NPS account opening: Is online e-NPS better than a PoP route?

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Choosing the most appropriate path to NPS

National Pension System (NPS) is among the most sought-after retirement investment in India, providing tax relief and long-term wealth generation. To open an NPS account, investors can use either the online portal (e-NPS) or through a Point of Presence (PoP) like banks and financial institutions. Both have their own advantages and the correct one will be based on your tech affinity, service standards, and charges.

How e-NPS works

The e-NPS website, run by the Central Recordkeeping Agency (CRA), allows subscribers to open an account online solely using Aadhaar, PAN, and a bank account. It is paperless and fairly quick, taking a few minutes in the majority of cases. Subscriptions and account management can also be done online, which suits technologically sound investors who prefer ease and less paperwork. Some may consider the process cumbersome initially, especially those who are not familiar with digital KYC procedures.

What a PoP offers

Points of Presence are licensed go-betweens, including post offices, banks, and non-banking centers, that help individuals open and maintain NPS accounts. Upon applying through a PoP, applicants receive facilitation advice, physical documentation support, and human interaction. While convenient for those not very tech-literate, this is an additional cost since PoPs charge service fees and transaction fees.

Weighing cost against convenience

The process of e-NPS is charged with lower fees compared to PoPs, as most of the services are automated and self-operated. PoPs, however, have personalized service some investors find attractive. For example, a novice retiree who lacks proficiency in online systems would embrace PoP service even at a higher cost, whereas younger investors familiar with digital banking would appreciate e-NPS more.

Long-term account management

It is simpler in the long run through e-NPS since contributions, nomination changes, and withdrawals can all be done online. Investors may have to visit the branch or rely on service personnel for these changes in a PoP, which takes more time. But PoPs can be beneficial to investors who like personalized advice while making important decisions on asset allocation or withdrawal.

FAQs

Q. Is e-NPS cheaper than opening up via a PoP?

Yes. e-NPS is less costly to offer and carry out transactions with than PoPs, making it affordable for self-directed investors.

Q. Can one switch to e-NPS at a later point of time from a PoP account?

Yes. Investors can switch their account to e-NPS later in life, but this will involve more steps with the CRA.

Q. What is ideal for new investors?

For tech-savvy investors, e-NPS is more suitable as it is convenient and cheaper. For those who prefer guidance, PoPs provide hand-holding at a more expensive cost.