National Pension Scheme: Planning for your retirement? The National Pension Scheme (NPS) is an ideal option. It offers a cost-effective way to secure regular income during retirement while also building a substantial corpus over time. NPS offers two types of accounts: Tier I and Tier II. Only Tier I account holders can invest in Tier II.
Upon reaching 60 years of age in the Tier II account, you must use at least 40% of your NPS corpus to buy an annuity from a life insurance company, and up to 60% can be withdrawn as a lump sum.
If you're considering investing, here are some key facts to consider:
Lowest management charges: NPS boasts one of the lowest fund management charges, starting at 0.09% and decreasing as your assets under management increase.
Equity exposure: Depending on your chosen plan, NPS allows up to 75% equity exposure. Active and Auto options are available, with the latter offering different strategies based on your age and risk appetite.
UPI for instant transfers: Use Direct Remittance (D-Remit) to transfer funds directly to the Trustee Bank via UPI and avail of same-day Net Asset Value (NAV) benefits.
Cost-effective online option: Opening an NPS account online is the most cost-effective method. With an initial account opening fee of Rs. 400 + GST, subsequent investments attract a convenience fee of 0.20% of the investment amount, ranging from Rs. 15 to Rs. 10,000.
Alternate Investment Fund (AIF): NPS also provides an opportunity to invest in Alternate Investment Funds, REITs, and Infrastructure Investments.
Pension eligibility: To be eligible for pension benefits, contribute for a minimum of three years and be above 60 years old. You can choose from various annuity plans from life insurance companies.
Portability: NPS offers seamless portability. You can operate your account from any location, even if you change your city or job, using your PRAN number.
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