NATIONAL
PENSION SYSTEM(NPS)
The National Pension System (NPS) was Launched on
1st January, 2004 with the objective of providing retirement income to all
the citizens. NPS aims to institute pension reforms inculcate the habit of
savings for retirement amongst the citizens.
With effect from 1st May 2009, NPS has been provided for
all citizens of the country including the unorganised sector workers on
voluntary basis.
NPS offers following
Important Features to help subscriber save for retirement :
The Subscriber will be allotted a unique Permanent Retirement
Account Number (PRAN). This unique account number will remain the same for the
rest of subscriber’s life. This unique PRAN can be used from any location in
INDIA.
WHO CAN JOIN NPS?
Individual : All citizens of India
between the Age of 18 to 60 years can Join NPS.
PRAN will Provide access to Personal
Account:
Tier -I Account : This is a
non-withdrawable account meant for savings for retirement.
Tier -I Account requires a minimum investment of Rs. 1000
annually and Rs. 500 per transaction. There should be atleast one transaction
per annum and minimum deposit of Rs. 1000 per annum is mandatory.
NPS Offers three Different Funds i.e. Equity Funds(E) that
invest in Nifty Stocks (Maximum up to 50 %), Debt Funds (C ) that invests in
corporate bonds and G-Sec (G) that invest in Government Securities. Once in a
year, you can rejig your Portfolio and can switch to another fund manager if
not satisfied with the performance.
In case you have not designed your portfolio, the asset
allocation is automatically done on the basis of your age under life cycle
fund. Up to the age of 35 years of the account holder the equity exposure
remains at the maximum level i.e. 50% and after that equity exposure is reduced
by 2% every year till the account holder reaches the age of 55 years.
Returns
NPS Returns are totally depending upon your asset allocation and
the Fund manager you choose. If you are a risk taker and choose the equity
exposure to the fullest then the returns are likely to be in double digits or
vice-versa.
Liquidity
Premature withdrawal from NPS i.e. 80% of the money withdrawn
before the age of 60 years should be necessarily used for buying annuity from
the life insurer for the monthly pension of the account holder.
Even if withdrawal is made after attaining the age of 60 years,
40% of the withdrawn amount should be used to buy annuity i.e. only 60% can be
deployed as per your wish.
Tax Benefit
An additional deduction for the investment up to Rs. 50,000 in
NPS (Tier I account) has been exclusively available for NPS under subsection
80CCD (1B). This is over and above the deduction of Rs. 1.5 lakh available
under sec 80C of Income Tax Act. 1961.
Advantage
This is lowest cost Pension Plan in the country . Individuals
can choose its investment profile based on its risk. NPS can invest maximum of
50% in selected stock.
On Death the entire amount is paid to the nominee.
You can go through the site https://npscra.nsdl.co.in/all-citizens-faq.php and read all the
FAQs regarding NPS.
Call Us if you interested- 9932150258