If you are looking for an easy access, flexible and portable retirement savings account, NPS or National Pension Scheme is the best bid for you. NPS is a low cost tax efficient (u/s 80CCC & 80CCD) savings instrument. NPS was launched by the Central Government of India. It is regulated by Pension Fund Regulatory and Development Authority (PFRDA). National Pension Scheme offers a robust and transparent platform to achieve their retirement goals cost effectively. Invest for retirement from an early age so that you can save enough to fulfill all your retirement wishes!
Beginning your retirement planning in the early stages will create a larger pension wealth and help you reach your retirement goals easily. Remember, an early start requires lesser investment to create a corpus of Rs. 1 crore Rupees.
Here's how you can achieve a Rs. 1cr. corpus by investing in NPS through regular monthly investments at different age levels.
The most common question that people ask is ‘How to invest for retirement at age 35’ or ‘How to invest for retirement at age 50’ while the right question to ask is ‘When to invest for retirement’ and the best answer is ‘Right NOW’, because the sooner you start the better you are able to plan your investments in order to retire rich.
The following example shows how an early start requires a lesser investment amount to create a corpus of Rs. 1 Crore.
Monthly Contribution
Pension Wealth atAge 60 will be
Monthly Contribution
Pension Wealth atAge 60 will be
Monthly Contribution
Pension Wealth atAge 60 will be
Monthly Contribution
Pension Wealth atAge 60 will be
Note:
| NPS VS PPF | |
|---|---|
| ELIGIBILITY AGE | |
| Between 18 - 65 | Between 18 - No upper limit |
| MINIMUM AMT. TO INVEST P.A. | |
| Minimum investment per year is Rs.1000. | Minimum investment per year is Rs.500. |
| TAX BENEFIT | |
| Tax Benefit up to Rs. 2,00,000 available per financial year. Contributions up to Rs. 1,50,000 are exempted u/s 80CCD(1). Additionally, contributions up to Rs.50,000 are exempted u/s 80CCD(1B). |
Tax Benefit up to Rs. 1,50,000 available per financial year. Contributions up to Rs. 1,50,000 are exempted u/s 80C. |
| CHOICE OF ASSETS / FUNDS | |
| Can choose to divide investment into 3 types of funds namely - Equity, Corporate Bonds & Government Securities | No choice. Everything is invested in Government Securities only. |
| AVAIL ANNUITY (PENSION) FACILITY | |
| Yes | No |
| LOAN FACILITY | |
| No | Yes |
| NRI’S CAN INVEST | |
| Yes | No |
| INVESTMENT MANAGEMENT CHARGES | |
| 0.01% p.a. | 0% |
| PREMATURE WITHDRAWAL | |
|
Before Age 60:
Up to 20% of Corpus can be withdrawn in lump sum
Balance amount needs to be invested in Annuity
After Age 60: Up to 60% of Corpus can be withdrawn in lump sum Balance amount needs to be invested in Annuity |
Can be made from the start of the 7th financial year Complete withdrawal done only at maturity i.e. after 15 yrs. |
| REGULATED BY | |
| Pension Fund Regulatory and Development Authority (PFRDA) | Government of India |
| NPS VS ELSS | |
|---|---|
| ELIGIBILITY AGE | |
| Between 18 - 65 | No minimum or maximum limit. Minor accounts can be opened. |
| MINIMUM AMT. TO INVEST P.A. | |
| Minimum investment per year is Rs.1000. | Minimum investment per year is Rs.500. |
| TAX BENEFIT | |
| Tax Benefit up to Rs. 2,00,000 available per financial year. Contributions up to Rs. 1,50,000 are exempted u/s 80CCD(1). Additionally, contributions up to Rs. 50,000 are exempted u/s 80CCD (1B). |
Tax Benefit up to Rs. 1,50,000 available per financial year. Contributions up to Rs. 1,50,000 are exempted u/s 80C. |
| CHOICE OF ASSETS / FUNDS | |
| Can choose to divide investment into 3 types of funds namely - Equity, Corporate Bonds & Government Securities | No choice. Everything is invested in Equity only. |
| AVAIL ANNUITY (PENSION) FACILITY | |
| Yes | No |
| LOAN FACILITY | |
| No | No |
| NRI’S CAN INVEST | |
| Yes | Yes |
| INVESTMENT MANAGEMENT CHARGES | |
| 0.01% p.a. | 1.90% to 3% p.a. |
| PREMATURE WITHDRAWAL | |
|
Before Age 60:
Up to 20% of Corpus can be withdrawn in lump sum Balance amount needs to be invested in Annuity After Age 60: Up to 60% of Corpus can be withdrawn in lump sum Balance amount needs to be invested in Annuity |
Complete withdrawal done only at maturity i.e. after 3 yrs. |
| REGULATED BY | |
| Pension Fund Regulatory and Development Authority (PFRDA) | Securities and Exchange Board of India (SEBI) |