Page 20 - mutual-fund-insight - Mar 2021_Neat
P. 20
FUND RADAR
maintains the records of subscribers, processes their directly with the CRA, it may not be a wise decision for
registration and withdrawal requests and so on. It is also someone who is not financially savvy or comfortable
responsible for generating regular account statements with maintaining the account or carrying transactions
and issuing the Permanent Retirement Account Number over the internet on his own. The CRA interface is
(PRAN) to subscribers following registration. completely online and more suitable for ‘DIY’ investors.
Here it is important to know the difference of But if you are not aware of various asset classes,
opening an NPS account through a POP and directly unsure about asset allocation, uncomfortable with
through the CRA. Besides the difference in the services online transactions or need some sort of assistance, or
provided by both, their recurring charges also vary. See prefer the offline route, then you should opt for the
the table ‘Charges associated with the NPS’. POP route, as the POP will help you with these issues.
Account opening: POP vs CRA Steps to open an NPS account online
You must note that CRA charges are bound to happen, To open an NPS account online with the CRA, one can
no matter whether you choose to open the account choose either NSDL or Karvy. Here is how you can open
through a POP or not. A POP is simply an intermediary an NPS account online with NSDL.
between you (the subscriber) and the CRA. By looking z Keep handy a scanned copy of the PAN card, a
at the above-mentioned table, you may think that it is cancelled cheque, your photograph, signature and
beneficial to open the account directly with the CRA Aadhar paperless offline e-KYC. To download your
and completely avoid the POP cost. By doing so, you Aadhaar paperless offline KYC, visit https://resident.
save on not only the account-opening charges but also uidai.gov.in/offline-kyc.
transaction and persistency costs, which are recurring z Visit the official website of eNPS (NSDL) at https://
in nature. If you invest through a POP, a minimum of enps.nsdl.com/eNPS/NationalPensionSystem.html
`20 is charged every time you make a deposit. This is z Click on ‘National Pension System’ and then on
in addition to the transaction cost charged by the CRA. ‘Registration’.
Although it is possible to make subsequent deposits z Select the ‘Aadhaar’ option in the ‘Register with’
directly to the CRA through eNPS after opening the field. Alternatively, you can select PAN but then, the
account through a POP, then also a trail commission is KYC will be routed through a bank where you
passed to the POP and a transaction charge of 0.10 per already have relation and a charge of up to `125 plus
cent is charged. In that case, the minimum and taxes may be collected.
maximum limits are `10 and `10,000. z Select ‘Tier 1 only’ if you want to save taxes and
Although it could be beneficial to open the account follow the on-screen instructions.
(]VPK 767 ZH]L TVUL`
About `24,000 is saved on transaction costs if someone opens the NPS account directly with the CRA and invests `50,000 at the beginning of every
year for a period of 30 years.
` 30,000
25,000
20,000
15,000
10,000
5,000
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
180(%5 2) <($56
Assumptions: Transaction cost at 0.25% of the transaction amount in the case of POP and `3.75 in the case of CRA. Persistency cost of `50 per annum in the case of POP. We have
assumed an annual return of 10 per cent.
18 Mutual Fund Insight March 2021
Subscription copy of [sabareesan.nair@gmail.com]. Redistribution prohibited.
