The National Pension Scheme (NPS) is a government sponsored retirement plan for government and private employees, as well as self-employed professionals. The scheme allows voluntary contributions to your NPS account directly from your employer. NPS is unlike the EPF and you don’t have to make mandatory contributions to the NPS account from your salary.
NPS is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). The contributions that you make to NPS are invested in mixed assets by a pension fund manager to gain maximum returns. Subscribers have the flexibility to switch between four types of funds and also change the pension fund manager. NPS also offers tax benefits under Section 80CCD (1) and Section 80CCD (1B) of the Income Tax Act.
At Finserv MARKETS, you are assured of 100% transparency with your NPS account from entry to exit day. A NPS account with Finserv MARKETS helps you fulfil your dream of living a comfortable retirement life with high returns, host of tax benefits and regular income.
NPS has various advantages over other pension plans. Some of them include:
The National Pension Scheme offers four types of investment options, including equities, government securities, corporate debt and alternate assets. You also have the choice to switch between 8 pension funds or fund managers if not satisfied with the funds’ performance.
Opening and operating an NPS account is fast, simple and transparent. You are allotted a unique Permanent Retirement Account Number (PRAN) after opening the account for easy online tracking of your retirement fund. You just need to login with your user id and password to monitor your NPS account, make withdrawals, or switch between funds and fund managers.
At Finserv MARKETS, you can open a NPS account in just a few minutes. You just need to upload a few KYC documents and provide your phone, email id and bank details.
Since the NPS is sponsored by the Government of India and regulated by the PFRDA, it has transparent investment norms and the pension funds are regularly monitored and reviewed by the NPS Trust.
Maintenance of NPS account is the lowest compared to similar pension products worldwide. Account maintenance costs over a span of 25-30 years can shave off a considerable amount of money from your retirement fund. NPS’ low account maintenance costs help you build a substantial retirement corpus in the long-term.
With Finserv MARKETS, you can continue your NPS account even after you change jobs. Contributions to your PRAN can be continued without opening a new NPS account even if you change your employer or location.
Under Section 80CCD (1B), salaried and self-employed taxpayers can get a deduction of up to Rs. 50,000 in a financial year, provided they have invested in a Tier 1 account. This deduction is over and above Rs. 1.5 lakh tax relief allowed under Section 80C.
To avail maximum tax benefit, subscribers can contribute Rs. 50,000 on their own towards NPS and also contribute 10% of their basic salary plus DA through their employer towards Corporate NPS.
Your accumulated retirement fund in your NPS account is available for withdrawal after you reach 60 years of age. However, you can withdraw only 60% of the corpus as the remaining 40% gets invested in a pension plan to provide you with regular income. Therefore, the NPS pension amount will depend on your total retirement fund and the percentage of the corpus you will invest for purchasing an annuity plan.
To calculate your NPS pension amount, you can use the pension calculator provided by the National Pension System Trust. Once you login to the site, enter your birth date, monthly contributions you would like to make and total years of contribution. If you are 30-years old today, your total years of contribution would be 30 years since 60 years is your retirement age.
After that, enter the expected return on your investment within a range of 5-15%. Note that NPS has been providing average returns of 9-12%. Now, select the percentage of the retirement fund you want to invest in an annuity plan. Though the mandatory portion is 40%, you can select more than that for bigger monthly pension. Lastly, select the expected annuity rate within 4-10% and you are done. You will clearly see the expected monthly pension based on your total corpus.
Any citizen of India aged between 18-65 years can open an NPS account. The person has to provide all the information and KYC documents required to open an account.
Investment in the National Pension System is independent of your investments in any provident fund or pension fund.
You can open an NPS account with any of the authorized Point of Presence (POP) in India. Finserv MARKETS is authorized by the PFRDA as a POP service provider to facilitate the opening of online NPS accounts.
Subscriber can check the status by accessing NSDL-CRA website using the 17 digit receipt number provided by the POP service provider. Once the PRAN is generated, email and SMS alerts are sent to the subscriber.
PFRDA registered Pension Fund Managers are responsible for investing your NPS contributions as per PFRDA investment guidelines. These guidelines ensure that investors are minimally impacted even if there is a market downturn. At present there are 8 Pension Fund Managers authorized by the regulator. However, this list may undergo changes according to the discretion of the PFRDA.
The PFRDA appoints IRDA (Insurance Regulatory and Development Authority of India), -licenced life insurance companies as annuity service providers (ASPs) for NPS subscribers. Presently, there are five ASPs and the list may increase in the future.