What is a NPS Account?
NPS
stands for National Pension System. It was formed in the year 1999 by the
Government of India to help people save money in a systematic way to use after
their retirement. It is a voluntary entity which is defined contribution
retirement savings scheme. It works in order to protect the volunteers that
subscribed to the scheme/system by giving them higher returns and higher
interest.
Types of National Pension Scheme funds
There
are 3 types of NPS funds out of which the volunteer subscriber can choose from;
they are as follows:
➢
Government securities
➢
Equities
➢
Corporate funds
Why is it good to invest into National Pension Scheme?
•
Unbelievable Tax Exemptions
Under
the national pension system, the subscriber is subject to a lot of tax benefits
and tax deduction through the sections in the Income Tax Act in India. Here are
the 3 sections under which tax benefits in NPS become possible:
Section 80 C C D - 1
A
tax exemption of INR 1.5 lakhs or less can be made.
Section 80 C C D - 2
A
tax exemption of 10 % of your basic salary (invested into the national pension
scheme) can be made.
Section 80 C C D – 1 B
A
tax exemption of up to INR 50,000 (voluntary contributions into the National
pension system scheme) can be made.
•
Make your NPS account
You
are provided with a PRAN after you invest your money or funds into the national
pension system scheme. The PRAN is your Permanent Retirement Account Number.
This is given through the Central Record Keeping Agency which is short formed
as the CRA. This digital age has made possible the ease of making the
transactions online which can be done in this case with just identification and
password.
•
Returns are high
A
higher return can be achieved by investing in the tier 2 accounts of the
national pension system scheme. The high returns are possible because the money
has been accrued over a long period of time till the age the individual
retires. If they start investing into the national pension system scheme
earlier, they will have higher returns as the money will be invested for a
longer time. The funds that are invested into tier 1 accounts also provide with
a return for the investors.
•
Invest really low into your NPS account
Accounts
in tier 1 can be opened at a really nominal amount which makes investing into
the national pension system scheme so amazing. You do not need to worry about
outing in huge sums of money just to get started with saving for your post -
retirement savings. The tier 1 NPS account can be opened with a super low
investment of INR 500 whereas the tier 2 accounts need to have INR 1000 to get
opened. There are 3 ways to deposit this money to get your tier 1 and tier 2
national pension system schemes started up, they are as follows:
o
Cash
o
Cheque
o
Demand Draft
Accessible by
This national pension
system scheme plan is available to invest into for both Indian residents as
well as non - resident Indians (NRIs). An individual between the ages of 18
years to 60 years is eligible to invest into the national pension system - NPS.
•
Can open multiple accounts
An investor who is
investing into the national pension system scheme plan can do so in multiple
options. When investing, the tier 1 is a mandatory to invest into as it is the
basic savings plan and there is also a tier 2 which is an optional investment
account which one can use their judgement to see if they want to invest into or
not. The more areas you invest into, the higher the possibility of the returns,
as if there were to be any risk in the investments, the risk are split across too.
•
Easy on your pockets
Investing into the
national pension system scheme plan is super light on you as well as your
pockets as it does not drain out much of it. It is an extremely cheap plan, to
begin with. The national pension system plan is one of the cheapest pension
plans in the country. To get a onetime enrollment, you only have to give INR
125. The fees for this is 0.35 % for every financial transaction which has a
minimum limit set to INR 20 and the upper limit as to what the maximum can be
is INR 25,000. To open yourself an account, you just need to pay INR 50. Fund
management rates are usually though to be high as managing that significant
amount of fund is one of the most difficult tasks, but the fund management
charge is 0.01 %.
•
Funds invested into
All the funds that are
invested in by proper functional organizations are systematic. All of the funds
that have been collected by the investors have been qualifies, experiences fund
managers. The funds which are put it have approved investment guidelines. All
the funds that re invested in by the investors are regulated PFRDA or the
pension funds regulatory and development authority. The funds are probably
invested into government securities, corporate shares, debentures, bills.
Invest into the NPS
account - national pension system scheme plan account and get all the benefits
when you retire through systematic saving systems. Get your funds to the NPS
account and get the highest returns on the lowest prices. The NPS account is a
great tool to systematically save your money into an account that will be
functional for use for the individual’s post retirement.
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