NEW DELHI
:
If you want to start investing in the National Pension System (NPS), the first step is to choose the right platform to open an account with.
There are two options: the direct route through e-NPS and a point of presence (PoP) such as ET Money or HDFC Pension—entities approved by the Pension Fund Regulatory and Development Authority (PFRDA) to open and operate accounts.
Here’s your guide for choosing the right account:
If you choose the direct mode and open an account using e-NPS—in other words, directly with the central record-keeping agencies (CRAs)—the account opening charges and transaction costs are typically lower. However, experts say PoPs provide value-added services that can help subscribers.
For instance, CAMS CRA charges ₹18 as account opening fees and ₹40 if you opt for a physical welcome kit (physical PRAN). If you go through a PoP, in addition to CRA charges, there will be upfront fees from the PoP, ranging from ₹0 to ₹400.
Transaction fees are also lower if you invest through CRAs. The NPS Trust website states that the three CRAs charge anywhere between ₹3.36 and ₹3.75 per transaction, while a PoP can charge up to 0.50% per transaction, capped at ₹25,000.
What many investors don’t know is that even if subscribers open an account with a PoP, they can still route their transactions through CRAs (e-NPS) and pay a 0.20% trail commission instead of the 0.50% upfront commission applicable in the PoP route.
For example, if a subscriber invests ₹50,000 once every year in the NPS for 35 years starting at age 25, they can save ₹15,000 over that period by investing through e-NPS. This calculation assumes the charges levied by CAMS CRA and the maximum permissible account fees for PoPs as stated on the NPS Trust website.
CRAs levy uniform charges regardless of whether a subscriber registers directly or through a PoP, said Prasenjit Mukherjee, head of CAMS CRA.
He noted the e-NPS route is comparatively cheaper since it connects the subscriber directly to the CRA, which acts as a depository for the NPS. However, over a span of 25–35 years, the difference is marginal.
He also highlighted that the PoP channel offers essential support and services that many investors find valuable.
“When it comes to user interface and customer support, PoPs are better equipped. That’s why many people prefer opening their accounts through PoPs, even though there is zero upfront fee on the e-NPS platform,” he added.
e-NPS is more suited for those who understand the ins and outs of the NPS. However, for the majority of subscribers, PoPs are more suitable, as they provide a better user experience and make it easier to set up features like SIPs, while also offering stronger support and grievance redressal systems, said Kuldeep Parashar, chief executive and founder of Pension Box.
Government employees must use CRAs to transact in the NPS, while corporate NPS contributions are routed compulsorily through a PoP.
