National Pension System(NPS) customers will now have the option to change their asset allocation four times in a financial year. As of now, they can change the allocation twice in a financial year, if they have opted for active option asset allocation. PFRDA President Supratim Bandyopadhyay said this earlier this week and said that with this the demand of many NPS customers has been accepted.
What is National Pension System?
NPS is a retirement savings Option where individuals can contribute monthly amount to withdraw regular income after retirement. It is a government-sponsored pension scheme, which was launched in January 2004 for government employees. Later, in 2009, it was opened to all classes. NPS Which government has launched a pension-cum-investment scheme? India To provide old age security to the citizens of India. It brings an attractive long-term savings opportunity to effectively plan your retirement through safe and regulated market-based returns.
Schemes Under NPS
In the National Pension System, there are multiple pension fund managers and investment options (auto or active). It has four asset classes – equity (E), corporate debt (C), government bonds (G) and alternative investments (Scheme A). There are two levels of plans under each category. The client first selects the fund manager, and then has the option of choosing any one of the investment options.
What is qualification?
To join NPS, one has to fulfill the eligibility conditions: Citizen of India, whether resident or non-resident; Applicant’s age should be between 18 to 70 years as on the date of submission of application; And the applicant must follow the KYC norms prescribed by the scheme.
Tier 1 and Tier 2 under NPS
There are two types of NPS accounts – Tier 1 and Tier 2. Tier 1 account is primarily meant for retirement savings, where a minimum contribution of Rs 500 has to be made at the time of opening the account. It also includes tax benefits under section 80CCD (1B) of the Income Tax Act, 1961.
Under NPS Tier 1, a person is allowed to withdraw 60 per cent of the accumulated corpus accumulated during his working years at the time of retirement, which is tax-free. The remaining 40 percent is converted into an annual product.
NPS Tier 2 is an open-access account with a minimum investment of Rs 1,000, where the subscriber is free to withdraw his entire amount at any point of time. No tax benefit is available in this account.
risk rating system
The Pension Fund Regulatory and Development Authority of India (PFRDA) regulations have outlined six levels of risk – low risk, low to medium risk, medium risk, medium high risk, high risk and very high risk.
“National Pension System (NPS) schemes are becoming an important asset for investment for long-term savings of individuals and, if invested in an informed manner, help in creating the desired corpus for pension. Pension. Investments under different asset classes of the schemes of the fund would involve varying levels of risk for the subscribers and, therefore, it is desired that adequate disclosure of the risks involved in various schemes of NPS be made available for the awareness of the subscribers, PFRDA said in the circular. Said.
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