NPS Retirement Planning: 5 benefits of investing in National Pension System (NPS)
Retirement Corpus: The National Pension System (NPS) is a market-linked retirement scheme that is designed to help individuals secure a strong retirement corpus.
NPS Planning: The National Pension System is open to individuals aged between 18 and 75, and it allows lump sum as well as monthly contributions. At the age of 60, the eligible individual can withdraw up to 60% of their corpus, with the remaining 40% being used to purchase an annuity plan, the return from which generates a monthly pension. Here are the 5 major key benefits of investing in National Pension System (NPS).
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Tax Benefits
NPS offers attractive tax deductions under Sections 80C and 80CCD of the Income Tax Act. Contributions up to Rs 2.0 lakh per annum in a Tier I account are eligible for tax deductions.
Market-Linked Returns
NPS is a market-linked scheme that helps an individual get returns up to 12.86 per cent, as per PFRDA’s assessment. They provide opportunities for higher returns compared to traditional retirement plans like PPF or EPF.
Assured Pension
Upon reaching 60 years of age, investors can use 40% of the accumulated corpus to purchase an annuity plan. It acts as a steady monthly pension and provides financial security post-retirement.
Flexibility
The National Pension System is flexible in terms of contributions and frequency of payments to individuals with different income levels. The investors have the option to choose their fund managers and investment mix between equity, corporate bonds, and government securities.
Portability
NPS accounts are portable across jobs and locations. Irrespective of the fact where the individual is working or living, they can continue their NPS contributions.