New Pension Scheme - Features and Benefits

In 2004, PFRDA (Pension Fund Regulatory and Development Authority) created NPS or New Pension Scheme, a pension scheme reserved for new government recruits. But in 2009, it was renamed as New Pension Scheme and the scope of the scheme was expanded to allow people from every sector.

NPS is a voluntary contribution scheme where one can invest throughout their working life and then start receiving the same in the form of pension after the age of 60 years.Let us have a look at some of the most prominent features and benefits of NPS

1.Multiple Investment Options

The money you contribute to NPS account is invested on your behalf. There are currently six different PFRDA-approved fund managers who offer many different types of investment funds.As there are many different types of funds to choose from, every investor can select a fund that best suits their investment profile.

2.Types of Accounts

Under NPS, there are two different types of accounts namely Tier I and Tier II. In Tier I account, you are not allowed to withdraw your investment until you turn 60 years. But with the Tier II account, you can withdraw from your balance as and when you like. However, you need a Tier I account to open a Tier II account. How to invest in NPS Tier I or Tier II account? You can open an account with a PFRDA-approved fund manager and contribute to the same online as well as offline.

3.Low Minimum Investment Amount

One of the biggest benefits of NPS is the low minimum investment amount. You can invest as little as Rs. 500 a month or Rs. 6,000 per year in your NPS account.Moreover, even the entry age of NPS is highly flexible. The minimum entry age is 18 years and the maximum is up to 60 years.

4.Complete Convenience

If you are looking for how to open an NPS account , know that the whole process is very simple and can be completed online. PFRDA has selected POPs (Point of Presence) like banks that have authorised branches for collecting NPS contributions. Most of the POPs allow you to open NPS account online by submitting a few documents like ID proof, address proof, and duly filled application form.

Now that you know what is NPS and its features, it is not difficult to see that it is an excellent option for anyone wanting to start investing for their retirement.Get in touch with a POP service provider to know more about the benefits and make a confident investment decision.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.