How to Check Old Age Pension?

After years of hard work,  retirement is the time when you can finally sit back and relax. However, financial planning is essential for a stable life post-retirement. Investing in old age pension plans can help accumulate adequate money for post-retirement and secure your family's financial future.Let us understand what it is, how to apply for old age pension, and how to check pension online.

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Retirement and pension plans are financial instruments that can shape your hard-earned income into savings for your post-retirement life. It comes in various forms to cater to a multitude of savings and investment goals, enabling a financially stable retired life.

Retirement is a time when you can finally unwind and realize your long-held ambitions. However, if you are financially unprepared, it can be a difficult time. As a result, it is in your best interest to consider a pension plan, also referred to as a retirement plan, and understand how important it is at a young age. You will have more time to start saving for your retirement if you do so.

What is Old Age Pension?

Old age pension plan is an investment plan where you put away a part of your savings is for a specific period. It can help you provide a regular income after retirement. NPS or National Pension Scheme is an old age pension plan available for the Indian citizens. It is an investment scheme regulated by the PFRDA (Pension Fund Regulatory and Development Authority) and the Central Government.

NPS is a retirement savings scheme designed to help its subscribers make optimal decisions for their future. Under this plan, the savings are pooled into a pension fund, which are invested by the PFRDA managers into diversified portfolios including government bonds, bills, shares, and corporate debentures. These investments grow and accumulate over time depending on the returns earned.

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How Does Old Age Pension Work?

To help you understand how old age pension works, we have listed down some features:

Under the National Pension scheme, it is an individual's choice on how they want to invest their hard earned money. NPS offers multiple investment options to choose from. In case you do not want to exercise a choice, your money will be invested as per the Default choice of "Moderate Life Cycle Fund" under "Auto Choice" option, where money will get invested in various type of schemes as per subscriber's age. The NPS offers two approaches to invest your money:


Active choice:-(Asset Class E, Asset Class C, and Asset Class G and Asset Class" A")

You will have the option to actively decide as to how your NPS pension wealth is to be invested in the following three options:

  Asset Class E - Investments in predominantly equity market instruments.


  Asset Class C- investments in fixed income instruments other than Government securities.


  Asset Class G - investments in Government securities.


 Asset class A: Investment in Alternative Investment Schemes including instruments like CMBS, MBS, REITS, AIFs, InvIts etc.



You can choose to invest your entire pension wealth in C or G asset classes and up to a maximum of 50% in equity (Asset class E) and up to a maximum of 5% in asset class "A". You can also distribute your pension wealth across E, C, G and A asset classes, subject to such conditions as may be prescribed by PFRDA.

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1. Auto choice - Lifecycle Fund

NPS offers an easy option for those people who do not have knowledge about how to manage their NPS investments. In case you are not able to exercise any choice as regarding the asset allocation, your funds will be invested in accordance with the Auto Choice option.

In this option, the investments will be made in a life-cycle fund. Here, the proportion of funds invested across three asset classes will be determined by a pre-defined portfolio (which would change as per age of subscriber), with the investment in E decreasing and in C & G increasing with the age of the pension holder.

Three Life Cycle funds are available under this Auto Choice:

  (i) LC75 – Aggressive Life Cycle Fund: In this Life Cycle Fund, the exposure in Equity Investments starts with 75% till age 35 and gradually reduces as per the age of the pension holder.

  (ii) LC50- Moderate Life Cycle Fund: In this Life Cycle Fund, the exposure in Equity Investments starts with 50% till age 35 and gradually reduces as per the age of the pension holder.

  (iii) LC 25- Conservative life cycle Fund: In this Life Cycle Fund, the exposure in Equity Investments starts with 25% till age 35 and gradually reduces as per the age of the pension holder.

If the pension holder does not choose any of the above options, they will get the Moderate life Cycle Fund.

Who Can Apply For Old Age Pension?

Now that you know some rules about old-age pension plans, here is what you must know about old age pension rules related to a government employee.

  1. According to the National Pension Scheme, people from all sectors be it corporate or government, are eligible for the NPS. This will help you to secure your future post-retirement.
  2. The minimum eligibility period for receipt of pension is 10 years. A Central Government servant retiring in accordance with the Pension Rules is entitled to receive pension on completion of at least 10 years of qualifying service.
  3. With effect from 1, January 2006, pension is calculated with reference to the last basic pay or average of the basic pay drawn during the last 10 months of the service, whichever is more beneficial. The amount of pension is 50% of the emoluments or average emoluments whichever is beneficial.
  4. The minimum pension presently is Rs. 9000 per month. Maximum limit on pension is 50% of the highest pay in the Government of India (presently Rs. 1,25,000) per month. Pension is payable up to and including the date of death.

How to Apply For Old Age Pension?

Here is a detailed step by step guide on how you can apply for the old age pension scheme.

  1. Get an application form from the Social Welfare Department in your area.
  2. Fill all information in the Application form like State, District and Block details, Name of the village Panchayat, Name of Society, Beneficiary and Heirs, House number, Gender (Male / Female), Age and Date of Birth, Birth certificate details, Annual income and domicile certificate details and EPIC number (Voter ID number)
  3. Submit the application form along with all documents to the concerned Tehsil Social Welfare Officers. An applicant from an urban area can directly submit the application to the concerned District Social Welfare Officer.
  4. The application will be verified by the concerned officers.
  5. The Social Welfare department will recommend the beneficiaries to District Social Welfare Officer.

The final sanction will be made by District Level Sanctioning Committee (DLSC).

How to Check Pension Online?

To know how to check pension online, head to the PFRDA (Pension Fund Regulatory and Development Authority) website for detailed information.

However, if you are looking for easy steps, follow these

  1. Go to your state's pension website
  2. Add the PRAN number and the Financial year.
  3. Click on the search button. You will get the details of your old-age pension scheme

How to Check Old Age Pension Balance?

The National Pension Scheme subscribers can check their balance from the NSDL portal. They can check their pension corpus and the current valuation online. You have to login into your account using your login ID and password provided by the CRA, along with your PRAN Kit.

How Much Do I Need to Save for Retirement?

If you’re wondering how much you need to save for retirement, there is no right answer, as it differs from one person to another. Moreover, while a specific savings amount might be sufficient for you, it might come close to nothing for the next person. However, there are some aspects that you can evaluate to figure out how much you should save for your retirement years, which are:

  • It goes without saying that the earlier you start saving, the better. Therefore, start by considering your age when you start saving. For instance, if you are 30 years old and investing around 20-30% of your monthly income, you will be able to save sufficient funds.
  • Next, evaluate your monthly expenses, credit card bills, EMIs, and other daily expenditure so you can get by with your savings comfortably during retirement.
  • When it comes to retirement planning and savings, it is also vital to consider all your long-term investments, as it will give you a clear idea of how much savings will be sufficient once you retire.
  • Lastly, think about the lifestyle you wish to lead post-retirement. For instance, if you plan on travelling/exploring new countries after retirement, you might need a larger savings fund. However, if you wish to stay indoors and spend time with your loved ones, you can get by with less. Regardless, it is crucial to have sufficient financial backup for emergencies.

Frequently Asked Questions (FAQs)

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Head of Office in the Ministry/Deptt./Office where a Government servant last served/died is the pension sanctioning authority.

National Pension System is a contributory pension system which was initially (from 1st January 2004) introduced for the government employees and later rolled out for all citizens of India from May 1, 2009. Any citizen of India in the age group 18 to 65 years can join the NPS.

A: Self-employed person (Any individual other than a salaried employee)

Contributions upto 20% of the Gross Income of the self-employed is deductible from the taxable income under section 80CCD (1) of the Income Tax Act, subject to ceiling of Rs. 1.50 lacs under Section 80CCE.

Salaried Employee:

Employees own contribution up to 10% of salary (basic plus dearness allowance) to NPS are tax deductible under Section 80CCD (1) of Income Tax Act, subject to a ceiling of Rs.1.50 lacs under section 80CCE.

POPs are banks and non-banking financial companies/ micro finance entities registered with PFRDA to provide service-related functions to their associated subscribers enrolled under NPS.

A: A subscriber is required to make the first contribution at the time of applying for registration (Minimum contribution Rs.500 for Tier I and Rs.1000 for Tier II with duly filled NCIS (NPS Contribution Instruction Slip).

ARN: Sep23/Bg/05L

Sources:

www.indiapost.gov.in/Financial/Pages/Content/NPS.aspx

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