- Date : 02/05/2022
- Read: 3 mins
Setting up a SIP and linking it to NPS can be a smart financial move. This article shows how to do it through the auto-debit facility of banks, with a minimum SIP amount of ₹500
The National Pension System Trust, or simply the NPS Trust is a division of the Ministry of Finance’s Pension Fund Regulatory and Development Authority.
For a better understanding of the workings of the NPS, click here.
If you wish to initiate a Systematic Investment Plan to make contributions to your NPS account, you can do that as well. The only prerequisites are that you must have a National Pension System Trust account, linking to a Permanent Retirement Account Number or PRAN.
Methods To Set Up a SIP for Your NPS Account
To start a SIP in your NPS account, you can approach your bank in person and instruct them to facilitate periodic payments, be it daily, weekly, monthly or quarterly. This is similar to how it occurs in Mutual Funds.
You can also start a SIP in your NPS account using the new D-Remit facility.
D-Remit is an electronic system to transfer money to an NPS Trustee bank directly, without having to go into an intermediary bank account and transfer the money to the bank. All the existing NPS customers can use this facility without any additional charge. The minimum contribution earned from this would be ₹500.
The main goal of establishing a D-Remit facility is to provide same-day Net Asset Value (NAV) for NPS investments. NAV on a T+2 basis was used before when NPS contributions were made without using the D-Remit method. To register for a virtual ID with D-Remit, you'll need an active NPS PRAN, a mobile number, and access to your bank's internet banking.
A virtual ID can be created using the D-Remit technology. Existing subscribers in the government/non-government/all citizens model would be able to deposit their voluntary contributions by creating a virtual id that would be connected to their permanent retirement account number.
How to invest through an NPS app?
- First, create a Virtual account ID with your chosen Trustee bank (https://npscra.nsdl.co.in/)
- Add this account as a beneficiary through net banking after it activates.
- You must ensure your mobile number is also updated in NPS.
- Afterwards, start a SIP and instruct your bank to direct debit money from your account.
On An Ending Note
Thus, the procedure of starting a SIP in your NPS is quite a simple procedure, and you can avail of this facility by visiting your bank physically, or digitally through the medium of D-Remit. The new D-Remit facility is a good initiative taken by the PFRDA, as now, the procedure can be done from the convenience of your home.
Now, all NPS investors can enjoy the benefits of rupee cost averaging. This will encourage a saving discipline, and increase the contributions to a comfortable retirement. Take a look at NPS performance in the last 5 years here.
SIP has also shown a stark increase in the number of accounts, thus making it a stable investment.
In case you have any doubts or queries regarding, you can refer to this video for a deeper understanding.