Best National Pension Scheme to Invest
The best NPS scheme is that they are voluntary long-term investments that can be subscribed by investors for retirement planning. Regular contributions can be deposited in the pension account by the subscriber. On retirement, you can withdraw a part of the corpus in lump sum. Also, the remaining corpus can generate allowance to secure a regular income, post-retirement.
Best NPS Plans
Benefits of Investing in National Pension Scheme
Voluntary Scheme
It is an investment option available for citizens employed in the public as well.
Low-Cost Scheme
Costs associated with the best NPS funds are very low.
Simplicity
To subscribe to the best NPS funds, an applicant has to open an account at any of the PFRDA appointed Points of Presence (POP) and get a Permanent Retirement Account Number (PRAN).
Portability
Individuals can operate an NPS fund account from anywhere in the country and the contribution can be deposited in any of the POPs.
Investment Process in NPS with Prakash72
Step 1:
Create an account in Nivesh by providing your basic details. (If you already have an account then just login into your account)
Step 2:
On your portfolio page click on the Buy New tab at the right top corner of the screen.
Step 3:
Select NPS and choose the scheme you want to purchase.
Step 4:
Your request will be generated and a relationship manager will get in touch with you for getting the investment done
Aspects of National Pension Scheme
Types of Accounts
- Citizen Model: The individual is the single holder of the NPS scheme. Decisions about the investment choice, annuity service provider, scheme provider are taken by the individual alone.
- Corporate Model: The individual and the employer can both contribute to the individual’s NPS scheme. The company will have to register for corporate NPS so that the employees can avail the benefit of the corporate model.
There are two sub-accounts available while opening an NPS funds in India:
- Tier I Account: A pension and retirement account, withdrawals are subject to certain restrictions.
- Minimum deposit of INR 500 is required to open the account.
- Minimum contribution of INR 1,000 needs to be done per year.
- Minimum of 1 contribution needs to be deposited per year.
- Tier II Account: Being a voluntary savings facility, the subscriber is free to withdraw the NPS funds savings whenever funds are required.
- Minimum deposit of INR 1,000 is required to open the account.
- Minimum total transactions for a year can be INR 250.
- There is no cap on the maximum amount deposited in the account.
Investment Choices
Active Choice: The individual decides how the money should be invested in different asset classes. With the best pension funds for NPS an individual can choose to allocate contributed funds in different percentages with a 50% maximum cap on Equity.
- Asset Class E: Invests 50% in stocks.
- Asset Class C: Invests in Fixed Income instruments other than government securities.
- Asset Class G: Invests only in Government Securities.
Auto Choice: The best NPS fund automatically invests money based on the age of the individual. This is a default option for the individuals as per the system.
Tax Benefits
As per the Income Tax Act 1961, the NPS funds attract income tax benefits:
- Under Section 80CCD 1 (B): Individuals contributing to National Pension Scheme investment in Tier I account can claim tax deductions of up to INR 50,000/- Section 80CCD (1). This benefit is over and above the tax exemption of INR 1,50,000 Under Section 80C. Under Section 80CCD (2): Employers contributing in Tier I investment in the NPS scheme are eligible for tax deduction up to 14% for central government contribution and 10% for others. This deduction falls over and above the deductions applicable Under Section 80C. Withdrawal of 25% of Tier I contribution in the pension fund for NPS is exempt from tax. Lump – sum NPS fund withdrawal of up to 40% after the individual turns 60 is exempt from tax.
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Customers spread over 3,000 pincodes
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Who Can Invest in NPS?
- NPS schemes can be used for subscribers or investors who are planning their retirement and are risk-averse.
- Individuals employed in the private sector who need regular income post-retirement through pension.
- Who are seeking extra deduction of INR 50,000 under Income tax can benefit from National Pension Scheme investment.
- Individuals between the age of 18-70 years of age can invest in the best NPS funds.
How NPS Works?
- NPS is a defined contribution pension system in which the contributions are invested in a mix of assets and the retirement corpus is dependent on the returns from those assets.
- The returns of the NPS scheme are linked to the markets and dedicated fund managers look into the management of funds.
- An investor can open up to 2 types of accounts. Tier 1 accounts are those in which withdrawals cannot be made and tier 2 accounts are those in which voluntary withdrawals are allowed. An investor must open a Tier 1 account in order to be eligible to open a Tier 2 account
- Investors can also choose out of 2 options, auto choice and active choice. In auto choice the asset allocation is done as per the age of the investor and in active choice the choice of asset allocation lies with the investor. However in the active choice the capping is 50% in equity.
- Withdrawals can be made at the age of retirement and if withdrawals are made before that there are certain exit conditions which are applicable.
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I’m a 62-year-old Financial Advisor, working in the Mutual Funds Industry for the past 20 years. In 2017, I started working from home. With a huge customer base, I had to commute all day for collecting the clients’ documents. At the end of each day I thought, “Till when will I continue working like this!” He was aware of Mutual Funds but was not sure how to get started. After coming in touch with Prakash72.com, he carefully evaluated the option of dealing with Prakash72.com versus directly with mutual funds and clearly saw the benefit of being part of a larger platform and the great leverage of technology that Prakash72.com offered. He then spent some time trying to understand the basics of mutual fund investing and also obtained an AMFI Registration Number (ARN). Since then, he has been able to help his customers diversify into mutual funds in a much simpler manner, leveraging the state-of-the-art technology. He is clear that he is into this for the long term.
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From traveling in buses to Jaipur and haggling with Mutual Funds companies for collecting clients’ statements to sitting in the comfort of my home and managing all the transactions with a few clicks on my phone, I have come a long way — all thanks to Prakash72. There was a time when I was forced to stop the SIPs of my hard-earned customers as it was impossible to service them given the paperwork that required a lot of commuting and expenses. For every customer’s KYC, I had to go to a cybercafé, pay Rs 10 and get a printout. Then the choice of funds was a complex issue. To make it worse, it was a herculean task to track my brokerage as it was coming from various places. Prakash72 came as a one-stop solution for all these problems and made investing a cakewalk for me and my customers.
Read MoreFrequently Asked Questions (FAQs):
1. How do I Choose an NPS Scheme?
There are various choices available under the best NPS scheme in India. NPS schemes can automatically invest money based on the age of the subscriber. This is known as Auto choice. However, the individual also has the flexibility to choose various asset classes for investment under the Active choice; including stocks, government securities, and fixed income instruments other than government securities.
2. What is the Current NPS Interest Rate?
The Interest rates for the NPS schemes range between 9% to 12% depending on the type of scheme.
3. How is NPS Calculated?
NPS is calculated based on your current age when you start investing and when you wish to retire. The amount that will be invested per month, returns expected, investment period, the percentage of return throughout the period of investment you receive, all of this will be a factor in how you can calculate your NPS amounts.
4. How Much Pension will I get From NPS?
This depends on the amount invested and the rate of return given by the fund over the period of investment.
5. How Withdrawal of NPS Funds happens?
- Reaching the age of 60: Out of the total accumulated NPS funds, at least 40% needs to be used for the purchase of an annuity for providing a monthly pension. Balance is paid as a lump sum to the individual. If the total amount is less than INR 2 Lakhs, the individual can withdraw 100% of the corpus.
- Before reaching the age of 60: Funds in the National Pension Scheme investment can be withdrawn before the age of 60, only if the individual has completed 10 years in NPS. Individuals will have to pay at least 80% of the accumulated pension to purchase the annuity for monthly income.
- Death of the individual: Upon the death of the individual, the registered nominee can withdraw 100% of the NPS funds. If the nominee wishes, the NPS account can be continued provided the KYC procedure is followed.