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

1. Eligibility: Any Indian citizen between 18 and 70 can enroll in NPS.
2. 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.
3. 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.
4. 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.
5. 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?

1. 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.
2. 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.
3. 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.
4. 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).
5. 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?

1. Visit nps.kfintech.com to open your NPS account.
2. Submit KYC documents (Aadhaar, PAN, etc.). 
3. Choose your investment strategy and pension fund manager.
4. 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.