NPS scheme: The National Pension System (NPS) helps in creating a stable income source for every individual post-retirement. As retirement concerns many people, they look forward to securing their finances for their future. However, saving finances might not be enough to meet your desired investment goal. So you must invest in the best financial schemes that will help grow your wealth. Besides, it will reap the desired rewards when you grow old over time. According to tax and investment experts, NPS provided an affordable investment model among other annuity plans available in the market along with income tax benefits. apart from this, NPS is a Government of India-backed scheme that also ensures social security post-retirement.
On why one should choose NPS over other annuity schemes available in market, Sreekanth Nadella, MD and CEO at KFintech said, “NPS scheme is a highly affordable investment option sponsored by the Government of India. It offers broad flexibility while you contribute to the investment. Indeed, the National Pension Scheme is better than any other Synthetic Investment Plan. Nevertheless, an extended investment plan is always beneficial for a better future after retirement. Besides, NPS has the potential to exempt your tax, thereby helping you to save big.” KFintech expert went on to add that NPS is regarded as a voluntary contribution scheme for providing retirement benefits.
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On how NPS gives you an opportunity to buy better annuity plans available in Indian market, Pankaj Mathpal, MD & CEO at Optima Money Managers said, “Through NPS, an investor is given annuity plans of the insurance companies that are empanelled by Pension Fund Regulatory and Development Authority (PFRDA), which is an added advantage of the NPS scheme at the time of annuity buy.”
On why an investor should invest in NPS scheme for creating wealth for retirement fund, SEBI registered tax and investment expert Jitendra Solanki said, “In NPS, an investor is given option to choose the percentage wealth one would use for buying annuity. However, one will have to use minimum 40 per cent of the maturity amount for annuity buying and rest is given to the investor as lump sum maturity amount. This is a unique investment tool that provides mix of both equity and debt exposure in single investment.”
Jitendra Solanki went on to add that NPS maturity amount is fully taxable as one need not to pay any income tax on the maturity amount withdrawn and the maturity amount used for annuity buy.