- Date : 20/04/2022
- Read: 4 mins
Every individual has a financial goal of creating a retirement fund. There is no pension provision in private employment. National Pension Scheme (NPS) is a retirement planning-cum-tax saving offered by the Indian government to provide social security to citizens. When you opt for NPS, you make regular contributions to steadily create your retirement corpus.
One of the most important financial goals for every individual is creating a retirement corpus. Private jobs do not have a provision for pension. So for your second inning, you need to figure out ways to get a regular monthly income. One way to have a financially secured post-retirement life is to opt for the National Pension Scheme.
National Pension Scheme (NPS) is a retirement planning-cum-tax saving scheme offered by the Government of Indian to provide financial security to citizens after retirement. The scheme is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). It helps you create your retirement corpus and gives you the option to choose various asset classes for investment.
How does NPS work?
If you opt for NPS, you will have to make regular contributions to create your retirement corpus. Your contribution is managed by pension fund managers and invested in different asset classes like Equity, Corporate Bond Schemes, Government Securities, and Alternative Investment Funds. NPS is a long-term investment and the sum invested grows over the years generating good returns for you.
The NPS account matures when you become 60 years of age. Upon retirement, you have the option to withdraw upto 60% of your contribution with no tax implication. But the remaining 40% has to be invested in an annuity plan. You can also choose to buy an annuity plan that invests 100% of your accumulated savings.
Also Read: How NPS Has Performed In The Past 5 Years
How to open an NPS account?
You need a Permanent Retirement Account Number (PRAN) to invest in the National Pension Scheme. To open an NPS account, you need to submit the application form with the documents listed below:
- Address proof - Passport, PAN Card, Bank Passbook, etc.
- Identity proof - PAN Card, Aadhar Card, Passport, electricity bill, etc.
- Proof of Date of Birth
- Photograph
Advantages of the NPS
- Flexibility - You can select the investment options and pension fund, and see your money grow.
- Convenience - The process of opening an NPS account and starting your investment is seamless. Also, your NPS investment is not affected when you change your job or location.
- Best of both worlds - You get to invest in both equity and debt funds and the fund management costs are low (0.03% to 0.09%).
- Tax Benefits - You can claim a deduction of up to Rs 150,000 under section 80C of the IT Act. Apart from this, an additional deduction of Rs 50,000 is allowed under section 80 CCD (1B) of the IT Act for contributing to the NPS investment.
- Regulated - It is regulated by PFRDA with transparent investment norms, regular monitoring, and performance review.
How to invest in NPS monthly
To start investing in NPS, you need to deposit the contribution amount along with a duly filled NCIS (NPS Contribution Instruction Slip) to any POP-SP or alternatively can visit eNPS website to make the contribution. You can start investing in NPS monthly using one of the below methods:
- Fill contribution slip and submit to any POP-SP
- Visit eNPS website and fill the details to get started
- Download NPS mobile app and contribute anytime and anywhere you want
To get the same day NAV, you need to deposit your money directly (D-remit) to the Trustee Bank instead of going through the intermediary account. Using D-Remit, you can get the same day NAV for your investment in NPS. You will need a virtual id (account) with Trustee Bank to use D-Remit.
Once created, add the Virtual Account as beneficiary. Depending on the features provided by your Bank, adding the Standing Instruction feature to your NPS account can also be utilized. If you give a Standing Instruction to the bank, from your account, the money will be directly debited and you will get same-day NAV in NPS.
Conclusion
NPS is one of the best ways to secure your post-retirement years. It gives you options to invest in various asset classes with steady returns, coupled with the advantage of low fund management charges. NPS is also a great tax saving device and a good way to ensure that you are well prepared for your retirement. Having the right financial security is paramount if you want to enjoy your twilight years tension-free.
Also Read: Could NPS Be The Missing Piece In Your Tax Planning Puzzle?
One of the most important financial goals for every individual is creating a retirement corpus. Private jobs do not have a provision for pension. So for your second inning, you need to figure out ways to get a regular monthly income. One way to have a financially secured post-retirement life is to opt for the National Pension Scheme.
National Pension Scheme (NPS) is a retirement planning-cum-tax saving scheme offered by the Government of Indian to provide financial security to citizens after retirement. The scheme is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). It helps you create your retirement corpus and gives you the option to choose various asset classes for investment.
How does NPS work?
If you opt for NPS, you will have to make regular contributions to create your retirement corpus. Your contribution is managed by pension fund managers and invested in different asset classes like Equity, Corporate Bond Schemes, Government Securities, and Alternative Investment Funds. NPS is a long-term investment and the sum invested grows over the years generating good returns for you.
The NPS account matures when you become 60 years of age. Upon retirement, you have the option to withdraw upto 60% of your contribution with no tax implication. But the remaining 40% has to be invested in an annuity plan. You can also choose to buy an annuity plan that invests 100% of your accumulated savings.
Also Read: How NPS Has Performed In The Past 5 Years
How to open an NPS account?
You need a Permanent Retirement Account Number (PRAN) to invest in the National Pension Scheme. To open an NPS account, you need to submit the application form with the documents listed below:
- Address proof - Passport, PAN Card, Bank Passbook, etc.
- Identity proof - PAN Card, Aadhar Card, Passport, electricity bill, etc.
- Proof of Date of Birth
- Photograph
Advantages of the NPS
- Flexibility - You can select the investment options and pension fund, and see your money grow.
- Convenience - The process of opening an NPS account and starting your investment is seamless. Also, your NPS investment is not affected when you change your job or location.
- Best of both worlds - You get to invest in both equity and debt funds and the fund management costs are low (0.03% to 0.09%).
- Tax Benefits - You can claim a deduction of up to Rs 150,000 under section 80C of the IT Act. Apart from this, an additional deduction of Rs 50,000 is allowed under section 80 CCD (1B) of the IT Act for contributing to the NPS investment.
- Regulated - It is regulated by PFRDA with transparent investment norms, regular monitoring, and performance review.
How to invest in NPS monthly
To start investing in NPS, you need to deposit the contribution amount along with a duly filled NCIS (NPS Contribution Instruction Slip) to any POP-SP or alternatively can visit eNPS website to make the contribution. You can start investing in NPS monthly using one of the below methods:
- Fill contribution slip and submit to any POP-SP
- Visit eNPS website and fill the details to get started
- Download NPS mobile app and contribute anytime and anywhere you want
To get the same day NAV, you need to deposit your money directly (D-remit) to the Trustee Bank instead of going through the intermediary account. Using D-Remit, you can get the same day NAV for your investment in NPS. You will need a virtual id (account) with Trustee Bank to use D-Remit.
Once created, add the Virtual Account as beneficiary. Depending on the features provided by your Bank, adding the Standing Instruction feature to your NPS account can also be utilized. If you give a Standing Instruction to the bank, from your account, the money will be directly debited and you will get same-day NAV in NPS.
Conclusion
NPS is one of the best ways to secure your post-retirement years. It gives you options to invest in various asset classes with steady returns, coupled with the advantage of low fund management charges. NPS is also a great tax saving device and a good way to ensure that you are well prepared for your retirement. Having the right financial security is paramount if you want to enjoy your twilight years tension-free.
Also Read: Could NPS Be The Missing Piece In Your Tax Planning Puzzle?
