In a country like India, people do worry about their Retirement, so there is NPS (National Pension Scheme) as the name suggests pension it’s a retirement scheme, so it is a long term bet. Let’s find out what, why, who, where, how about NPS.
Q – Is this scheme for everyone?
A – Yes, if your age is between 18-65 yrs. A resident of India and even NRI can also invest in NPS.
Q – How & where can I open my account?
A - 1st – OFFLINE
For government employees mostly there account open at the time of joining but if it’s not then you can contact at the nodal center in your department only, they will generate your PRAN (permanent retirement account number), it’s a unique and portable same like your PAN, and then you can invest.
For Non-Government employees, they need to go to POP (points of presence) center. Generally, they are authorized banks of your area, you have to submit your KYC documents, fill up the registration form, they will generate your PRAN, and then you can invest.
To know your nearest POP center go to the NSP website www.npscra.nsdl.co.in
2nd – ONLINE
Go to website www.enps.nsdl.com and register yourself,
You required your AADHAR number linked with your mobile number,
Net banking, image copy of your signature, fill up the registration form and they will generate your PRAN, and then you can invest.
Q – What is the minimum amount I can invest?
A – Minimum amount to do invest and let the account remain active is 500 Rs/year.
Q- Where my money is going to invest?
A- In NPS your money going to invest in Equity, Government schemes, and in Corporate Bonds.
You will get two choices first is Active choice where you can choose what percentage do you want your money to go for investment in the sectors as mentioned above, for equity the maximum you can invest is 75%.
The 2nd choice is Auto choice where the percentage of sector investment decides on an individual’s age.
We can also change our choice as mentioned earlier yearly once or twice from active to auto and vice versa.
Q- What are the plans for investments?
A - Tier 1 plan – it is a Pension plan – here you can invest your money till the age of retirement on monthly basis and then you can withdraw your money in the form of monthly pension or even lump sum. But you cannot withdraw the full amount in a lump sum.
Tier 2 plan – it is an Investment plan – here there is no minimum investment amount, no restriction on withdrawal, No tax benefit, and you need an active Tier 1 Plan for continuing in Tier 2 plan.
Q - Who will look after the growth of my Money?
A – Pension fund managers will take care of your money’s growth.
Funds Managers like LIC, SBI, KOTAK, RELIANCE, HDFC, ICICI, ADITYA BIRLA, etc…
However, above all, there is a PFRDA (Pension Fund Regulatory & Development Authority) which is a big boss among all. Same like ICC in cricket and SEBI in Stock Market.
Q – What are the benefits of NPS?
1) High returns as it has equity exposure.
2) Have a tax rebate in section 80C up to Rs 1, 50,000, plus another Rs 50,000 above 80C limit.
3) No tax on maturity amount at the time of withdrawal (Tier 1 plan only).
In the next blog, we will see the withdrawal plans of NPS.