Pick Your Rainbow

• 1. From April 1, 2009, it's open to anyone who can deposit at least Rs 6,000/annum, and isn't a government employee.
  
• 2. Deposit the money in 23 banks, mutual and insurance firms—dubbed ‘points of presence’ or POPs.
  
• 3. Choose between six fund managers and three investment options, from low to high risk. Returns depend on fund performance and are not guaranteed.
  
• 4. You get a Permanent Retirement Account Number (PRAN) card, which will be portable across the country and jobs. Account details online or via call centre.
  
• 5. Deposited money routed to fund managers, which will invest funds and generate an NAV.
  
• 6. You can switch between fund options and fund managers. Can withdraw from the scheme if critically ill or buying first house.
  
• 7. After 30 years (or maximum age of 60), pick up lump-sum amount. But it's taxable—unless you invest in an annuity outside the scheme.

• ICICI Prudential Life
  
• IDFC
  
• Kotak Mahindra
  
• Reliance Capital
  
• SBI
  
• UTI

• Type ‘E’ High return, high risk: largely equity
  
• Type ‘G’ Low return, low risk: chiefly in govt bonds
  
• Type ‘C’ Moderate risk: largely credit-rated bonds and fixed income instruments
  
• Auto Choice Default option, pre-set allocation based on age

• Cheapest pension scheme compared to MF/insurance retirement products.
  
• Social security net for self-employed, even those not covered by EPF schemes.
  
• Flexible, as you can switch between fund managers and risk options.
  
• Has default investment option, allows withdrawals in special circumstances.
  
• Transparent, can track what your retirement kitty looks like.

• Doubts over whether investors are savvy enough to make choices.
  
• Minimum annual deposit amount eliminates a large chunk of population.
  
• Will compete with MF/insurance pension products that are aggressively sold.
  
• Unlike PPF, NPS funds are taxable at maturity—unless invested in an annuity.
  
• Implementation woes, pension regulator’s powers not clearly defined.

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