The launch of New Pension Scheme (NPS) paved the way to invest in the scheme for common people, which was open to only government employees earlier, thus, making the pension management easier. The money invested in this scheme will be returned partly as a lump sum and the rest as an annual payment or pension, upon maturity. The most striking feature of the scheme is that it carries the lowest administrative charges and fund management charges (FMC) in the market, with FMC capped at 0.0009% and custodian charges in the range of 0.0075% to 0.05%.

Initial charges
Let's take a quick look at Table 1 which compares NPS with other pension schemes available in the market such as MF Pension Scheme, Insurance Pension Fund Scheme, EPF and PPF, on the basis of different charges.

NPS charges a flat Rs 470 per year plus 0.0084 per cent which will go down further with an increase in the volume. In Mutual Fund product, we have considered UTI Retirement Benefit Pension; it provides a tax benefit of Rs 1,00,000 under Section 80C. The entry load for the scheme has been put at 0 per cent as per the SEBI ruling, effective from Aug 01, 2009. For Insurance PF scheme, we have considered ICICI Pru LifeStage Pension scheme, which comes with a total charge of 1.81 per cent. While in EPF and PPF, there are no entry loads and transaction charges.

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