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National Pension System (NPS)

Planning for retirement is akin to nurturing a sapling. It takes considerable time for the seedling to morph into a tree and for you to reap its many benefits. The National Pension System (NPS) is a retirement-specific investment plan that gives your regular pension in your retirement years. What's more, you can also reduce your tax liabilities with NPS investments

Nidhimehra
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National Pension System (NPS)

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  1. National Pension System

  2. What is NPS The National Pension System is a pension scheme regulated by the Pension Fund Regulatory and Development Authority of India (PFRDA). It was initiated by the central government in 2004 for people to invest and reap returns for retirement.

  3. How NPS Works? NPS is a market-linked pension account in which you can make regular contributions till you retire. These investments are managed by professional fund managers. At age 60, you can withdraw 60 per cent of the corpus and remaining 40 per cent to buy an annuity which generate regular income after retirement

  4. Account Types in NPS The NPS offers two different account types: Tier I NPS Account Tier II NPS Account

  5. Difference between Tier 1 and Tier 2 Account

  6. Benefits and Features of NPS account 1: Returns: For Tier I accounts, the minimum amount per contribution is ₹500. Moreover, you have to make a contribution of at least ₹1,000 in a financial year. There is no limit on the number of contributions in a financial year if you are a Tier I account subscriber. For Tier II accounts, the minimum amount per contribution is ₹250. There is no minimum balance requirement. 2: Flexibility: You can change your fund manager if you are unhappy with the fund's performance. You will have to fill up a form for a fund manager change request.

  7. 3: Risk - returns stabilisation: The risk factor posed by equity market volatilities is softened in the long run. 4: In NPS, you have the option of being an active investor and monitoring your investment and deciding how and where it should go.On the other hand, the automatic option allows the scheme to divide your funds appropriately through the 'auto' mode, based on your age and other defining factors.

  8. Tax Benefits of Investing in NPS Under Section 80CCD of the Income Tax Act, you can claim deductions against your contributions to the National Pension System or Atal Pension Yojana. Tax deductions under Section 80 CCD (1) are available to all individuals irrespective of whether he/she is employed at a government or private organisation or is self-employed.

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