The National Pension System (NPR) is a government-backed pension scheme that allows people to save for retirement and receive a regular income after retirement. Under the NPS scheme, people can invest as little as Rs 200 a day to build a pension corpus that can provide a pension of up to Rs 50,000 a month.
Here’s how to apply for NPS scheme:
Individuals must visit the National Pension System Trust (NPS Trust) website and register for an NPS account in order to apply for the NPS scheme. They can also complete the registration process by visiting a Point of Presence (POP) or a Point of Presence – Service Provider (POP-SP). The POPs and POP-SPs are intermediaries that provide NPS-related services to investors.
After opening an NPS account, a person can begin investing in the scheme by selecting a pension fund and an investment option. The NPS provides two types of investment opportunities: Tier I and Tier II. The Tier I option is a mandatory account that individuals must open to participate in the NPS scheme. It is a long-term investment account that cannot be withdrawn until the individual turns 60. The Tier II option is a voluntary account that individuals can open in addition to the Tier I option. It is a highly flexible account that allows users to withdraw funds at any time.
Know the benefits of NPS scheme:
The NPS scheme offers tax advantages, flexibility, and professional fund management. Individuals can claim a tax deduction of up to 50,000 rupees per year under Section 80CCD (1B) of the Income Tax Act under the NPS scheme. They can also claim an additional tax deduction of up to 50,000 rupees per year for contributions made by their employer to the NPS scheme under Section 80CCD (1C).
The NPS scheme also provides investors with flexibility by allowing them to select the pension fund and investment option that best meets their needs. The NPS scheme offers several pension funds, including the government sector pension fund, the corporate sector pension fund, and the alternative investment fund. Each pension fund has a unique investment strategy, and individuals can select the one that fits best their risk tolerance and investment objectives.
The NPS scheme is also professionally managed, with the pension funds overseen by experienced fund managers. To maximise returns and minimise risk, the fund managers invest the funds in a diverse portfolio of assets such as stocks, bonds, and real estate.
Know who can apply for NPS scheme:
The NPS scheme is open to all citizens of India, including self-employed individuals, salaried employees, and business owners. It is also open to non-resident Indians (NRIs) and foreign citizens who are working in India. The minimum age to join the NPS scheme is 18 years, and there is no maximum age limit.