For a financially secure and safe retirement, many instruments choices beginning from mutual funds, actual estate, stocks, to NPS, EPF, and so on. are recommended by professionals. Even even though all of these are the most popular retirement instruments, professionals think about the National Pension System (NPS) as one of the ideal investment tools for retirement organizing in India.
While all sorts of investments come with their personal merits and demerits, investments in the NPS are largely focused on the retirement of the investor. Along with tax added benefits just about every economic year, with NPS, the investors get a pension in the course of their retirement years. Experts say this scheme is excellent for self-employed pros, particularly these working in the unorganized sector.
During a current webinar on ‘National Pension System for Corporates’ by the Pension Fund Regulatory and Development Authority (PFRDA) in collaboration with the Confederation of Indian Industry (CII, Delhi chapter), with the theme of ‘Importance of Retirement Planning – Role of NPS’, PFRDA chairman Supratim Bandyopadhyay mentioned that retirement organizing is needed due to the fact of the purpose that longevity is rising. He added, “Now we are into a situation of risk of living long instead of dying early as was the case earlier, and if we live long it will be a problem not only for the individual but also for the society at large. Therefore, one needs to plan early.”
It has been observed from several of the reports on longevity that just after retirement at 60 years, persons live 17-18 more years. Also, with the advancement of healthcare facilities persons are living longer like in no way just before. Hence, professionals say even even though picking out one investment tool for such an significant aspect of life can be confusing, not investing in the ideal instrument could imply losing out on the prospective returns on the investment.
Therefore, it is much better to recognize these investment instruments to make an informed selection. For instance, National Pension System (NPS) presents its investors to pick out from 3 choices of investment – equity, corporate debt, and government bonds, permitting its investors to have larger exposure to equities, wherein they can fetch larger returns.
Bandyopadhyay mentioned, “In view of making it a core retirement product, we discourage withdrawal in between, and allow partial withdrawal only of 25 per cent of self-contribution three times over the whole accumulation period. Although it’s a market-linked product, our fund managers work under stringent guidelines for safeguarding our subscribers’ money.”
NPS provides a lot of flexibility like the selection of funds, selection of asset allocation and an investor obtaining more threat appetite, he/she can place 75 per cent of his/ her fund in equity. It is a price-effective economic scheme, which added benefits the subscribers to have a bigger corpus as erosion of corpus in the kind of charges or costs is minimal.
Investors love complete tax-exemption with NPS up to the limit of Rs 1.5 lakh beneath section 80C. Additionally, one also gets tax-exemption of up to Rs 50,000 beneath Sec 80CCD (1B). On the employer’s contribution produced towards employees’ NPS account, workers can also claim deduction beneath section 80CCD (2), of up to 10 per cent of the simple salary plus dearness allowances.