National Pension Scheme (NPS): Eligibility, Benefits of Investment

National Pension Scheme or NPS Scheme is one of the government pension schemes of India. Under this scheme, the government employees, volunteers and other individuals have the availability of pension for their future. In this article, we will know in detail about the National Pension System (NPS) Scheme.

National Pension Scheme

National Pension Scheme Details

The National Pension System was started in India in 2004. Its main objective was to provide comfortable and secure pension to the government employees and volunteers for their future. To register for the National Pension System, you will first need to fill your details like date of birth, registration number, email address, photo etc. Then you have to go to the nearest bank branch and apply for the National Pension System.

Advantages of National Pension Scheme (NPS Scheme)

Tax Savings: One of the biggest advantages of the National Pension System (NPS) Scheme is that under it you get tax exemption. A certain percentage of the money invested in the National Pension System is tax exempt. Also, when you complete your pensionable age, there is no tax on the amount you get as pension.

Various Investment Options: Various investment options are available to you in the National Pension System. In this, you can divide your investment amount into different investment options, such as share market, independent pension plan etc. Through this you can increase your investment and you can get good returns.

Safe Investment: National Pension System is a safe investment option. To protect your investment in this, the government has created a pension fund. Moreover, your investment amount in the National Pension System grows and gives you a secure return.

Regular Investment: The National Pension System also has an automatic debit card facility for making regular investments. With this, you can invest regularly and increase the amount of your pension.

Returns: In the National Pension System, you get returns according to your investment. In this, you can take 60% of your investment amount as a pension plan and you can transfer the remaining amount to your bank account.

Profit is the main focus: Before investing in the National Pension System, the needs of an investor are understood. After this he is told the main options for his benefit. In this way, the investor gets a chance to invest as per his needs and get maximum returns.

Affordable Rates: The rates for investing in the National Pension System are very convenient. In this, you can choose different options according to your investment amount. This gives investors the maximum opportunity to invest as per their needs.

Online NPS Account: You can open an online NPS account to invest in the National Pension System. This makes investing very easy and you do not need to go to the bank.

No Documents Required: You do not need any documents to invest in the National Pension System. You can easily invest online.

Very low initial investment: You need a low initial investment in National Pension System. With this, you can invest according to your needs.

Rules for investment in National Pension Scheme:

  • You must be between 18 years to 60 years to invest in the National Pension System.
  • Your pension term should be 60 years.
  • To invest in the National Pension System, it is necessary to have your passporting document.
  • To invest in the National Pension System, you must have a relationship with the National Pension System Trust (NPST).
  • To invest, you need to have a valid account under NPS.
  • To invest in the National Pension System, you must have a PAN card.
  • You can invest in National Pension System at least once in a year.

Detailed list of options:

There are various options to invest in the National Pension System in which one can invest. These options are as follows:

Government Scheme: National Pension System is a special option for government employees. The government also invests in this, which gives more chances of security to the investors.

Independent Investment: In this, investors can choose their investment options and set a fixed amount for their investment. This option is suitable for most investors who understand the various investment options and are informed about their investments.

Scheme with minimum guarantee: In this scheme, minimum guarantee is given to the investors. In this, investors deposit a specific amount which increases over a period of time.

Purely Market Linked Investments: In this, investors can invest in market-linked investment options. In this, investors need relevant knowledge to invest in the market.

Investment Swap Scheme: In this the investors have to swap to invest in different investment options. In this scheme, investors have more autonomy in choosing investment options.

Benefits of National Pension Scheme:

  1. National Pension System is a safe option for investors to accumulate money for their future.
  2. The National Pension System promises investors a regular pension during the latter part of life.
  3. Investing in the National Pension System gives the investor the option of investing at least as much as in his earlier life.
  4. Investing in the National Pension System gives the investor a chance to lead a secure life.
  5. National Pension System is a tax-saving option. Investors can get tax exemption on the amount invested under the National Pension Scheme.
  6. Investing in the National Pension System gives the investor more advantages than private investment options.
  7. Investing in the National Pension Scheme guarantees a secure future to the investor.
  8. By investing in the National Pension System, the investor gets a lifetime corpus. This fund is available till the last stage of the investor’s life.
  9. The investment amount under the National Pension System is also an investment for the Income Tax Department. This gives the benefit of getting tax exemption as per the limit prescribed by the Income Tax Department.
  10. Investing in the National Pension System protects the investor from the authority of the Income Tax Officer.
  11. To withdraw the investment amount under the National Pension System, the investor has to wait till the attaining of the pensionable age. This helps in making the investment decisions of the investor.
  12. Investing in the National Pension System gives different investment options to the investor as per his investment requirement.

Eligibility for investing in National Pension Scheme:

To invest in the National Pension Scheme, the investor has to fulfill the following qualifications:

  • Must be at least 18 years of age.
  • The investor must be an Indian citizen.
  • The investor should have a valid PAN card.
  • The investor should have a valid bank account. Before investing in the National Pension Scheme, the investor has to open at least one Tier-1 account.

How to invest in National Pension Scheme:

To invest in the National Pension Scheme, the investor has to follow the following steps:

  1. First of all, the investor has to visit the official website of National Pension Scheme https://enps.nsdl.com/ and click on the option “Open New Account”.
  2. The investor has to enter his information. This includes name, address, email ID, mobile number and PAN card number.
  3. The investor has to upload the scanned copies of his Postal Acknowledgment, Bank Account and PAN Card.
  4. The investor has to choose the nominee. Nominee can be any individual or entity whom the investor wishes to include in his nomination.
  5. The investor has to choose the type of investment scheme. There are two options in this – Tier-1 and Tier-2.
  6. The investor has to choose his investment amount. The investment amount should be at least Rs 500.
  7. The investor has to deposit the investment amount through net banking. Investors can transfer money from their net banking account to the National Pension Scheme account.
  8. The investor is given a payment receipt showing his payment.

Investors can keep a daily eye on their National Pension Scheme account. They can check their account balance, investment history and other information through the official website of National Pension Scheme.

Disadvantages of National Pension Scheme:

  • While investing in the National Pension System, the investor has to divide his investment into different investment options, which can be somewhat difficult for the investor.
  • After investing in the National Pension Scheme, the investor has to wait till the pension age to withdraw his investment amount from the pension scheme. Hence, investors while investing in this scheme should keep in mind that they are investing for a long investment horizon.
  • Investors should assess their investments while investing in the National Pension Scheme. The financial position of the investor may change due to long tenure of investment in this scheme.
  • While investing in the National Pension Scheme, the investor should keep in mind that this scheme is a safe option for investment, but the investor does not get any income from it.
  • To invest in the National Pension Scheme, the investor has to select a pension scheme. While investing in the National Pension Scheme, investors should also keep in mind the ratings of the companies managing the pension fund.
  • Before investing in National Pension Scheme, investors should understand the terms, conditions and investment process of this scheme.
  • Before investing in the National Pension Scheme, investors should thoroughly understand their investment information and the available investment options.
  • Investors should assess their financial situation before investing in National Pension Scheme. This will help the investor to choose the right investment option as per his/her financial goals and risk tolerance.
  • Before investing in the National Pension Scheme, investors should understand the long term of their investment and the long term of investment for pension.

Apart from all these methods, it may also be useful for the investor to talk to a pension counselor or financial advisor before investing in the National Pension Scheme. They can help and guide investors on all the important aspects related to investments and help them make the right decisions while tracking their investments.

National Pension System is a very useful investment scheme which provides investors with a beneficial pension for their old age. Along with this, investors also get better returns by investing in this scheme. But, before investing in this scheme investors must understand their financial condition, investment process, terms and conditions. Also, they should take proper advice and guidance before investing in this scheme. This can help them take the right decision while investing and create a secure future for their old age.

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