A gift for retirement – National Pension Scheme
The average life expectancy has increased to 70 years, so a quick question went through my mind what if I have been gifted such a long life, shouldn’t I plan for a healthy and happy retirement? Shouldn’t I be prepared for the future?
I am pretty sure that this question might have crossed through your mind too. The answer for the same is National Pension Scheme.
What is NPS?
National Pension Scheme is a defined contribution-based Pension Scheme launched by Government of India. NPS is regulated by Pension Fund Regulatory Authority of India (PFRDA). It is a voluntary scheme for old age security.
Why should I invest in NPS?
1. Tax benefits:
Additional investment up to Rs. 50,000, is deductible from taxable income under section 80CCE over and above 1.5 lakh deduction which we get under NPS below.
You can expect a return of 9% from NPS. Returns are totally dependent on the investment choice you do.
3. Source of regular income:
NPS will help you take care of your monthly expenses when you need it most.
The amount of investment and frequency of contribution can be changed as per the subscriber requirement.
NPS account remains the same irrespective of change of employment or region.
Who can invest in NPS?
A citizen of India, whether resident or non-resident can join NPS between the age group of 18 to 60 years. A pre-existing pension account holders can also apply under this scheme for fresh registration.
Types of Account under National Pension Scheme:
1. Tier I Account:
A Tier I account is mandatory to open in order to join NPS. The account has limitations on withdrawal. The subscriber needs to make a minimum contribution of INR 1,000/year. Taxation benefits can be availed on money deposited in this account.
2. Tier II Account:
This account is optional and can be opened at any point of time – at the time of opening Tier I account or later. Tier I account is compulsory for opening Tier II account.
How to open an NPS Account?
In today’s digital world where everything is available online, we are a new-age app that makes it easy to invest in mutual funds. You can directly invest through our app and it’s just a few clicks away.
Withdrawing money from NPS:
After 60 years of age, up to 60% can be redeemed lumpsum out of which 40% is tax free; the balance will be converted for pension payout.
If you want to exit before 60 years of age, then only 20% of the corpus can be withdrawn and balance to be invested for pension payout.
In case of death the subscriber, a nominee is allowed to withdraw 100% of NPS.
If you want to enjoy the 2nd innings of your series you should definitely invest in NPS.