National Pension System (NPS): What are the benefits?

Investment

oi-Sunil

By Sunil Fernandes

Published: Tuesday, June 4, 2013, 12:11 [IST]

The National Pension System (NPS) is a new pension scheme which was launched by Government of India. It is regulated by the Pension Fund Regulatory and Development Authority (PFRDA), and was first introduced for government employees and then in end 2009 for all citizens of India.

Under the NPS, you can invest sums of money at regular intervals into your pension account and also have the option of taking a part of the corpus as lump sum amount and the balance in the form of fixed monthly income, as and when you desire the same.

Also read National Pension Scheme: Should you invest or skip?

What are the benefits of opening an account with the NPS

Flexibility

NPS can be opened by any citizen of India. Individuals can choose the amount they want to set aside and save every year. This would help in extending old age security coverage & income to all citizens.

Another important feature is that you can choose your own investment option and the Pension Fund Manager of your choice.

It is portable

An interesting feature of the NPS is that it is portable. This means that you can operate your account from anywhere in the country, even if you change your city, job or your pension fund manager.

NPS is regulated

The NPS is regulated by the Pension Fund regulatory and Development Authority. The investment norms are transparent and regular monitoring and performance review of fund managers by NPS Trust.

Tax Benefits

You can avail of tax benefits under section 80 C of the Income Tax Act. This means that you can get tax benefits to the tune of Rs 1 lakh per annum.

Reasonable returns

It's possible to get reasonable returns, of course one cannot guarantee returns, if the investment option chosen is equities.

In any case there are several benefits of NPS, and investors with a long term horizon would do well to opt for the same.

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