Skip to main content

NPS - Government-backed retirement instrument

It's a strange coincidence that 'pension' rhymes with 'tension', but the fact is that the two are inversely related. A good pension to support your expenses during retirement will make your twilight years easy and simple to navigate. The earlier you start, the better off you will be. And one of the best retirement savings instruments to begin is the National Pension System (NPS). The NPS has two types of accounts - Tier I and Tier II. In this article we will focus only on Tier I since it is geared primarily towards pension saving. The Tier II account is also a great option for non-retirement and short term saving but we shall discuss that, elsewhere.


A government of India initiative, the NPS Tier I is simple and low cost. Here are 6 reasons why we recommend it to investors:


1. It's open to everyone
All citizens of India (resident or non-resident) between the ages of 18 and 60 can open an NPS account. It is thus available to both employees and self-employed persons.


2. You get a tax break
NPS investments are eligible for tax deductions of up to R1.5 lakh a year under Section 80CCD. Budget 2015 increased this amount by another 50,000. So, you can get a deduction by contributingR200,000 to the NPS or just top up your EPF/PPF/ELSS investments of 1.5 lakh with an NPS contribution of 50,000. Upon maturity at the age of 60, only 40% of your NPS pot is tax free. However, after retirement your other income may be lower (since you are no longer employed/self-employed), allowing you to remain in a low tax slab and save on tax.


3. You get exposure to equity
History has proved time and again that equity is the best asset class for the long term. Few 80C products allow you to gain exposure to it and NPS is one of them. It balances out this exposure (which is capped at 50%) with corporate and government bonds. The result has been stellar returns. The lock-in aspect of the NPS also prevents you from making short sighted investment decisions propelled by greed and/or fear.


4. Its cheap and low-effort
The NPS has one of the lowest cost structures among the investment options available. The Pension Fund Managers who manage your money charge as little as 0.01%. The other charges involved are also low.

You can choose your NPS allocation between equity, corporate debt and government debt funds. However, for those who do not wish to worry about this decision, help is at hand. You can simply pick the auto allocation option under the NPS which will distribute your money based on your age and automatically re-balance as you grow older. Stress, busted!


5 It's easy to contribute to and manage
You can open an NPS account through your nearest Point of Presence Service Provider (PoP-SP) or online through eNSDL. You can also view your balance and manage your account online through the NSDL website. In order to do this, make sure to note down the Permanent Retirement Account Number (PRAN) that will be sent to you.


6. You can extend the tenure till you are 70
After attaining 60 years of age, you have an option to continue investing in NPS up to the age of 70 years under the all-citizens model (which excludes Government employees).




-----------------------------------------------
Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds

Top 10 Tax Saver Mutual Funds to invest in India for 2017

Best 10 ELSS Mutual Funds in India for 2017

1. BNP Paribas Long Term Equity Fund

2. Axis Tax Saver Fund

3. Franklin India TaxShield

4. ICICI Prudential Long Term Equity Fund

5. IDFC Tax Advantage (ELSS) Fund

6. Birla Sun Life Tax Relief 96

7. DSP BlackRock Tax Saver Fund

8. Reliance Tax Saver (ELSS) Fund

9. Religare Tax Plan

10. Birla Sun Life Tax Plan

Invest in Best Performing 2017 Tax Saver Mutual Funds Online

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

---------------------------------------------

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

-----------------------------------------------

 

Popular posts from this blog

ULIP Review: ProGrowth Super II

  If you are interested in a death cover that's just big enough, HDFC SL ProGrowth Super II is something worth a try. The beauty is it has something for everybody — you name the risk profile, the category is right up there. But do a SWOT analysis of the basket, and the gloss fades     HDFC SL ProGrowth Super II is a type-II unit-linked insurance plan ( ULIP ). Launched in September 2010, this is a small ticket-size scheme with multiple rider options and adequate death cover. It offers five investment options (funds) — one in each category of large-cap equity, mid-cap equity, balanced, debt and money market fund. COST STRUCTURE: ProGrowth Super II is reasonably priced, with the premium allocation charge lower than most others in the category. However, the scheme's mortality charge is almost 60% that of LIC mortality table for those investing early in life. This charge reduces with age. BENEFITS: Investors can choose a sum assured between 10-40 times the annualised premium...
Read more

Section 80CCD

Top SIP Funds Online   Income tax deduction under section 80CCD Under Income Tax, TaxPayers have the benefit of claiming several deductions. Out of the deduction avenues, Section 80CCD provides t axpayer deductions against investments made in specific sector s. Under Section 80CCD, an assessee is eligible to claim deductions against the contributions made to the National Pension Scheme or Atal Pension Yojana. Contributions made by an employer to National Pension Scheme are also eligible for deductions under the provisions of Section 80 CCD. In this article, we will take a look at the primary features of this section, the terms and conditions for claiming deductions, the eligibility to claim such deductions, and some of the commonly asked questions in this regard. There are two parts of Section 80CCD. Subsection 1 of this section refers to tax deductions for all assesses who are central government or state government employees, or self-employed or employed by any other employers. In...
Read more

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...
Read more

Bharat Bond ETF

Top SIP Funds Online   The government of India has paved the way for the launch of India's first corporate bond ETF called as Bharat Bond ETF. Edelweiss Mutual Fund will be managing it. The fund is mandated to invest in AAA-rated bonds of select public sector companies (see the table 'List of constituents and their proportions in the portfolio'). The government has a threefold objective behind launching this product. One, to deepen the liquidity of the Indian debt markets and provide a gateway for easy retail participation. Two, to solve investors' dilemma of picking premium bonds. Lastly, to help the underlying government-owned companies raise funding for their operations. But does it make sense for you, the investor, to invest in it? Lets find out. What is the product? As the name suggests, it is an exchange-traded fund which will be listed on a stock exchange from where its units can be bought and sold post launch. It will have two variants - one maturing in 3 ye...
Read more

What is Electronic Clearing Service (ECS)?

  As the name suggests, it's an electronic process through which money can be transferred from one bank account to another. According to RBI, this mode is usually used for regular payments and receipts, like distribution of dividend, interest, salary, pension etc. This mode is also used for collection of bills for telephone, electricity, water, various types of taxes, payment of EMIs , investments in mutual funds , payment of insurance premium etc. There are two types of ECS , like most other banking transactions, ECS credit and ECS debit. An ECS credit is used by a bank account holder , usually a large company or an institution for services like payment of dividend, in terest, salary, pension etc. If your mutual fund pays you dividend to your bank account, of all probability it is being paid through ECS credit.ECS debit, on the other hand, is used when a company or an institution is getting money from a large number of people. For example if you are investing in a mutual fund sc...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now