How to Transfer Superannuation Fund to NPS? A complete guide

Planning for retirement is an essential part of financial wellness. Traditionally, many employees depended on superannuation funds for their retirement corpus. However, with the emergence of the National Pension System (NPS) Offering Greater Flexibility and Tax Benefits, Many Individuals are Considering Transfering Transfering Fund to NPS. Let’s undersrstand everything you need to know about this transfer process.

What is Superannuation Fund?

A superrannuation fund is an employer-sponsored penage plan where the employer contributes a portion of the employee’s salary toward the Employee’s Future Pension. Generally, The Contribution is Around 15% of the Employee’s Basic Salary Plus Dearness Allowance (DA). The employee can access these funds upon retirement. You can check here on How to Calculate Superannuation Benefit? These funds are usually managed by trust funds or insurance companies like lic.

What is NPS?

The National Pension System (NPS) is a Government-Backed, Voluntary Retirement Savings Scheme aimed at Encouning Systematic Savings. NPS allows individuals to contribute regularly in a low-cost, market-linked investment model. Upon retirement, 60% of the corpus can be withdrawn tax-free, and the remain 40% is used to purchase an annuity plan to receive a regular penalty.

Benefits of Transferring Superannuation Fund to NPS

While you can Withdraw superannuation fund in IndiaThere are several benefits of transferring it to nps too.

• Higher tax-free withdrawal: In superrannuation, only 1/3rd (approx. 33%) is tax-free upon retirement. In NPS, up to 60% can be withdrawn tax-free.
• Zero gst on annuity purchase: While Buying Annuity Under Superannuation Attracts 1.8% GST, No GST is Levied for Annuities Under NPS.
• Better returns: NPS, Being a Market-Linked Product, Often Delivers Better Returns Compared to Traditional Superannuation Funds. Check this article about 3 nps funds that delivered over 22% Cagr in the last 5 years,
• Flexibility: NPS Allows Partial Withdrawal after 5 years, while Superrannuation Funds are Rigid and Depend on Trust Policies.
• Portability: In case of a job switch, NPS Accounts Remain Intact. Superannuation Schemes May Force Mandata withdrawal If the New Employer does not offer a similar plan.

Pre-resights for Transferring Superannuation to NPS

• You must have an active nps tier I account.
• You should have a valid pran (permanent retirement account number).
• Coordination Between Your Old Employer/Trust and the New Employer/Point of Presence (POP) is required.
• Necessary Documentation Like Transfer Letters and Fund Release Instructions must be ready.

Step-by-step process of transferring superrannuation fund to nps

1. Open an nps account: Open a tier I NPS Account Through your Employer, Bank, or Pop.
2. Request transfer: Apply to your Current Superannuation Trust or Fund Manager Requesting a Transfer to NPS.
3. Issuance of Check/Draft: The superrannuation fund will issue a check/draft in the following manner:
   • For Govt. Employees: “Pao/CDDO NAME <> Employee Name <> Pran Number”
   • For Private Employees: “Pop Collection Account-NPS Trust <> SUBSCRIBER NAME <> Pran Number”
4. Obtain Transfer Letter: Along with the check/draft, get an official letter mentioning the transfer details.
5. Submit documents to pop/employer: Submit the check/draft and transfer letter to your employer (if NPS is employer-based) or directly to your pop.
6. Fund uploading: Your Employer/Pop will upload the transferred funds to your NPS Tier I Account with Approves Remarks.

How to Transfer LIC SUPRANNUATION FUND to NPS

If your superannuation fund is managed by lic, here you can proceed:

• Reach out to the LIC Branch Managing Your Superannuation.
• Submit an application requesting transfer to nps.
• Lic will is is a check favorite the nps trust with your pran details.
• Collect the Transfer Letter from LIC.
• Submit bot the check and letter to your employer or pop.
• Track the transfer until the funds are credited to your NPS Tier I Account.

How to Transfer Superannuation Fund to HDFC NPS?

• HDFC Pension Provides End to End Support to Subscribers as Well as Corporates willing to launch nps for their employees and also with migration of the superannuation funds to nps to nps.
• If you are a retail subscriber willing to transfer

Negative factors of shifting to nps

While NPS offers Several Benefits, IT’s Important to Consider a Few Limitations:

• Market Risk: Returns in NPS are market-linked and are not guaranteed.
• Mandatory annuity purchase: Even after maturity, 40% of the corpus must be used to buy an annuity, which might offer lower returns.
• Lock-in period: Premature Exit requires the account to be active for at least 10 years.
• Limited Fund Choices: Compared to other investment options, NPS offers limited fund manners and asset allocation flexibility.
• Contribution Limits: The 10% Contribution Limit (for Employees) May Be Lower Than What Somenurannuation Schemes Offer.

Conclusion

Transferring Your Superannuation Fund to NPS Can Be a Smart Move IF You Looking For Better Tax Benefits, Higher Returns, And Flexibility in Managing Your Retirement CORPUS. However, Since NPS COMES With Market Risks and Mandatory Annuity Conditions, It is Crucial to Assess your Financial Goals and Risk Appetite Before Making the decision. If you are ready to embrace a market-linked retirement plan with potential for green, shifting to nps out be an excellent choice.

FAQS on Transferring Superannuation Fund to NPS

1. What is a superannuation fund?
   A superrannuation fund is an employer-sponsored penme where a portion of your salary is set aside for retirement, usually managed by a Trust or Insuration Company LICE LIC
2. What is the National Pension System (NPS)?
   NPS is a Voluntary, Government-Backed Retirement Savings Scheme that Allows Systematic Investments in Market-Linked Assets with Partial Tax-Free with the benefits at retirement.
3. Can I Transfer My Superannuation Fund to NPS?
   Yes, eligible individuals with an active nps tier I account can transfer their superrannuation fund to nps.
4. What are the benefits of transferring my superannuation fund to nps?
   You get Higher Tax-Free Withdrawal, Better Returns, Flexibility, Portability, and Zero GST on Annuity Purchase under NPS.
5. Is there any tax benefit in NPS compared to superrannuation?
   Yes, in NPS, up to 60% of the corpus can be withdrawn tax-free versus only 1/3rd in suurannuation.
6. Do I Need An Active NPS Account Before Transferring My Superannlation Fund?
   Yes, you must have an active tier I NPS account and a valid pran number before initiating the transfer.
7. What documents are needed for the transfer?
   You needed a check/draft favorite NPS Trust and an official transfer letter from the superrannuation fund or lic.
8. Can I Transfer LIC-Managed Superannuation Funds to NPS?
   Yes, You can. You need to apply to lic, get the check and transfer letter, and submit them to your pop or employer.
9. What are the risks of transferring superrannuation to nps?
   Being Market-Linked, NPS Carries Investment Risks, and Returns are not guaranteed.
10. Is GST Applicable when Transferring from Superannuation to NPS?
    No, there is no gst levied on annuity purchase under nps.
11. How is the Transferred Superannuation Amount Treated in NPS?
    It is credited as a Non-Contributory Deposit And separately identifiable in your NPS account.
12. What If My Employer does not offer nps facility?
    You can still maintain and operate an individual nps account independent through a registered point of presence (POP).
13. Can I Partialy Withdraw from NPS after Transferring My Superannuation Fund?
    Yes, Partial withdrawals are allowed after MainTaining The Account for at Least 5 years for specific purposes like illness, education, or home purchase.
14. Who Should Issue The Transfer Check for Private Sector Employees?
    For Private Employees, The Check Should Be Drawn in Favor of “Pop Collection Account-NPS Trust” Along with the Subscriber’s name and pran number.
15. How long does it take for the superrannuation transfer to reflect in my nps account?
    Typically, it may take a less weeks depending on how Quickly the employer, LIC, or Pop Processes the paperwork and uploads the funds.
16. Can I Continue to Contribute to NPS after Transferring My Superannlation Fund?
    Yes, you can continue regular contributions to your NPS Tier I Account Even After Transferring Your Superannuation Amount.
17. What Happens If I Switch Jobs After Transferring My Superannlation to NPS?
    Your NPS account is portable and remains with you irrespective of job changes, Unlike Traditional Superannuation Schemes.
18. Is the transferred superannuation fund Eligible for tax deductions under 80ccd (1) or 80ccd (2)?
    No, The Transferred Amount Itself is not Eligible for Fresh Tax Deductions Under 80CCD Sections. Only your new contributions qualified.
19. Can i opt for different fund managers after transferring my superrannuation to nps?
    Yes, NPS Allows You to Choose and Even Change Fund Manners and Asset Allocation Options Within Certain Guidelines.
20. Is it compulsory to buy an annuity with part of my nps corpus after retirement?
    Yes, at least 40% of your final nps corpus must be utilized to purchase an annuity to ensure a regular pension post-Retirement.
21. IS NPS Better Than EPS (Employees’ Pension Scheme)?
    NPS generally offers better returns as it is market-linked and provides higher flexibility compared to EPS, which offers Fixed Pension Amounts Based on a Formulas Buth Limited Potented Potented
22. Can i have both nps and superrannuation?
    Yes, you can have both schemes simultaneously. You can contribute to your employer’s superrannuation fund while Maintening an individual or Employer-Linked NPS Account.
23. How can I withdraw My Lic Superannuation?
    To withdraw your lic superrannuation, you need to apply to the lic branch handling your fund, complete necessary forms, provide Identity documents, and Choose Between options like LIKE LIM SUM SUM SUM SUSM SUSM SUSTDRAWAN annuity plan as per the scheme’s rules.

Have you recently transferred your superrannuation fund to nps or planning to do so? Share your experience or queries in the comments below!

Suresh kp is a seasoned financial expert with over 20 years of experience. He is nism Certified Investment Adviser and Research Analyst. For more about his Expertise and Certifications, Visit About Suresh Kp

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