At a point when individuals retire, they will either receive no salary or encounter a decrease in it. Without accurate planning, you might have to alter your lifestyle. In fact, it’s difficult to compromise on your comforts and expenditure. On the other hand, we all wish to have financial freedom when we retire; it gives us the confidence to lead our lives according to our will and not depend on family (children or relatives).
As a solution, opting a pension plan would help you to save a good corpus for your old age, thus providing financial security and one such scheme that we help you do so is the “NATIONAL PENSION SYSTEM.”
What is NPS?
The National Pension System is a Government initiative, intending to provide pension opportunity to every Indian (Resident or Non- Resident) and to inculcate the habit of saving, especially for retirement. It was rolled out on January 2004 for new Government recruits and has been made mandatory for all central government employees and some state government employees. This scheme is not compulsory for Government Employees who have joined before January 2004; however, they can always opt for it if they want to. As for the private sector employees, they have a choice to choose between Employees’ Provident Fund Organization and NPS.
Am I eligible for NPS?
Any person between the age of 18 – 65 years can open an NPS account, provided you choose the right type:
Types of NPS :
1. Tier 1
It is a mandatory account for all those who opt for NPS.
2. Tier 2
Not a compulsory account like Tier 1. You can withdraw funds at any time, and hence, it provides high liquidity. There are no contributions from the government or the employers and include no tax exemptions either. There are three critical points to make a note of:
How do I exit from NPS?
If you retire at 60:
If you retire before 60 years:
Do I get tax benefits?
Who are the Pension Fund Managers for NPS?
What investment options do I get?
1. Active- choice:- With this investment option, an investor gets to mix equity, corporate debt, and government securities as per his/ her choice. However, the allocation of equity can be a maximum of 50%.
2. Auto- choice:- Allocation is done as per the investor’s age.
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Hopes these details help you in your journey with NPS. After all,
“The best way to predict your future is to invest in it.”
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