NPS for Housewives: A Complete Guide to Secure Retirement

National Pension System, is a retirement-focused scheme regulated by the PFRDA or Pension Fund Regulatory and Development Authority and recognised by the Government of India. Investments made into NPS can be allocated across multiple asset classes such as – Equities, Corporate Bonds, Government Securities (G-Secs) and Alternative Investment Funds (AIFs).

At the time of its launch in 2004, NPS was only open to government employees, but later, in May 2009, it became available for all Indian citizens. Due to this significant change in the eligibility criteria, people without any formal employment, including housewives, can save money for their old age through NPS.

NPS offer two types of accounts: NPS Tier 1 and Tier 2 accounts. A Tier 1 account is a mandatory pension savings account, and it has restrictions on withdrawals. The minimum yearly contribution you need to make in a Tier 1 account to keep it active is ₹1000. On the other hand, Tier 2 account is an optional investment account that offers more flexibility on deposits and withdrawals.

NPS scheme for housewife is more commonly known as the All Citizens Model of the National Pension System. Under this NPS model, any resident Indian can open an NPS account to gain financial security in their later years, whether they are formally employed or not.

The account holder needs to make contributions at regular intervals, and these contributions will be invested for long-term growth. The NPS account undergoes superannuation after the housewife attains the age of 60 years, however currently this can be deferred till the age of 75 years.

After superannuation, up to 60% of the corpus in the NPS scheme for housewife account can be withdrawn as a lump sum. The remaining amount must be mandatorily used to purchase an annuity plan from an life insurance company. This annuity plan provides a fixed monthly pension to the housewife during their old age. If the NPS corpus at superannuation is ₹5 lakh or lower, the housewife has the option to withdraw the entire amount without mandatory annuity purchase.

NPS for housewife allows the subscriber to choose how their money is invested across 4 different asset classes. Under Active Choice, the housewife can choose how much of their investments will be allocated towards each asset class. Otherwise, they can select the Auto Choice option. With this option, their money will be automatically invested and asset allocation adjusted based on the age of the housewife. This is designed to minimise investment risk and optimise overall returns.

The National Pension System is designed as a long-term investment plan that aims to provide financial security in old age. However, there are various other benefits that housewives subscribing to NPS can look forward to. Key benefits of NPS for housewives are mentioned below:

The government of India offers two types of pension schemes for housewives and others individuals who are employed in the unorganised sector. The main focus of both these schemes is to provide financial security in old age. These are:

• National Pension System (NPS): Atal Pension Yojana (APY): The NPS scheme is perfect for housewives who want to build their retirement corpus through market-linked investments. Housewives between the ages of 18 and 70 years can join the scheme. The account holder needs to start with a minimum investment of ₹500 at the time of opening the account. A minimum yearly contribution of ₹1,000 is required to keep the NPS Tier 1 account in good standing.
• Atal Pension Yojana (APY): APY is another government-recognised pension scheme for individuals who don’t have any formal employment, including housewives. The account holder of this scheme will receive a fixed monthly pension of ₹1,000 to ₹5,000 after their retirement. Anyone aged between 18 and 40 years can opt for the Atal Pension Yojana scheme. However, housewives who have filed income tax returns in the previous year are not currently eligible to open a APY account.

The below table compares key features of these two types of pension plans for housewives:

The eligibility criteria in the case of NPS for housewife is the same as any individual opting for the NPS All Citizens model. The housewife needs to satisfy the following criteria

• Age Requirement: A housewife aged between 18 years and 70 years is eligible for NPS
• Citizenship: Another important criteria for this scheme is that the account holder needs to be an Indian citizen. Housewives who are resident Indians, non-resident Indians (NPIs) or overseas citizens of India (OCI) are allowed to subscribe to NPS.
• KYC Compliance: For Know Your Customer (KYC) purposes, Identity proof such as Aadhar, Voter ID, etc. along with a valid PAN card are necessary. For online registration of NPS Aadhar card must be linked to the mobile number for Aadhaar OTP-based KYC.

Housewives can open a NPS account either via the online or the offline route. The below section provides a step-wise guide for opening a NPS account for housewives online:

The NPS applicant must provide specific KYC documents while submitting the NPS account opening form for housewife. Keep the following documents ready at the time of form submission:

• Identity Proof (any one): PAN card, Aadhar card, Voter ID card, Passport, etc.
• Address Proof (any one): Aadhar card, Electricity bill, Passport, Bank statement, etc.
• Other Requirements: Recent Passport-size color photograph

Note: The above list is illustrative, not exhaustive. Other documents may be required for a housewife subscribing to NPS.

NPS offers individuals without regular income such as housewives a transparent and effective way to secure their old age. This can help housewives achieve financial independence in old age through regular income without having to rely on friends or family.

Alternatively, earning spouses can opt for joint annuity plans such as the Axis Max Life Smart Wealth Annuity Guaranteed Pension Plan with the housewife as co-annuitant. These plans offer regular annuity payouts to the primary annuitant i.e. earning spouse during their lifetime. After death of the primary annuitant, the housewife named as co-annuitant is eligible to receive the pension offered under the plan.