NPS - Not Cheap

NPS is not that much cheap as it's look in first glance. For investors of higher amounts indeed it's providing the benefit of size but for small investors it's not cheap at all. For a small investors investing just 6K Rs. the minimum yly. subscription, sample this.

Fund management charges are low enough, but the fixed charges are high. In a bad year, when you barely manage to invest 6000 in the requisite 4 yearly installments, you incur the following charges:
A. Account opening charge of Rs. 50 (only required for the first year)
B. Annual maintenance charge of Rs. 350
C. 4 transactions, Rs. 10 fees to CRA for each. Total Rs. 40.
D. Registration with PoP (Point of Presence, kind of the investor’s broker): Rs. 40. This will be required not just the first time, but everytime the PoP is changed for some reason (e.g. migration from one location to another)
D. 4 transactions, Rs. 20 fees to PoP for each. Total Rs. 80.
Other charges are negligible; but these charges total to Rs. 560. This is 9.33 percentage of the investment for the year (Rs. 6000). Consider it kind of an entry load for NPS.

In the light of the above facts, NPS is useful for investors who r going to commit higher amounts, as barring Fund management charge, all other charges r not linked to the investment or fund, instead they r fixed in nature & may prove counter productive for lower investment amounts.

Thanks

Ashal