On January 12th, National Youth Day, let us reflect on the responsibilities and opportunities as young Indians. Amidst career pursuits and dreams, retirement planning is something we tend to completely overlook. Though distant, a plan to secure your future should start early.
This Youth Day, consider the National Pension System or NPS retirement plan as a valuable tool to start saving for a comfortable retirement. Start now for a secure tomorrow!
Why Should You Invest in NPS?
Following are some of the most important reasons why you should start investing in the NPS pension plan:
- Steady Post-Retirement Income: Annuities of the National Pension Scheme guarantee a consistent income after retirement.
- Maximum Lock-In for Long-Term Savings: NPS enforces a structured tier system, preventing easy exits and promoting long-term savings.
- Professional Management: Regulated by the Pension Fund Regulatory and Development Authority (PFRDA), NPS ensures professional management of investments and annuity services.
- Diverse Investment Options: NPS offers two options, Active and Auto choice, allowing flexibility in asset allocation. Active choice empowers you to decide your asset distribution, while auto choice adjusts allocation based on age, ensuring adaptability.
- Tax Benefits: With the NPS retirement plan you can enjoy tax benefits at contribution, gains during the account tenure, and withdrawal on maturity (EEE benefit).
- Cost-Effective Structure: NPS boasts a low-cost structure with nominal registration, account opening, and maintenance fees.
- Family Protection: With NPS you will get a pension plan that extends income to your spouse even after your death, ensuring continued financial support for your family.
- Flexibility and Accessibility: National Pension Scheme investment starts at as low as Rs. 1,000 per year, making it accessible for various income levels.
- Potential for Good Returns: NPS allocates funds to equities, providing the potential for good returns.
- Regulated and Secure: Administered by PFRDA, NPS is managed by authorised professionals, adhering to strict guidelines.
What are the Types of NPS Accounts Available?
There are two main types of NPS investment accounts:
- Tier-I Account: To join NPS, you must open a Tier-I NPS account with a minimum contribution of Rs. 500. Withdrawals are restricted and conditional. To keep the account active, a minimum deposit of Rs. 1,000 per year is required.
- Tier-II Account: Anyone who is an Indian citizen and falls between the age bracket of 18 to 65 can open this account voluntarily. The account provides more flexibility, enabling you to make contributions and withdrawals as per your requirements.
Who is Eligible to Invest in NPS?
The National Pension System or NPS retirement plan in India is open to all individuals between 18 and 70 years of age, regardless of their residency status. Anyone within this age group can apply to join the NPS.
What Documents Are Required to Open an NPS Account?
To start a National Pension Account, you need to submit the following documents:
- Any one of the address proofs such as ration card, PAN card, bank passbook, passport, Aadhaar card, etc.
- Any one of the identity proofs such as water bill, passport, PAN card, ration card, Aadhaar card, NREGA job card, bank passbook, electricity bill, etc.
How to Contribute to NPS?
There are three convenient methods of contributing to an NPS account:
- Submit a correctly filled NCIS (NPS Contribution Instruction Slip) to a POP-SP
- Contribute online via the eNPS website with PRAN and OTP
- Use the NPS Mobile App for on-the-go contributions, accessible for Android and IOS users.
How Much Is the Return on NPS?
For over a decade now, the National Pension Scheme has been delivering consistent annual returns of 8% to 10%. The actual returns you receive will vary from one scheme to another, as they are market-linked.
Conclusion
National Youth Day is a perfect opportunity for young people to take control of their financial futures. By starting early with the NPS retirement plan, they can build a secure retirement fund and enjoy their golden years with peace of mind.
Protean has been entrusted by the PFRDA to be the Central Recordkeeping Agency for the National Pension Scheme. For more information on how to invest in NPS, click here.
