending on the age of the investor the allocation of funds is done automatically among various assets.

It is an important aspect of financial planning for any person to build a sizeable retirement corpus. These funds not only help in taking care of expenses in old age but also fight the ups and downs of post-retirement life.

The government has provided a very safe and efficient investment option for both Indian residents as well as NRIs. Therefore, investing in NPS can help ensure that such corpus is there to make one’s life hassle free in their golden days.


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