On May 1, 2009, New Pension Scheme (NPS) was introduced in the markets with much fanfare. Portrayed as a scheme with the lowest fund management charges, they created quite an excitement among individuals. But the fund management cost is not the only charge attached to the scheme. In-fact, there are few other charges as well, which comes out once you start investing in the scheme. The table below shows some of those charges.
| Services | Charges | Example |
| Annual maintenance charges | 350 | 350 |
| Each Deposit / Switches / Statements | 30 | 360 |
| Central Record- Keeping | 50 | 50 |
| Point of Presence | 40 | 40 |
| Total | 470 | 800 |
In addition to above, there will be a charge for Demat account, asset servicing and investment management fee. As can be seen above, even if an investor invests Rs 500 per month, then for the whole year, his expenses will be a minimum of Rs 800 for an investment of Rs 6,000. The expense ratio turns out to be around 13%, which is way too high when compared to investments in avenues like mutual funds (expense ratio on equity-oriented mutual funds is capped at 2.50% per annum).
Hence, investors would do well to take into account the charges levied on NPS, before making investments in the scheme.
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