What Is NPS Pension Scheme That You Need To Know


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NPS or National Pension Scheme is an Indian long-term voluntary financial scheme planned for retirement that comes under the purview of the Pension Fund Regulatory and Development Authority and Central Government. This article covers the basics of the NPS pension scheme that will clear your query a bit. So, let us begin with-

What Do You Understand By NPS Pension Scheme?

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If you are planning on having a solid retirement plan, then this is it. Besides offering less risk on investment, it offers your a regular monetary source on a monthly basis after you retire from your job. This is great for those who are under private sector employment.

This significantly proves that one gains massive benefits paved from a systematic investment for the upcoming future that can make a profound change in your life. This scheme is great for the salaried people who plan to get the best of the  80C deduction.

What About The Interest Rate?

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Well, the portion of the investment goes straight to the equities, which is not considered as a guaranteed return though. But the offers that get tagged along with the same are high when compared to the other traditional tax-saving investments. For instance PPF.

Precisely, it’s been 10 years now, since the implementation of the policy, and till now the annualized return that the policy yielded is 8% to 10%. In addition, with NPS, a customer also enjoys the freedom of changing the fund manager if you feel unsatisfied with the performance of your fund.

Briefs Down The Risk Assessment In Relation To NPS

Well, there is recently a recorded gap of 75% to 50% dealing with the equity margin in regards to the NPS scheme. In case of the government, the cap accounts to be 50%. In this prescribed range, the equity portion lowers to 2.5% every single year beginning from the year where the investor turns 50 years.

With 60 as well, the cap will stay fixed as 50%. This scheme works advantageous for the interest of the investors, denoting that the corpus is in a safe place from equity market volatility. In addition, the possibility of NPS earning is much higher.

What Is The Withdrawal Rule After 60 Years

As soon as you retire, you are eligible in taking down the entire fund from the NPS scheme. But there is a mandate that states to maintain around 40% of the fund that will offer you a regular monthly benefit from PFDRA registered organization.

The 60% corpus is tax-free. However, the latest from the government policy tells that, the entire fund is tax-free which is undoubtedly great.

Conclusion

This is in brief about the NPS pension scheme. This has secured a large base in the market for its robust policy. If you are still confused make sure that you talk to a professional, this will help you narrow down more on this topic. NPS pension scheme is all on benefits, hence this will ensure you a great retired life for sure.

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