National Pension System: NPS offers many investment options to its customers. These include equities, corporate bonds and government securities. There are several fund managers registered with PFRDA to manage your funds in NPS. Each fund manager or AMC has separate funds for equity, corporate bonds and government securities. At the time of registration in the NPS scheme, investors have to choose a fund manager and choose their preferred asset class option (equity, corporate bonds and government securities). The maximum exposure that an investor can have to equities is 75 per cent. Let us tell you that some rules of NPS have been changed, whose information you will get here.
New entry rule
The regulator has recently increased the entry age in NPS to 70 years. The first entry age was 65 years. Now any person between the age group of 18-70 years will be able to subscribe to NPS. With the new entry age rule, customers who have opted out of NPS can reopen their account.
New exit rule
Now there will be a lock-in period of 3 years for new subscribers joining NPS after 65 years. The maximum age to exit NPS is 75 years. Subscribers can withdraw 60% of the total amount as a tax free lump sum amount and they have to use the remaining 40% to buy annuity. However, if the amount is less than Rs 5 lakh, the customer can withdraw the entire amount.
New premature exit rule
If you are planning to exit the National Pension System (NPS) prematurely, then you will get only 20% of your total amount under NPS in one go. With the rest of the amount, you have to buy the annuity. This 80:20 rule will be applicable for both government and non-government sector customers joining NPS between 18-60 years. However, in case of non-government sector, the individual needs to be a customer of 10 years.
Asset allocation rules changed
Subscribers joining NPS after 65 years will be able to exercise the option of pension fund and asset allocation under Auto and Active Choice with maximum equity exposure of 15 per cent and 50 per cent respectively. Pension fund can be changed once in a year while asset allocation can be changed twice.
Government sector customers included in online exit process
PFRDA has included government sector customers in the online exit process and paperless process. Earlier, only non-government sector customers were given the benefit of the facility of online exit process. Explain that the total AUM (Asset Under Management) of NPS is Rs 603,667 crore. The National Pension System, like PPF and EPF, is an EEE (Exempt-Exempt-Exempt) instrument in India where the entire amount is tax-exempt on maturity and the entire pension withdrawal amount is tax-free.
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