Planning for a steady flow of income for the post-retirement phase is an essential investment. Most of the working sectors have now put an end to pension schemes which is why it has become all the more important that everyone should start making the right investment plans so there is no financial crisis once they retire. NPS investment is one of the most popular and easy ways of accumulating funds for retirement. Get detailed information about the best options for safely investing your money, on this website: http://www.extramoneyinfo.net
The National Pension Scheme is managed by the central government and Pension Fund Regulatory and Development Authority (PFRDA). This scheme gives all Indian citizens a chance to make a regular investment to receive regular income once retired.
National Pension Scheme: Types of account
The National Pension Scheme, being a voluntary investment plan, gives individuals enough flexibility to choose the type of account they wish to invest in. NPS includes two types of accounts-
. Tier I
Anyone who wishes to begin investing in NPS needs to open a Tier I account. After retirement, 60% of the amount can be withdrawn while 40% is used to purchase annuities for regular monthly income. Premature withdrawal is only allowed under special circumstances
. Tier II
To open a Tier II account, a Tier I account must be opened first. The entire accumulated amount can be withdrawn anytime as per the need of the account holder.
National Pension Scheme: Advantages
When planning to invest in NPS, one must also know why investing in NPS is an effective retirement tool.
1. Long-Term Investment Plan
The National Pension Scheme is a long-term plan as you begin enjoying the benefits post-retirement. This is an easy way of saving for a long time. So, it is also advised that you must begin investing as early as possible. NPS asks for basic eligibility and anyone above the age of 18 years can open a Tier I NPS account.
2. Regular Income
The government of India introduced NPS with an aim of providing a regular source of income to all Indian citizens. With regular investment in an NPS account, you can accumulate sufficient amounts for the purchase of an annuity after retirement. The annuity ensures a regular monthly income.
3. NPS Calculator
An NPS Calculator, as the name suggests, is a digital tool where one can calculate the details of the investment. By entering the accumulated amount, tenure, etc. One can calculate the returns that will be generated post-retirement. It gives a broader idea of your investment to make financial plans accordingly.
4. Flexibility of Investment
Not just a surety of income, NPS also offers flexible investment. You can choose the type of account, Tier I or Tier II, to invest in. Further, you can also change your fund manager, Point of Presence anytime you want
5. Tax Benefits
Tier I account lets the investors enjoy tax benefits. Although a Tier II account does not offer tax benefits, Tier I account can help you get a tax deduction of up to INR 50,000 (80CCD (1B)) and INR1.5 lakh (80C).
6. Available for All
There are no particular employment parameters needed to open an NPS account. Any Indian between the ages of 18 and 65 can choose to open the account without any hassle
7. Secure Investment Plan
The central government of India backs the National Pension SchemeIndia. So, is also considered one of the secure investment plans. So, even beginners can look forward to investing in an NPS account without any fear.
Know the Charges of Opening an NPS Account
The charges of opening an NPS account is not too high so that anyone can easily open it. Check out the charges in the table given below-
|Tier I||INR 500|
|Tier II||INR 1000|
NPS: Who Should Invest?
After getting into the details of the NPS account, the next essential question is who should invest in the National Pension Scheme and which account is a better investment option.
Anyone can choose to open an NPS account and because it offers both retirement and tax benefits, it further becomes a smart investment plan. While Tier I allows restricted withdrawals, Tier II allows flexibility of withdrawal. Tier I and Tier II accounts have their own sets of benefits and features. Depending on the future financial goals, investment capacity, and needs, one should choose the type of account.
The National Pension Scheme has gained popular grounds owing to the satisfactory response of the investors. Also, being a safe investment option, beginners find it better to start their investment career with an NPS investment. If you have also not yet started investing in a retirement plan or planning to start your investment career, NPS can be a good start. You can also check the NPS calculator to have a rough idea of the returns you will get to enjoy after the maturity of the plan.
Learn more about different types of retirement and pension practices that are common around the globe, on this website: www.economicsandmoney.com