Old Pension Scheme Vs New Pension Scheme! What are the key differences between them?

March 31, 2025

Retirement planning is significant for your golden years. Investors choose a retirement plan or a pension scheme to meet their post-retirement daily expenses and financial dreams. The Indian pension system has gone through many changes over the years. There are two major retirement plans: an old pension scheme and a new one. In this blog, we’ll explore the key differences between the two.

Old Pension Scheme: An Overview

The Old Pension Scheme (OPS) was a traditional retirement savings plan, introduced in the 1950s for government employees. Under the scheme, beneficiaries receive a fixed pension of 50% of their last drawn basic salary, or the average of their last ten months’ salary, whichever is more beneficial. A key advantage of OPS is that it does not require any employee contributions, and the pension is guaranteed. To qualify, employees must complete a minimum of ten years of service. Additionally, the income received under this scheme is tax-free.

National Pension System (NPS)

The National Pension System, also known as the new pension scheme was also introduced by the Government of India but unlike OPS, NPS is available to both government and private sector employees. Under this system, subscribers need to contribute regularly to receive benefits in post-retirement years. The NPS offers market-linked returns as it invests in a diverse range of asset classes such as equities, bonds, securities, and AIFs.

An NPS subscriber can choose their asset allocation as their risk appetite and financial goals. Upon retirement, 60% of the accumulated corpus is tax-free, while the remaining 40% must be used to buy annuities to receive a regular pension. Any Indian citizen between the ages of 18 and 70 can invest in NPS. Moreover, the change in job or location doesn’t impact their potential returns.

One of the benefits of NPS is its flexibility. Subscribers can choose their asset allocation, potentially earning higher returns. Upon maturity, 60% of the accumulated corpus is tax-free, while the remaining 40% must be invested in annuities, which are 100% taxable.

What are the 5 tax benefits under the new pension scheme? Interested? Read them here.

Key Differences Between OPS and NPS

Feature	Old Pension Scheme (OPS)	New Pension Scheme (NPS)
Returns	Fixed returns based on the last drawn salary.	Market-linked returns.
Tax-Benefits	Tax-free	60% of the accumulated corpus is tax-free, and the rest 40% is taxable.
Eligibility	It is only available for government employees.	NPS is open to every citizen of India aged 18-70.
Contributions	Employees don’t need to contribute. It is government-funded.	Employees and employers can both contribute to NPS.
Flexibility	Fixed monthly pension with no investment preferences.	Investment preferences are available for better potential returns.
Investment	You cannot decide your contribution amount. It is fixed by the Government of India.	In NPS, subscribers have the leverage to choose their investment amount.

Final Thoughts

Both retirement schemes have their own set of benefits, but OPS is only available to government employees; however, it is only available to those employees who have joined on or before January 1, 2004. On the other hand, NPS is available to everyone as it comes with more flexibility and the potential for high returns. Individuals should assess their risk tolerance, investment horizon, and financial goals before choosing any pension plan or scheme.

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How to choose the top wealth management firm in India?

March 30, 2025

The significance of the best wealth management firm lies in its capacity to offer personalized financial strategies that consider all aspects of your financial life. This includes professional investment management, tax-efficient strategies, retirement planning, and estate planning. How would you choose them? What should be considered while selecting wealth management companies? In this blog, we’ll unveil the factors that you can look for while choosing private wealth management firms.

Wealth Management Services – The Objective

The core objective of wealth management is to assist the clients in enhancing and preserving their wealth in the long term. This involves creating a tailored financial plan that is in line with the client’s financial goals, risk tolerance, and investment horizon.

Wealth Management Firms – The Importance

Why wealth management is important can be summed up in a few key points:

Customized Financial Planning: Wealth management offers customized financial strategies that suit the unique needs and objectives of the individual.
Holistic Approach: It addresses all areas of an individual’s financial life, including investments and taxes, as well as estate planning.
Professional Knowledge: Wealth managers offer a high degree of proficiency and wisdom, ensuring sophisticated financial and investment management strategies.
Long-Term Focus: Wealth management focuses on long-term growth, aligning with the client’s future financial goals.

Click here to learn about the significance of wealth management services in India.

How to Choose the Best Wealth Management Company?

While deciding how to select a wealth management company, there are several key considerations, such as:

Credentials and Expertise: Seek companies with certified professionals who possess a strong track record in the industry. Check their qualifications and experience in managing wealth.
Range of Services: Make sure the company provides a full range of services that address your unique needs, such as investment management, tax planning, estate planning, and others.
Reputation: Look for the firm’s reputation and past performance. Check out client feedback, testimonials, and any history of regulatory issues.
Fee Structure: Understand the fee structure of the firm. Ensure that the firm is transparent and aligns with the services it offers. Look for any hidden fees or any expenditure that is not mentioned by the company.
Personalized Service: The ideal wealth management company must provide personalized services aligned with your financial condition and objectives. Evaluate how willing they are to grasp and address your particular needs.

Final Thoughts

Choosing the best wealth management company in India is a crucial decision that can impact your financial goals. By learning how to select a wealth management company, you can ensure that you receive personalized and effective financial advice. Whether you wish to increase your wealth, prepare for retirement, or are looking for effective estate management, the right firm will provide the expertise and services necessary to achieve your goals.

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Starting a Business? Here’s Why Company Registration is Crucial!

It’s an exciting experience starting a new business, but before you can start, your company must be registered legally. Whether you want company registration, business name registration, or are looking for the company’s registry, in this blog, we’ll discover the types of company registration and why it is crucial.

What Is Company Registration?

Company registration is the legal process of incorporating your business, assigning it a distinct identity independent of its owners. The company registry usually deals with this process, overseeing business incorporations and keeping company records.

Company Registration – Why is it important?

A company registration provides many advantages. A licensed company makes it genuine and enhances the business’s credibility.

Prevents personal obligation and guards against other risks and losses.
Creates goodwill and also facilitates more customer attraction.
Provides credible investors with bank credits and good investments with ease.
Coverage of the obligation to guard the assets of the company.
Larger wealth commitment and higher stability.
Enhances the capacity to build and expand large.

How is financial literacy vital for any entrepreneur? Sounds interesting, doesn’t it? Click here to learn more.

Types of Company Registration In India

In India, different types of company registrations can be opted for based on the different business structures and needs. Let’s have a look at the types of company registration:

Private Limited Company Registration: Numerous companies are opting for a private limited company registration type since a private limited company is the most sought-after form of business entity for start-ups and small to medium-sized businesses.
Limited Liability Partnership (LLP) Registration: An LLP has the advantage of a regular partnership along with the benefits of limited liability protection. A limited liability partnership registration provides partners protection against the wrongdoing of other partners, just like shareholders in a company. It is suitable for small businesses in which the owners desire to keep their liability limited while keeping management flexible.
One Person Company (OPC): Registration of a person company is ideal for sole proprietors who want to create a corporate identity without compromising on limited liability protection. OPCs, unlike sole proprietorships, enjoy a separate legal personality, which offers their owners protection against personal liability. It enables individuals to start and run a business independently.
Public Limited Company Registration: A public limited company is suitable for businesses that intend to raise capital from the public by offering shares on the stock exchange. It is subject to more stringent regulatory requirements than private limited companies.

Requirements for New Company Registration

If you are planning a new company registration, follow the process:

Unique company name: The suggested name must be different from the names of registered companies or trademarks.
Minimum directors: One-person companies require one, private companies require two, and public companies require three directors.
Minimum members: One-person companies require one, private companies require two, and public companies require seven members.
Citizenship requirement: A minimum of one director should be an Indian national, although foreign nationals can be directors as well.
Director Identification Number (DIN): A DIN is required for all directors.
Digital Signature Certificate (DSC): Shareholders and directors require a DSC for document signing.
Registered office: A physical address is a must.
Memorandum of Association (MOA) and Articles of Association (AOA): Draft these documents defining the company’s goals and rules of working.

Final Thoughts

Whether you require business name registration or full new company registration, being compliant with the Companies Registry is crucial to a successful start. Registering your business not only safeguards your brand but also opens the doors to expansion and credibility.

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National Pension Yojana – A Retirement Plan For All!

The National Pension Yojana, widely known as the National Pension System, is a government-sponsored pension scheme for Indian citizens who look to safeguard their golden years. It was launched in 2004 and opened for only government employees. But in 2009, the National Pension Yojana opened to every Indian citizen between the age of 18-70 years.

NPS is an attractive long-term investment option for salaried and self-employed individuals. In this blog, we’ll discover how NPS is the go-to retirement for many individuals in India. Let’s have a look at the NPS features and why it can be a preferable choice for every individual.

Key Features of NPS

Eligibility: Any Indian citizen between 18 and 70 can enroll in NPS.
Returns Potential: NPS invests in a mix of asset classes such as equities, bonds, and securities. It diversifies your investment and potentially provides you with market-linked returns.
Type of Accounts: NPS has two accounts, Tier I and Tier II. Tier I is a pension account to which a subscriber regularly contributes. On the other hand, Tier II is a voluntary savings account with flexible withdrawals options.
Easy to Understand Structure: NPS simply invests in an array of asset classes. To make things easy and transparent, the NPS calculator gives subscribers the potential of returns on their investment over a while, depending on their contribution and market.
Low Investment: The National Pension Yojana is a low-investment affair. A subscriber can open an NPS account with ₹500 only and start planning for their golden years.

Why is NPS the best choice for everyone?

Market-Linked Returns: NPS offers the potential for higher returns compared to traditional fixed deposits or provident funds. Since the investment is diversified into equity, bonds, and government securities, it provides a balanced approach to wealth creation.
Low-Cost Structure: In contrast to most other investment products, NPS comes with a very low expense ratio, ensuring that a significant portion of your funds remain invested and grows with time.
Flexible Approach: Subscribers have the freedom to contribute as per their financial capacity. Moreover, they can choose auto or active mode where they have the advantage of choosing their approach. Aggressive subscribers can opt for active mode, and moderate subscribers can choose auto mode. This is based on their risk appetite and investment horizon.
Tax Benefits: One of the key benefits of NPS is that it comes with numerous tax advantages. Under the Income Tax Section 80 (C), a subscriber can have up to ₹1.5 lakh tax benefits and an additional deduction of ₹50,000 under Section 80CCD(1B), which is over and above 80 (C).
Portability: The NPS account remains active regardless of job changes or location shifts. This makes it a perfect retirement tool for individuals who switch jobs frequently or migrate to different cities.

What are the 10 compelling reasons to plan retirement with NPS? Do you want to explore more? Click here.

How to enroll in the National Pension Yojana?

Visit nps.kfintech.com to open your NPS account.
Submit KYC documents (Aadhaar, PAN, etc.).
Choose your investment strategy and pension fund manager.
Make the initial contribution to activate the account.

Final Thoughts

The National Pension Scheme is an ideal retirement planning tool, offering financial stability and disciplined savings. With its tax benefits, flexibility, and long-term growth potential, NPS is a must-consider option for individuals seeking a secure post-retirement life.