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ABOUT NPS
National Pension System (NPS) is an investment cum pension scheme initiated by Government of India to provide old age security and pension of all citizen of India. The NPS was rolled out for all citizens of India on May 01, 2009. The Scheme is regulated by Pension Fund Regulatory and Development Authority (PFRDA).
KEY FEATURES OF NPS
| Question | Answer |
|---|---|
| Who can apply? | All Citizens of India & NRI, between 18-65 years |
| How many account we can have? | Tier I - Pension account (Mandatory A/C - Tax benefit available) Tier II - Investment account (Optional A/C - No tax benefit but corpus is withdrawable anytime) |
| How much Tax Benefit? | Tax benefit under sec 80C up to Rs.1.5 Lacs and extended benefit of Rs.50,000 for tax deduction u/s 80CCD |
| How much can I start with? | Tier I - Rs.500 Tier II - Rs.1,000 |
| How much Minimum total contribution can be made in a year? | Tier I - Rs.1,000 (Min. amount per contribution Rs.500) Tier II - N.A. (Min. amount per contribution Rs.250) |
| What are investment options? | Auto Choice: Investment across different asset class equity, debt, alternative investment etc is made as per predefined pattern as life-cycle fund. Active Choice: Investment across different asset class equity, debt, alternative investment etc is made according to investor's choice. |
START EARLY INVESTMENT IN NPS
Starting retirement planning in the early stages will create a larger pension corpus and help you reach your retirement goals easily. Remember, an early start requires lesser investment to create a corpus.
WHY TO INVEST EARLY IN NPS?
The following example shows how an early start requires a lesser investment amount to create a corpus of Rs. 1 Crore.
Age
25
Monthly Contribution
5,000
Pension corpus at retirement will be
1,59,75,343
5,000
Pension corpus at retirement will be
1,59,75,343
Age
30
Monthly Contribution
8,000
Pension corpus at retirement will be
1,57,31,642
8,000
Pension corpus at retirement will be
1,57,31,642
Age
35
Monthly Contribution
10,000
Pension corpus at retirement will be
1,18,90,811
10,000
Pension corpus at retirement will be
1,18,90,811
Age
40
Monthly Contribution
5,000
Pension corpus at retirement will be
1,05,03,612
5,000
Pension corpus at retirement will be
1,05,03,612
Note:
- The calculations and the figures as displayed are indicative only excludes applicable charges.
- Assuming 10% rate of return on NPS investment.
Why NPS?
Affordability -You can start investing as low as Rs. 500 per transaction and Rs. 1000 per year.
Investment Flexibility-You can switch between various asset classes like equity, corporate debt, government bonds and alternate funds (once a year) and there is no upside cap on investments in NPS.
Tax benefit-NPS comes with the dual advantage of additional tax benefit up to Rs. 50,000 u/s 80CCD(1B) over and above the limit u/s 80C of Rs. 1,50,000 and assuring a regular income in the future.
Portability & Transparency-You would be identified with a unique Permanent Retirement Account Number (PRAN), which can be operated from anytime, anywhere and you can check value of investment anytime.
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