What is the National Pension Scheme?
The National Pension Scheme which was launched by the Central Government in January 2004. The main objective of which is to provide every Indian with a pension after their retirement so that they do not have to face any Financial Problems at Old Age. In simple terms, it is a long-term investment plan for retirement like Atal Pension Yojana. You have to contribute 10% of your Basic Salary + DA to this account, and the same contribute is done by your Employer. By retirement, it (8% to 10%) Interest is deposited depending on market risk. You can then withdraw 60% of the Total Amount at the same time, but at least you have to buy an Annuity Plan of 40% that will continue to pay you a fixed pension for a Lifetime.
Benefits of National Pension Scheme:
If you invest in NPS Scheme, it can be a profitable deal for you–
NPS Return/Interest Rate:
Part of NPS is Invest in Equity, which can't give you Guaranteed Return, but it's a little better than any other Retirement Plan. In history to date, it has provided an average return of 8% to 10%.
Since it has a share of equity, NPS currently has a 50% cap on equity exposure. This protects investors' interest, and a proposal to increase it to 75% by PFRDA in the future is under consideration.
NPS Tax Benefit:
When it comes to Tax Benefit, you get deductions of up to Rs. 1,50,000 on your employer's contribution under 80C. In addition, you can also avail of a deduction of up to Rs. 50,000 for 80CCD (1B) Additional Self Contribution. So together, you can get NPS Tax Deduction up to a maximum of Rs 2 lakh.
Money Withdrawal Rules:
You have to invest up to 60 years. After which you can withdraw 60% of the total amount simultaneously but will have to buy an Annuity Plan of 40%. Apart from this, if you continue in NPS for 3 years, you can withdraw up to 25% for some work, like children's marriage, higher studies, building / buying a house / medical treatment of family, etc. And with a gap of 5 years throughout your tenure, you can withdraw money 3 times.
Manage NPS Account:
Because it also contains equity, the government allows you to manage your NPS Account in Auto Choice or Active Choice. You also have the right to choose your fund manager.
Who can invest in NPS Plan?
NPS Scheme was first brought only for government employees, but after 2009 it was opened to all Indians. Even NRI's can avail of it by opening the NPS account.
It mainly includes 4 Sector -
- For Central Govt Employees
- For State Govt Employees
- For Private Sector Employees
- For Personal NPS Account
Who can open NPS account:
- A person should be an Indian citizen.
- between 18 and 65 years of age.
- NRI can also open the account, but its contribution will be subject to RBI and FEMA's requirements from time to time.
What can't happen–
- No one can open more than one account in NPS.
- No HUF or joint NPS account is opened.
How to open an NPS account?
You can open your NPS Account in two ways which are:
You must have these following documents before you open the Online NPS Account:
- Aadhaar Card with linked phone number
- Pan Card
- Bank account details
Then follow this process to open the NPS Account:
- First, click on this New Registration.
- You need to select the application states and account type, fill in your PAN, and select the bank.
- Then click Continue.
- After which OTP will appear on your (Adhaar Linked) Mobile Number, enter it and click on Continue.
- After which you will get some information auto-update, you need to submit other personal information.
- Upload your e-signature at the same time.
- To make account active, you need to pay a minimum of Rs 500.
- After this, you will get your PRAN, i.e., Permanent Retirement Account Number, and NPS Account will become Active.
If you want to open your NPS Account offline, you'll need to go to your nearest POP(Point of Presence) or Bank. You need to fill the NPS Form and provide the necessary documents such as address proof, ID proof, berth certificate, etc. Nowadays, almost all banks offer an NPS Account facility.
Other NPS related information:
You can check the status https://www.npscra.nsdl.co.in/ and login after you log in to check NPS status.
Click on this link to check NPS Balance – you can check the balance after login to the section with https://cra-nsdl.com/CRA/ and subscribers.
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