Most of us rely on monthly salaries for our economic sustenance, but this is only applicable till we are formally employed. As soon as we retire this flow of income stops and we have to rely on past savings, investments and rental income. However, each one of us may not have had the chance to adequately prepare for our golden years. This is where NPS or the National Pension Scheme comes into play. It's a scheme promoted by the Government of India for ensuring that each citizen of India, between the ages of 18 to 60 years old is prepared for his/her retirement. The scheme was launched in 2004, as a mandatory scheme for Central Government employees, and in 2009, it was made open for all Citizens of India.
Eligibility
NPS can be availed by all Indian citizens, including NRIs, who are between the age of 18-60 years at the time of application. Applicants are also required to comply with applicable KYC rules. In fact, NPS regulations clearly define those who aren’t eligible: Individuals already having an NPS account, bankrupt individuals and those who are not mentally sound.
Working of NPS
With an interest rate varying between 12%-14%, NPS acts as a source of money for the government and hence, it is invested in a very broad range of options. For availing NPS, a PRAN (Permanent Retirement Account Number) is generated, at the time of filling up the application.
Any individual can open two accounts, named Tier I and Tier II. Tier I cannot be used for withdrawing money unless it matures, i.e. you reach the age of 60. However, Tier II can be used for withdrawing money as per requirement. The key here is that Tier I is mandatory for having a Tier II account.
Advantages
Tax benefits:
Non-Tax Benefits:
Opening NPS account
For opening an NPS account, registration for PRAN is required. PRAN is a unique 12 digit number that is issued to individuals subscribing to NPS.
Documents required for PRAN:
Online process for NPS:
Central Recordkeeping Agency (eNPS), NSDL e-Governance Infrastructure Limited, 1st Floor, Times Tower, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai, 400013 - INDIA
NPS is a highly prudent investment option, especially for salaried individuals. It allows you to save tax, plan for retirement and offers good returns. So when are you opening your NPS account?
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