NPS – Everyone is worried about retirement life after job. Some people plan for their retirement life right now and invest in a good fund. If you also want to secure your life after retirement, then National Pension Scheme i.e. NPS can be a better option for you. This is a long-term retirement investment scheme, which not only provides financial security after retirement, but also gives an opportunity for tax saving and market-linked growth.

NPS was launched in 2004

NPS is a scheme launched by the Government of India in the year 2004. Its purpose is to provide a stable and reliable income to people after retirement. This scheme is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). Initially it was only for government employees, but in 2009 it was opened to all Indian citizens.

What are the benefits?

This accumulates retirement funds. Tax relief of up to Rs 2 lakh per annum is available. There is scope for getting higher returns than EPF and PPF. It is safe from the Pension Regulatory Authority. Charges are less as compared to other investment options, due to which you get higher returns in the long run. When you turn 60, 60% of the money under this can be withdrawn tax-free. At the same time, 40% of the money is used for pension, due to which you get a fixed income every month.

Any Indian citizen can open an NPS account. For this, his age should be between 18 years to 70 years. Salaried people, businessmen, freelancers, self-employed people can also join it. To open an NPS account, Aadhar card, PAN card, Voter ID for residential proof, bank account, passport size photo, active mobile number and e-mail ID will be required.

A person investing in this scheme deposits a fixed amount every month or year. This money is invested in the stock market, government bonds and other financial instruments by professional fund managers. When the investor reaches the age of 60, he gets a part of the deposited amount as lump sum. He gets pension every month from the remaining amount.

If an employee invests in NPS, he will not have to pay any tax on annual income up to Rs 13.7 lakh. According to the new tax slab, there is no tax on income up to Rs 12 lakh. At the same time, there is an additional rebate on 14% NPS contribution. In such a situation, if your salary is up to Rs 13.7 lakh annually. If you invest in NPS, then you will not have to pay tax.

According to the NPS calculator, if you start investing in NPS from the age of 21, then for the next 40 years you will have to invest Rs 1000 every month. For pension, you will have to buy annuity. You will have to invest 50% of the total corpus in the annuity plan. At the same time, keep the estimated return on investment at 12% per annum, the total corpus on retirement will be Rs 3,50,44,023 (Rs 3.51 crore). Your pension wealth will be Rs 1,75,22,012 i.e. (Rs 1.75 crore). In this case, the monthly pension will be Rs 1,16,800.

How to open NPS account?

To open an NPS account, one can apply both online and offline. For online registration, one has to go to the eNPS portal https://enps.nsdl.com or https://enps.kfintech.com and register. To open an offline account, one can open an account at a bank, post office or official NPS service center (POP-Points).

 

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