You can now invest in the National Pension Scheme (NPS) on Coin. This is still in beta so please do check it out and let us know if you spot any issues.
NPS is a retirement pension scheme and is pretty similar to mutual funds and it’s regulated by The Pension Fund Regulatory and Development Authority (PFRDA). There are 10 pension fund managers (AMCs) and each pension fund offers equity and debt schemes. There are two tiers in NPS:
Tier 1: All your investments are locked in until the age of 60.
Tier 2: This has no lock-in, you can invest and withdraw anytime you want to, similar to mutual funds. We aren’t offering this to start with.
You’ll be eligible for Tax benefits of upto Rs. 2 lakh if you are under the old tax regime. i.e. Rs 50,000 under section 80CCD over the Rs. 1.5 lakh deduction under Sec 80 CCE.
Once you hit 60, you can withdraw 60% of your money, it’s tax-free. The remaining 40% has to be compulsorily annuitized. Annuities are insurance policies that are offered by insurance companies. In return for a lumpsum, they will pay you a regular amount for as long as you are alive. Annuities are a way to deal with the longevity risk—what if you live longer?
How to invest on Coin?
Step 1: Go to Coin – Zerodha, click on “I agree.”
Step 2: You’ll see a page with your account details that we fetch from our records. Check if everything is correct and add any missing details.
Step 3: In the next step, you’ll have to select a pension fund and a risk profile.
Step 5: If you select auto choice, the equity and debt allocation will automatically change every year as per your age. If you select active choice, you can decide the allocation with a max of 75% in equity and 25% in the rest.
Step 4: Make the payment, and you are done.
Account opening charge of Rs 200
Contribution charges of minimum Rs 30 and 0.25% of the transaction thereafter.
Why is Zerodha charging for NPS when it doesn’t charge for mutual funds?
In mutual funds, we rely on the exchange infrastructure to settle transactions. But in the case of NPS, there’s a lot of work involved in building and maintaining these systems, including ongoing maintenance. Despite that, our charges are less than what others charge and the upper cap allowed by PFRDA.
Features we are working on
Account details and profile modifications
Scheme preference changes
P&L and other performance metrics
Allowing users to shift their NPS accounts to Zerodha
Unlike mutual funds, there’s a significant amount of effort involved in building features that seem basic. So, please bear with us while we iron out the bugs and make the experience better over time.