NPS - About, advantage and disadvantages and how to apply ?

 What is NPS? Advantage and disadvantages of nps, how to apply open National pension system account ? 

National pension system

What is National pension system?  Why it's necessary for every person ?

New Delhi - National Pension Scheme is a social security initiative by the Central Government.  It is an investment scheme for public, private and unorganized sector employees.  People who invest in NPS scheme not only get monthly pension but also a lump sum amount.  In this, investors can get more benefits by investing regularly.  Under this, the benefit of income tax exemption up to two lakh rupees is also available.  On investing in this, the benefit of up to 1.5 lakh under section 80C and up to an additional Rs 50,000 under section 80CCD is available.

 Two options are given to invest in NPS scheme, Active and Auto mode.  By selecting these options, investors have to decide how much money they want to invest.  On this basis, it is also fixed that how much pension he will get after the retirement of the employee.  Along with this, it is also decided how much amount he will get in lump sum on retirement.  Every investor has to choose at least 40 percent NPS maturity amount.  If someone wants to get more pension then this amount can be increased.  This scheme will be more beneficial for the people working in the private sector.

 Features and Benefits of NPS

 It offers very high returns as compared to other traditional tax-saving investments like PPF.  In this you can get 8% to 10% annual return interest.
 In NPS, you are also given the option to change your fund manager if you are not happy with the fund's performance.
 There is a limit of 75% to 50% on equity exposure for National Pension Scheme.  For government employees this limit is 50%.  Whereas the maximum limit has been fixed at 50% for investors aged 60 years and above.
 To get a higher monthly pension, you can invest as much money as possible.
 Investor can buy annuity using 100% of Net NPS maturity amount.  Whereas annuity purchases are at least 40 percent.
 If an investor invests Rs 15,000 per month using 60 per cent of the net NPS maturity amount for annuity purchase, then as per NPS, you will get Rs 1,36,75,952 and monthly pension of Rs 1,02,5070.

NPS Disadvantages

 1. You have to complete a lengthy amount of complicated paperwork to open an NPS account.
 2. The minimum investment amount required is relatively high.  You have to deposit at least Rs 6,000 annually.
 3. There is no fixed rate of interest.
 4. Once your account matures, you are liable to levy income tax.

 How to open NPS account

 To open an NPS account offline or manually, you need to collect the subscriber form from your nearest POP and submit it along with KYC papers.  Ignore if you have already done KYC with that bank.  After this, you will be issued the number and password by post or by the center.  There is a fee of Rs 125 for this procedure.  If you want to open account online then you have to go to link to link your account with your PAN, Aadhar and mobile number.  The OTP received on the mobile number has to be filled.  It will then give a PRAN (Permanent Retirement Account Number), which you can use for NPS login.

 It is a well-known fact that the part of the salary that people pay under NPS is invested at different places in the market with different risks.  One of the purposes of this is also that the money keeps on increasing.  So the pension scheme does not give any fixed number that it will pay that much interest.  But, usually the subscribers of the NPS scheme get interest ranging from 12 to 14%.  This return means that it is better than other investment avenues.
 The website of PFRDA says that in NPS, you get different investment options and you can also take the services of a fund manager, then your money will be logically put in the market and your money will grow.  You can change the direction of your investments or even change the fund manager at any time in between, so that you can avail more options.  Do remember that the returns on NPS are completely dependent on the volatility of the market.

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