NPS for NRIs: NPS Guide For Individuals Who Move Abroad

For Indians who move overseas for work, education or any other reason, a change in residential status can raise questions about their investments in India. One such concern is what happens to an existing National Pension System (NPS) account after any individual becomes a non-resident Indian (NRI).

The Pension Fund Regulatory and Development Authority (PFRDA) allows Indian citizens living abroad and Overseas Citizens of India (OCIs) to subscribe to NPS, which is subject to applicable rules. PFRDA’s NPS guidelines explicitly state that Indian citizens and OCIs are eligible to join this scheme if they meet the stated requirements.

What happens to your NPS account after moving abroad?

Becoming an NRI does not require one’s existing NPS Tier I accounts to be closed. PFRDA describes NPS as portable across employment and geographical locations, making it a very flexible and open choice for subscribers. In this case, subscribers can continue with their investments for retirement even if they are not physically present in India.

For NRI subscribers, certain banking and documentation requirements are applicable. PFRDA requires proof of an NRE or NRO bank account for NRI subscribers. The same requirement applies to OCIs. This means that an individual who had an NPS account in India before they moved abroad for XYZ reason does not have to withdraw the retirement corpus; they can continue building it after providing the basic requirements and checks to PFRDA.

NRIs and OCIs can subscribe to NPS and make contributions through permitted channels. Contributions are invested according to the subscriber’s selected fund for pension and investment allocation. These are subject to PFRDA's investment framework, as mentioned on the PFRDA portal.

Therefore, an NPS account can remain part of an individual’s long-term retirement portfolio even after they move abroad for work, education or any other reason, given that the subscriber meets the relevant regulatory and KYC requirements and checks.

For NRIs, the takeaway is simple. Moving abroad does not mean you have to close your NPS accounts. One can continue holding and contributing to NPS and make their retirement corpus sufficient, but it should be in accordance with the PFRDA rules. However, one’s banking arrangements and account options may change once they become a non-resident.