Superannuation to NPS Transfer

Are you planning for a secure financial future? If you have a superannuation fund, transferring it to the National Pension System (NPS) could be a game-changer for your retirement planning. This transfer not only simplifies your investments but also offers significant tax benefits, better returns, and enhanced flexibility. Whether you are looking to maximise your retirement savings or enjoy greater control over your funds, this guide will help you understand the process, prerequisites, and benefits of transferring your superannuation fund to NPS.

Let us explore why this move can be a smart financial decision and how you can make the transition seamlessly.

A superannuation fund is an employer-sponsored retirement savings scheme where contributions, typically 15% of the employee’s basic salary plus dearness allowance (DA), are made by the employer. These funds are managed by trusted entities like LIC or private insurance companies and provide employees with a pension corpus upon retirement. It is a structured way to save for retirement and is widely used in Indian financial planning.

For additional diversification in your retirement planning, consider investing in a Bajaj Finance FD. Open an FD account today!

The National Pension System (NPS) is a government-backed, voluntary retirement savings scheme designed to help individuals systematically invest in market-linked assets. NPS offers flexibility in investments, tax savings, and the creation of a retirement corpus. Subscribers can withdraw up to 60% of the corpus tax-free at retirement, while the remaining 40% must be used to purchase an annuity, ensuring a steady income post-retirement.

If you want financial security, pair your NPS investments with a Fixed Deposit! 

With guaranteed returns and high safety ratings, Bajaj Finance FDs can provide a stable complement to your market-linked NPS investments, helping you diversify your retirement savings effectively. Check FD rates. 

Transferring your superannuation fund to NPS comes with several advantages:

• Higher tax-free withdrawal: NPS allows up to 60% tax-free withdrawal at retirement, compared to only 33% in superannuation.
• Zero GST on annuity purchase: NPS annuities are exempt from GST, while superannuation annuities attract 1.8% GST.
• Better returns: NPS investments are market-linked, often delivering higher returns than traditional superannuation funds.
• Flexibility: NPS allows partial withdrawals after five years for specific purposes, unlike the rigid structure of superannuation funds.
• Portability: NPS accounts remain intact even if you switch jobs, while superannuation funds may require mandatory withdrawal during job changes.

Pro Tip: Maximise your retirement savings by transferring your superannuation fund to NPS today. Or you can also use FD as another option to grow your savings. Bajaj Finance is offering up to 7.30% p.a. returns on FDs. Book now!

Before initiating the transfer process, ensure you meet the following requirements:

• Active NPS Tier I account: You must have an operational Tier I NPS account.
• Valid PRAN (Permanent Retirement Account Number): This unique identification number is mandatory for NPS subscribers.
• Coordination with employer or fund manager: The transfer process involves coordination between your employer and the point of presence (POP).
• Essential documents: You need KYC documents, transfer letters, and superannuation account details.

Here is a simple guide to transferring your superannuation fund to NPS:

1. Open an NPS account: If you do not already have an NPS account, open one through your employer, bank, POP, or online via eNPS.
2. Request transfer: Approach your employer or superannuation fund manager to initiate the transfer process.
3. Obtain cheque/draft:
   • For government employees: The cheque should be issued in favour of “PAO/CDDO Name<>Employee Name<>PRAN Number.”
   • For private employees: The cheque should be issued in favour of “POP Collection Account-NPS Trust<>Subscriber Name<>PRAN Number.”
4. Get a transfer letter: Ensure you receive an official transfer letter detailing the specifics of the transfer.
5. Submit documents: Provide the cheque/draft and transfer letter to your employer or POP.
6. Fund uploading: The employer or POP will upload the transferred funds to your NPS Tier I account.

Tax benefits of transferring to NPS

One of the primary reasons for transferring a superannuation fund to NPS is the tax advantages:

• Investment stage:
  • Superannuation contributions are capped at 15% of salary (basic + DA) or Rs. 1.5 lakh, whichever is lower.
  • NPS contributions allow tax deductions up to 10% of salary (basic + DA), with an upper limit of Rs. 7.5 lakh under Section 80CCD(1B).
• Exit at retirement:
  • Superannuation: Only 33% of the corpus is tax-free.
  • NPS: Up to 60% of the corpus is tax-free, with the remaining 40% invested in an annuity.
• Exit before retirement:
  • Superannuation: No tax-free withdrawals are allowed.
  • NPS: Up to 20% of the corpus can be withdrawn tax-free, while the balance must be used to purchase an annuity.

To ensure the withdrawn amount continues to grow, consider investing it in a Bajaj Finance Fixed Deposit (FD). With competitive interest rates, high safety ratings, and flexible tenures, Bajaj Finance FDs provide a reliable way to secure and grow your savings. Open a Bajaj Finance FD today to safeguard your financial future!

Transferring your superannuation fund to NPS can significantly enhance your retirement savings by offering better tax benefits, higher returns, and greater flexibility. With its market-linked structure, portability, and tax-efficient withdrawals, NPS is a robust tool for long-term financial planning.

Plan your retirement the right way — transfer your superannuation fund to NPS for maximum benefits.