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Support Your Old-Age With NPS

NPS
Nov 08, 2021 Alankit

National Pension Scheme (NPS) is an investment plan for retirement and also a social security initiative by the Central Government of India to facilitate a regular income post-retirement to all the subscribers and is based on a unique Permanent Retirement Account Number (PRAN) which is allotted to every subscriber.

This scheme also encourages people to invest in a pension account at regular intervals during their employment. The amount invested will turn into a monthly income post-retirement. Earlier the scheme covered only Central Government employees, but now it has been made a voluntary option to all Indian citizens aged between 18 to 77 years.

You can any timeapply for National Pension Scheme (NPS) and avail its benefits:

  • Returns:
    A part of NPS goes to the equities. However, it provides returns that are higher than the traditional tax-saving investments schemes. Its been a decade. Since this scheme came into effect and has delivered 8% to 10% annualised returns. NPS gives you the benefit of changing your fund manager if you are not happy with the performance of the fund.
  • Risk Assessment:
    For now, there is a fixed cap of 50% on equity exposure of the National Pension Scheme. According to this, the ratio of risk and return is set to neutral in the investors interest, which means the corpus is safe from the equity market volatility.
  • Withdrawal Schemes:
    One cannot withdraw the entire amount under theNPS scheme after their retirement. They are required to keep a minimum of 40% of the corpus with the PFRDA, to be used as a regular pension from their registered insurance firm. The remaining 60% can be withdrawn after retirement, and according to the latest update from the Government, the entire NPS withdrawal is now tax-free.
  • Early Withdrawal:
    One cannot withdraw the entire amount under the NPS scheme after their retirement. They are required to keep a minimum of 40% of the corpus with the PFRDA, to be used as a regular pension from their registered insurance firm. The remaining 60% can be withdrawn after retirement, and according to the latest update from the Government, the entire NPS withdrawal is now tax-free.
  • Investors Contribution:
    There is no upper limit to ones contribution in the NPS, but renders a minimum investment amount, which can be low as of Rs.500 (in Tier-I account) and Rs.250 (in Tier-II account). If one fails to maintain the minimum specified amount then the account will freeze and to continue the use of the account, one must clear the penalty at any of the nearest Point of Presence.

There are two types of NPS account:

  • Tier-I
  • Tier-II
PARTICULARS TIER I TIER II
Status Default Voluntary
Withdrawals Not Permitted Permitted
Tax Exemption Up to Rs.2 lakh p.a. 1.5 lakh for Government employees Other Employees- None
Minimum NPS Contribution Rs.500 Rs.250
Maximum NPS Contribution No Limit No Limit

The Tier-I account is mandatory for the ones who opt for theNPS scheme . Only the Central Government employees have to contribute 10% of their basic salary, but for others the NPS is a voluntary investment plan.

Let us look at the procedure of how to open an NPS account with Alankit:

  • Click on the “registration” tab and choose “individual”.
  • Enter your AADHAR number or PAN card number.
  • An OTP will be sent to your registered mobile number for verification.
  • Choose Tier-I account. If wanting to invest for other goals, you can also choose Tier-II.
  • If you chose Aadhaar, simple OTP authentication is required. If using PAN, your bank will verify your details and charge Rs.125.
  • Fill in your personal details in the form. Submit to generate the acknowledgement number.
  • Choose any of eight pension funds. If you are opting for active management, you need to specify how to spread corpus across fund classes.
  • Give details of the nominee.
  • Upload your picture and signature.
  • Contribute and get PRAN.
  • Download the complete form.

Our team of experts at Alankit are responsible for handling and managing all of your end to end requests or queries related to your NPS account, while enabling you to access all the benefits of NPS and provide you easiness in early withdrawals (if necessary).

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