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NPS Scheme The Benefits and Details Involved

Apr 30, 2019 Alankit

Individuals planning for their retirement often have a lot of questions in their mind. Which is the best retirement plan to choose? This is one of the frequently asked questions. The National Pension System or NPS is a popular pension plan among the many retirement plans available in the market. It assures a steady income for retired individuals by letting them make regular savings during their employment years. Those looking forward to a retired life must know about the NPS scheme details.

A contribution based pension scheme launched by the Government of India, NPS is regulated by the Pension Fund Regulatory and Development Authority (PFRDA) and follows transparent investment norms. Alankit Limited, a leading player in e-Governance sector, offers speedy and efficient NPS services through a nationwide network of CRA-Facilitation Centres, backed by over two decades of extensive experience. The company is recognised as a prominent Point of Presence Service Provider (POP-SP) for NPS across India.

About the scheme

One of the major points to note in the NPS scheme is the eligibility criteria. The scheme is open to all Indian citizens and non-resident Indians (NRIs) who are aged between 18 and 65 years. Through NPS, the government aims to achieve the following objectives:

  • Empower all citizens by extending old age security coverage to them
  • Provide financial security to individuals through a steady income in their old age
  • Help individuals build their retirement corpus and secure reasonable market-based returns over long run

NPS Subscribers have the choice of opening their NPS account from among two options namely:

  • Tier-I regular pension account, wherein funds in account cannot be withdrawn till the person reaches age 65.
  • Tier-II savings account, wherein there is no restriction on the withdrawal of money, at any point of time.

Another vital point to note in scheme is that NPS offers two investment options for funds allocation namely:

  • Auto choice: A default option for life cycle funds where funds are managed automatically by the authority depending on the investor’s age.
  • Active choice: An option which lets an investor choose the percentage of contribution in available asset classes.

Alankit brings convenience to NPS subscribers with an easy account opening procedure. The subscribers simply need to fill & submit the Permanent Retirement Account Number (PRAN) application form, which can be obtained from Alankit website or the nearest CRA-facilitation centre, along with their KYC documents. After successful processing, the PRAN card will be sent to applicants within 20 days.

Why is NPS beneficial?

Many investors find NPS as a highly beneficial scheme owing to high returns & tax benefits it guarantees, that too with just minimum contribution on a regular basis. Hence, it has become a highly sought-after investment plan in India. The major advantages of subscribing to the NPS scheme are given below:

  • Flexibility: NPS gives subscribers the choice to pick their own investment options and pension fund managers. Moreover, they can make contributions anytime in a financial year and change the amount they wish to set aside & save every year.
  • Portable: As per NPS scheme details; subscribers can operate their account from anywhere, even if they change the city and/or employment.
  • Tax benefits: NPS promises tax exemption of Rs 1.5 lakh under Section 80C of Income Tax Act and additional tax benefit of upto Rs 50,000 under Section 80CCD (1B). This means, subscribers get a total tax deduction of up to Rs 2 lakh.
  • Higher returns: Subscribers have the freedom to make investments in various asset classes viz. equities, corporate bonds and government securities. There is no maximum limit on the investment amount which means subscribers would get high returns on maturity depending on the volume of contribution.

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