NPS (National Pension System)
Today in this article we are going to explain All Answers about NPS (National Pension System). There are lots of misconceptions about NPS, in this article, we will tell you about the benefit of NPS, who can invest in it, how to invest, how to withdrawal, and other basic information about this.
NPS stands for or National pension system. Many peoples pronounce it a new pension scheme but the actual name is the national pension system. It is the Retirement solution in India. People invest in it to get a corpus after retirement also as a pension product. Let us proceed to the topic step by step.
Who can invest?
1 All citizen
2 Government sector
3 Corporate sector
So, the meaning is that each and every citizen can opt for the National pension system, in the government sector it is mandatory to opt for this system, but it is is also open for common peoples who are working in the corporate sector and also open for business persons or self-employed.
Many people still believe that NPS is only for Govt Employees. But this is the wrong concept developed by you. NPS is available for each and every person.
The minimum age required to invest in the National pension system is 18 years and the maximum age allowed is 65 years.
If a person starts investing at the age of 60 years then the maximum age for which he can invest is 70 years age
The reason for which maximum people choose NPS is the options available to them under different categories. There are different types of asset classes available to choose from. It is always your choice to select from the below asset class how much amount do you want to invest and in which asset class.
Asset class E: it means the equity or related to share market.
Asset Class C: it means fixed-income instruments.
Asset class G: it means government securities.
Asset class A: it means alternative investment funds
There are also different types of allocation choices available to you.
1 Active choice: this is the type of choice where you can select how much of amount can be invested in equity and how much in other asset classes. the maximum amount in equity you can invest is 75% of your total investment and remaining in other assets class.
2 Auto choice: This is the option for the peoples who can not understand the systems of equity and other funds or type of people who don’t want to indulge in the tension of decision of selecting funds. Here regulator PFRDA decides on behalf of customers where to invest and how much to invest in which assets class. It may change from time to time according to the performance of the assets classes.
Withdrawal means time to exit. let us discuss now how can you exit from NPS and when can you exit.
the first condition to exit from NPS is your 60 years of age. at the age of 60 years when you will retire and you want to withdraw, you can withdraw 60% of the fund, and the remaining 40% will remain with the regulator for your pension system. it means 40% off your fund it is for your pension. The 60% of the fund you will get is text free.
there is also a facility available where you can take your that 60% of the fund in 10 annual installments
if you had completed 60 years of age and your total maturity or Corpus is up to 2 lakh then there will be no 60-40. you can draw your whole amount.
if you want to do to premature exit from it and your age is not complete 60 years, then you can withdraw only 20% of the amount and 80% it will remain for the pension fund. But the condition is you must have invested at least 10 years in the fund.
If your corpus or fund in less than 1 lakh then there is no 20-80. You can withdraw your whole fund.
Yes, it was the much-required option and is also available in NPS. let us discuss this.
The minimum time period for partial withdraw is 3 years complete and you can withdraw in the 4th year up to 25% of the total amount invested.
In full tenure, you can do partial withdrawal only 3 times and with specific reasons only.
These specific reasons are Critical illness, higher education of children, skill development, and the start of new business.
The important thing to know is that the Minimum contribution at the start of the fund is with a amount of 500 rupees.
Minimum one contribution in a financial year is required and a minimum of 1000 rupees is required.
Where to open the NPS account?
there are NPS centers available all over the country and in all cities. You can go on Official website of NPS. Banks can also open the NPS account.
Hope the above article had made you clear about the doubts of NPS investment and now you will not worry about that investment. I have tried to answer all the questions of the subscribers.