National Pension Scheme (NPS), Features and Benefits

National Pension Scheme (NPS) is a voluntary and long term investment plan for retirement under the purview of Pension Fund Regulatory and Development Authority.

What is National Pension scheme (NPS) ?

It is a social security initiative by the central government.

Thisscheme is open for all with the exception of armed forces.

In this scheme, people will deposit money at regular period of time during employment.

Afterretirement ,they can withdraw certain amount ,but they will receive remaining as pension post retirement.

It is for government employees as well the people working in private sectors.

Who are eligible to invest in NPS?

Any citizen of India in the age group of 18-60 years can open an NPS account .

This scheme is best for those who wants to plan their retirement early on and has a low risk appetite.

What are the benefits of investing in NPS?

High returns.

A portion of NPS goes to equities ,which provides much higher returns estimated about 8-10% per annum.

You are allowed to change your fund if you are not satisfied with the fund performance.

Risk assessment.

There is a 50% cap on equity exposure for NPS.Therefore,the amount is safe from market volatility.

Tax benefits.

This scheme will also provide you some tax benefits.

You can easily save upto 2 lakhs while investing in NPS.

Withdrawal rules.

You can’t withdraw all the corpus after retirement.

Minimum40% should be remained in the account that will provide you monthly pension.

Options of early withdrawal and exit.
As a pension scheme ,it is mandatory to invest in it at an age of 60 years.

Afterinvestment of minimum 3 years,you can withdraw upto 25% for certain purposes.

Youcan make withdrawal 3 times with the gap of 5 years in the entire tenure .

How to open an NPS account?

The account can be open in both ways ,offline as well as online.

Offline mode

Collect the subscriber form from the nearby Point of Presence (PoP).Submit the form with KYC papers.Pay the one time subscription fee of 125 rupees.

Online mode 

Go to the official website Then link your account with PAN, Aadhar or mobile number.

You can also validate your account from here .

Written By Deepak Kumar ( Senior Analyst )

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