National Pension System (NPS) permits online lumpsum investment for investors looking to build their retirement corpus. This investment instrument is managed by the PFRDA (Pension Fund Regulatory & Development Authority). Both employers and employees contribute towards this retirement scheme. NPS specifically encourages systematic investments among employees of both state and central governments and among the citizens. This scheme was introduced in 2004, with the goal of reforming the pension model in the country.
What are the advantages of NPS investment?
By investing in NPS, you as a subscriber can make the most of the listed advantages –
∙ This is a voluntary investment scheme available for all Indians between 18 and 60 years of age.
∙ This plan has transparent investment norms.
∙ NPS account can simply be operated from anywhere.
∙ This assists you to plan out your retirement and you can become sure of getting guaranteed retirement returns.
∙ You can get a tax deduction on contributions towards NPS as per Section 80C.
What are the steps to open an NPS account to deposit lumpsum money?
Before you open an NPS account online, ensure to keep these documents handy –
∙ PAN
∙ Aadhaar
∙ Net banking details
∙ Passport size photos
∙ Scanned photo of your sign
Once you are ready with these documents, go ahead with the listed steps –
∙ Visit the NPS website. When the website loads, hit on the ‘registration’ option, and select the ‘individual’ option.
∙ Post this, input your PAN and Aadhaar details. Once you are done, you will get an OTP (one-time password) on the mobile number.
∙ Submit the OTP and click on the ‘continue’ option. After this, you will receive an acknowledgement number with your name. Hit on ‘ok’.
∙ In the next step, input your personal information and then hit on the option ‘save and proceed’.
∙ After this, you are required to select your asset allocation strategy – active or auto. Also, fill out the nominee information.
∙ After you fill out the nominee information, upload your bank’s cancelled cheque along with the specimen signature.
∙ Now is the final step, where you require paying a minimum of Rs 500. After you have done the payment via net banking, you will get your PRAN (Permanent Retirement Account Number) and payment receipt.
Two crucial features of opting for NPS are –
- Source of earnings post-retirement
Post retirement, while your income source stops, your regular mandatory expenses continue. In case you consider inflation, you will notice that your expenses post retirement would be higher for the same lifestyle expenses you are bearing currently. Note that, once you approach the age of retirement, your NPS lumpsum investment matures and up to 60 per cent of your corpus is transferred to your savings bank account automatically while the rest of the 40 per cent is given to an insurance company for offering you a regular pension. This means, the higher your corpus for retirement, the higher would be your overall pension. The only medium to create a massive retirement corpus is to start your investment for retirement early.
- Assured returns
Though a portion of NPS is invested in equities, which may not offer guaranteed returns, the whole returns from NPS are assured. Also, the return from such an instrument is comparatively higher than other traditional schemes like bank FDs (fixed deposit).
Ending note
NPS is a retirement scheme wherein you can get regular income along with tax benefits after retirement. By investing a predetermined amount at a predefined time voluntarily or a lumpsum amount, you can considerably enhance your earnings. So, in case you are looking for a comprehensive and secure pension plan with a potential of generating high returns, this is the option you must opt for.
