National Pension System: A new rule has come about the National Pension System. In such a situation, customers will now be able to withdraw money easily.
Under the new rules, now partial withdrawal money will come to the subscriber’s account within 5 days.
The new rules of the Pension Fund Regulatory and Development Authority can be availed online. Withdrawal permits have been granted through self declaration. Earlier, as per the rule, the customer was considered eligible for partial withdrawal only after investing in the fund for three years. Explain that only 25 percent of the total contribution can be withdrawn. The old rules had to apply to the nodal office for withdrawal. Also important documents had to be attached, but now it will be possible to withdraw from the Self Declaration Form in the new rule.
Know what is the National Pension System?
The National Pension System started in the year 2004 for government employees. It was opened to all job occupation classes in 2009. One can make regular contributions to the working pension account. You can withdraw a portion of the money collected when needed. While the remaining amount can be used for regular income after retirement. An Indian citizen can invest 18 to 60 years in this scheme. NPS accounts are of two types. First one cannot withdraw money till the age of 60 years. Whereas in other it is like a savings account. Where the customer can withdraw money according to his need.
Who can invest in the account?
– Central Government employees
– State Government employees
– Private Sector Employees
– General public
How to open NPS account?
– To open NPS account one has to go to the nearest bank.
– From where the subscriber form has to be submitted along with KYC paper.
– Initial investment at one time (Rs 500 or Rs 250 monthly or less than one thousand), the customer will get a temporary account.
– For this process a registration fee of Rs 125 is incurred.
Four types of annuity schemes are available under NPS
When you have attained 60 years of age, you will have to use at least 40% of accumulated pension fund to purchase an annuity which will provide a regular monthly pension. The remaining amount can be withdrawn as a lump sum. When you exit or close your pension account under the National Pension System (NPS), you can withdraw up to 60% of the amount on retirement, but essentially need to buy an annuity plan with the remaining 40% In the context of NPS, an annuity refers to the monthly amount received by a customer from the Annuity Service Provider (ASP).
One percent of the pension wealth, as decided by the subscriber (minimum 40% and minimum 40% in case of superannuation and pre-mature exit) Is used to purchase annuities from implanted annuity service providers. ASPs are responsible for providing a regular monthly pension to customers after exiting the NPS. These are ASP Insurance Regulatory and Development Authority (IRDA) regulated insurance companies listed by the PFRDA to provide annuity services to NPS customers.
When can you opt out of NPS?
– on supernation
When you reach the age of adjudication / attaining the age of 60, you will have to use at least 40% of accumulated pension fund to purchase an annuity which will provide a regular monthly pension. The remaining amount can be withdrawn as a lump sum.
– Pre-mature exit
In case of premature withdrawal. This means getting out of the NPS before attaining 60 years of age. In such a case, at least 80% of your accumulated pension corpus should be used to purchase an annuity that will provide a regular monthly pension. However, the remaining 20% can be withdrawn as a lump sum. You can exit NPS only after completion of 10 years.
– at your death
In case of your demise, the entire accumulated pension corpus (100%) will be paid to the nominee or your appointed legal heir.
Here are the schemes which are available with ASP under NPS
1. Annuity for Life
You get a lifetime annuity after retirement. Originally, upon the death of the annuity, the annuity payment stops.
An annuity is a person who is entitled to regular payment of pension or to collect the investment made in the annuity.
2. Annuity for life with return of purchase price on death
On the death of the annuity, the annuity is paid off and the purchase price is returned to the nominee.
3. Annuity payable for life with 100% annuity payable to spouse on death of annuity
On Anniversary’s death, the husband is paid an annuity during the lifetime. If the spouse predetermines the Annadata, the annuity payment will cease after the death of the annuitant.
4. Annuity payable to the spouse with 100% on the death of the spouse on purchase of annuity
In such a case, on the death of the annuity, an annuity is paid to the husband during the lifetime and the purchase price is returned to the nominee after the death of the spouse.
(With inputs from NPS-NSDL website)
NPS scheme gives up to 22% returns in a year
National Pension System (NPS) schemes affect performance as equity and debt schemes by all pension fund managers have given double digit returns in the past one year. Experts believe that returns should not be the reason to start investing in NPS. NPS is a long term investment tool to save for your retirement.
It is a market-linked product. Returns in NPS plans will be volatile. Both Tier-I and Tier-II accounts have shown excellent returns. The Tier 2 account in NPS is an add-on account that provides the facility to invest and withdraw from various schemes available in NPS without any exit load. Whereas, Tier 1 account of NPS is locked up to 60 years of age, till you do not extend it, there is no lock in period for Tier 2 account.
NPS, The loan schemes under Scheme C and Scheme G also gave double digit returns. Under Scheme C, which invests in corporate bonds, LIC Pension Fund gave the highest return of 15.19% in last one year. HDFC Pension Fund with 14.70% return. The lowest return under Scheme C was 12.98%. Scheme G, which invests in government securities, has given an average return of 13.66% in the last one year. This return fell from 13.11% to 14.45%. Tier 2 accounts also showed similar returns.
