The National Pension System (NPS) is a distinctive pension plan backed by the Government of India.
All Indian residents, state/central government employees, private employees and self-employed between the ages of 18 to 60 can subscribe to NPS.
Read more about NPS in detail
National Pension Scheme(NPS)- All You Need To Know From Entry To Exit Rules
Table of Contents
Benefits of NPS
- NPS offer both equity and debt exposure in a single investment. Therefore it offers balanced returns.
- It is a long-term saving option with a safe and (regulated )market-based return for retirement planning.
- National Pension Scheme is governed by the Pension Fund Regulatory and Development Authority (PFRDA). Thus NPS is well regulated and safer comparitively.
- People get regular income along with a lump sum payment when they reach retirement age, enabling them to enjoy a stress-free retirement.
- A yearly minimum investment of Rs. 1,000 is required.
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What is the Benefits of NPS?
- Disciplined Investment – Your money is locked in and placed aside until you turn 60 in order to secure post-retirement funding.
- You have to contribute every year till retirement age. The minimum yearly investment of Rs.1000 is required.
- Cost-effective – the Pension scheme subscription charges are very low and it offers larger returns. The compounding of return allows you to generate sizable gains after retirement, despite the initial investment possibly being low.
- Better Alternative – In comparison to PPF, FD, Pension Plans, it offers better returns. Since a portion of the NPS is invested in stocks, it may have the potential to provide higher returns than other risky and fixed income products. That is why it does not provide guaranteed returns.
- Market Based Returns – It’s returns vary as per the asset allocation amongst Equity (E), Corporate Bonds (C), Government Securities (G) and Alternate Investment Funds (A) .Returns are directly linked to the market as per the market returns.
- Professionally Managed – The pension funds are invested and managed by the well qualified pension fund managers. Professional management assures better profits on retirement.
- Passive Income – Since one has to buy a mandatory annuity plan, which provides a lifetime income source.Thus, provide regular flow of money, when you most need financial support.
- NPS benefits on Retirement– NPS is long-term investment plan but still it provides withdrawal option to the subscriber.There is a minimum lock-in period of 10 years for All Citizens/Corporates. At the time of retirement one can withdraw up to 60% of accumulated corpus as tax-free amount and invest the 40% for regular cash flow and take advantage of a monthly pension.
- NPS Benefits in income Tax – You can take additional deduction for Rs.50000 under section 80CCD(1B) and save additional tax of Rs 15600. This amount is over and above tax deduction U/S 80 C for Rs.150000.
- Thus you can invest up to ₹2,00,000 in order to save ₹62,400 in taxes.
NPS Calculator
To calculate pension please visit link
http://www.npstrust.org.in/content/pe…
To watch NPS calculation video on Youtube
https://www.youtube.com/watch?v=ARe0Eqd6XMk&t=41s
NPS withdrawal rules
Please visit the link Latest NPS Withdrawal Rules 2022- Govt. & Corporates
Step by step process to withdraw money from NPS
Please watch the video : step by step process to withdraw money from NPS
