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Secure Your Future with NPS Pensions

, December 19, 2015, 0 Comments

nps-pensions-kotak-bank-marketexpress-inFinancial planning for retirement requires some basic knowledge and skill. Unfortunately, most people do not have the financial skills to make the right choices. Most individuals delay retirement planning under the mistaken assumption that they have plenty of time to think about it.

Aside from delaying decision making, many also make random investment decisions, without considering their long-term financial goals and stability. Focusing on the right products to build the retirement corpus is very important to ensure you do not face a liquidity crisis when you no longer have your regular monthly income.

Individuals who are seriously considering retirement planning should consider the national pension scheme (NPS). It is a low-cost solution and when done in a systematic manner can result in a sizeable corpus on retirement.

What is NPS?

The NPS is a government offered plan available for people aged between 18 and 60 years. Account holders can contribute to the scheme when they are working and can withdraw money once they retire. It is not only a low-cost scheme, but is one of the best tax savings schemes available in India.

The Benefits of NPS

  • The national pension scheme is completely portable, in the sense that the account can be operated from anywhere in the country, even if you relocate or switch jobs.
  • It is regulated by the Pension Fund Regulatory and Development Authority (PFRDA) with transparency and periodic performance reviews by the NPS Trust.
  • These tax savings schemes provide benefits for an amount of up to INR 1,50,000 under section 80CCD(1) of the Income Tax Act, 1961. Section 80 CCD (1B) raises the amount further, by an additional INR 50,000. This effectively gives you benefits on an amount that adds up to INR 2,00,000.
  • The voluntary scheme is available for Indians as well as non-resident Indians (NRI).
  • The procedure to open the account is simple and quick; you need to submit the form along with relevant documents to points of preference (POP) and procure a permanent retirement account number to begin investing.

Flexibility

Account holders can choose from asset classes C, G, and E to invest in different instruments, such as equity stocks, government securities, and other securities. Individuals can choose their contributions to each of these asset classes, as per their personal financial objectives. Using an intelligent approach, you can not only avail NPS tax benefits, but also grow a significant retirement corpus for your financial security.

Calculate the benefits

Several POPs like Kotak Mahindra Bank and LIC, among others, provide subscribers with an option to maintain their NPS account. You would get a better idea using pension plan calculators in India found on the websites of these POPs.

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Disclaimer:Tax benefit is for indicative purpose only. The calculations are made on the assumption that the conditions mentioned in the relevant sections of the Income Tax Act, 1961 are fulfilled. Tax laws are subject to amendments from time to time. This is not a legal advice or tax advice and users are further advised to consult their tax advisors before making any decision or taking any action.