Planning for retirement is one of the most important financial decisions you can make. With increasing life expectancy and rising costs of living, securing a stable income post-retirement is crucial. One of the best ways to do this in India is by investing in the National Pension Scheme (NPS).
NPS is a government-backed retirement savings scheme that provides financial security in your golden years. It is flexible, tax-efficient, and ensures a steady income after retirement. If you’re wondering why you should invest in NPS, this article will help you understand its benefits and how to open an NPS account easily.
Benefits of Investing in NPS
1. Attractive Returns
Unlike traditional savings options like fixed deposits or PPF, NPS invests in a mix of equity, corporate bonds, and government securities, helping you earn market-linked returns. Historically, NPS has delivered 8-10% annual returns, making it a good long-term investment option.
2. Dual benefit of Low Cost and Power of Compounding
You get the benefit of lowest account maintenance costs with NPS as compared to similar pension products across the globe. While saving for a long-term goal such as retirement, the cost matters a lot as the charges can trim off a significant amount from the corpus over 35-40 years of investment period.
Till the time you stay invested, the accumulated corpus grows over a period of time at a compounding rate and offers optimum market linked returns based on your investment choice. With this dual benefit of low cost and compounding, you get the benefit of larger corpus.
3. Tax Efficient
One of the biggest reasons to invest in NPS is its tax-saving advantage. Here’s how you can save on taxes:
Deduction up to ₹1.5 lakh under Section 80CCD(1) (part of 80C limit).
Additional deduction of ₹50,000 under Section 80CCD(1B) (beyond 80C limit).
Employer contribution (if applicable) up to 10% of salary under Section 80CCD(2), which is also tax-free.
4. Low Investment Requirement
You don’t need a large sum to start investing in NPS. The minimum contribution is just ₹500 for Tier 1 and ₹250 for Tier 2 accounts. This makes it an affordable investment option for everyone.
5. Flexible
You get the freedom to decide your investment allocation among the four asset classes available, depending on your risk appetite and the return expectations. You also get the flexibility to shift your pension fund manager and scheme preference.
6. Regulated and Transparent
NPS is regulated by Pension Fund Regulatory and Development Authority (PFRDA), ensuring transparency and security for investors.
7. Pension After Retirement
At the time of retirement (age 60), you can withdraw up to 60% of your NPS corpus tax-free, and the remaining 40% is used to buy an annuity (pension plan) to provide a monthly income for life.
How to Open an NPS Account with Retire100?
Opening an NPS account is a simple process and can be done online or offline. Here’s how:
1. Visit the Visit the Retire100 NPS portal
2. Enter your investment details
3. Select a pension fund plan
4. KYC verification and Bank account verification
5. Upload Signature
6. Make the initial payment
7. Add nominee and bank details
8. Generate and download your Permanent Retirement Account Number (PRAN).
9. Start Investing
How to Use retire100 NPS Calculator?
Before investing, estimating your potential returns using an NPS Calculator is wise. This online tool helps you understand how much you can accumulate for retirement based on:
- Your monthly contribution amount.
- Investment tenure.
- Expected rate of return.
Steps to Use an NPS Calculator
- Visit a trusted website like Retire100 & click on the NPS Calculator
- Enter your age, contribution amount, expected returns, and retirement age.
- The calculator will display the projected maturity amount, pension amount, and tax benefits.
- Adjust the contribution amount to see how you can maximize your retirement corpus.
Steps to Use an NPS Calculator
- Visit Retire100 NPS Calculator
- Enter details like your age, contribution amount, expected returns, and retirement age.
- The calculator will display the projected maturity amount, pension amount, and tax benefits.
- Adjust the contribution amount to see how you can maximize your retirement corpus.
Conclusion
The National Pension Scheme is one of the best retirement investment options in India, offering market-linked returns, tax benefits, and financial security post-retirement. It is affordable, flexible, and well-regulated, making it an excellent choice for anyone planning their retirement.
If you haven’t started investing in NPS yet, now is the right time. Use the NPS calculator to plan your investments wisely and follow the simple steps to open an NPS account. Secure your future today!
