Preparing for post-retirement life is crucial for every Indian; resident or Non-Resident. Retirement is when your primary cash flow (salary) is likely to stop and dependence on secondary cash flow in the form of savings and investments kicks in.
Non-resident Indians (NRIs) aged 18 to 60 can invest in India’s National Pension Scheme (NPS) by adhering to KYC norms. The NRIs can make contributions to NPS from their NRO/NRE account.
While investing depends on individual financial goals, risk tolerance, and investment preferences, Kurian Jose, CEO, of Tata Pension Management listed some reasons for NRIs to consider investing in NPS
NPS is designed as a long-term retirement planning tool. It is a defined contribution (DC) tool that encourages individuals to contribute systematically over their working years.
2) Asset allocation
NPS offers asset allocation, based on individual risk tolerance and investment preference. One can select between equities, corporate bonds, government securities, and alternative assets, allowing them to tailor their investment strategy.
3) Inflation-beating returns.
Equity participation through NPS in the listed equity capital market provides for capital appreciation over the long term. This helps in inflation-beating returns.
4) Professional fund managers
NPS funds are managed by professional fund managers appointed by the Pension Fund Regulatory and Development Authority (PFRDA), which regulates NPS schemes. These fund managers make investment decisions based on market conditions and long-term trends.
5) Taxation benefit
NPS is an Exempt-Exempt-Exempt product. While NRIs may not be able to benefit from the first “E” (tax deductions on NPS contribution), they can benefit from the other two Es (contributions earning returns without any tax implications and Withdrawal (up to 60%) is tax-exempt).
NPS account opening process for NRIs
- Fill up the mandatory online form by visiting the NPS portal.
- The account can be opened with PAN, Aadhaar, Digilocker, or using existing KYC records with an Indian bank account.
- In case an applicant selects to open an account with PAN, the activation of the permanent retirement account number (PRAN) is subject to KYC verification by the empanelled banker with which the NRI has an account. The name and address should match with the banker’s record selected by the applicant during the registration process.
- Scan and upload your photograph (optional for Aadhaar) and signature.
- Make online payment (Minimum amount of ₹500) through NRO/NRE account.
- Subscribers will have the option to authenticate the form through OTP Authentication or eSign process.
Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Published: 18 Dec 2023, 01:52 PM IST