The thought of retiring is by no means without hiccups. You may choose to retire early, or never retire, but having some sort of a retirement corpus to fall back on serves more than one purpose. Unless you’re incredibly rich already, an ordinary citizen would benefit greatly from the national pension scheme investment (or NPS) - to tide you over during your sunset years. If you’re like me and have a hard time squirrelling away funds each month to form your corpus, then investing in this national pension scheme may make the most sense.
The National Pension Scheme (NPS) has been designed to inculcate a habit of systematic savings among central and state government employees as well as ordinary citizens. Under this scheme, you make voluntary predetermined contributions during your working life such that you can make wise decisions regarding your future via your systematic savings.
The Pension Fund Regulatory and Development Authority (or PFRDA) is responsible for handling this scheme which was first launched in January 2004. It presently serves as the country’s most affordable market-linked retirement plan.
Under this scheme, you are entitled to invest in any one of the three pension funds available. Each of these funds has minor differences. However, the overarching commonality relates to the fact that they can each provide you with good returns at the time of your retirement.
If you don’t make clear your preferred fund when you register, your money will be invested in the default funds that are the responsibility of the PFRDA. This authority not only invests in the pooled funds but ensures that professional fund managers manage them.
The amount you contribute to your pension scheme will grow over the years keeping in mind the returns drawn from investments. All NPS subscribers can alter between the different pension funds available. That said, a subscription to a given fund must be maintained for a minimum period of one year before this switch can be taken.
You must submit your application form along with all the supporting documents to get a permanent retirement account number (or PRAN) and subscribe to the national pension scheme. Under this scheme, subscribers can open two accounts which are as follows.
You're probably wondering how to invest in NPS online. Here are two methods you can invest in NPS online.
In order to enroll in the national pension scheme, you must submit the following documents in addition to a duly filled application form.
Listed below are some of the merits associated with investing in the NPS scheme
The limits imposed on Tier I and Tier II accounts are as follows.
Investing in the National Pension Scheme online is a straightforward and convenient process that offers a secure future for investors. It’s a government-backed initiative that provides individuals with a systematic platform to save for their retirement. The scheme is flexible, offering multiple fund options and two types of accounts to cater to different investment needs. By following simple steps, one can easily invest in this scheme from the comfort of their home, making it an excellent choice for those seeking long-term financial security. Remember, it’s never too early to start planning for retirement.
Users can find several investment options on the Fi app. Be it short-term or long-term — it's easy to invest with a simple swipe of your phone's screen. Fi also offers a Peer-to-Peer investment feature called Jump! Jump can help you earn up to 9% p.a on your investment. But if you want to save up for a short-term goal & earn interest on it, select our super-flexible Smart Deposit. If you're looking for higher/stable returns, opt for a Fixed Deposit.
Most people prefer to invest in the NPS online as it is a hassle-free and paperless process. Simply download the NPS smartphone application or visit the eNPS website to invest in this scheme.
There are upsides and shortfalls to the national pension scheme and the public provident fund. Although the latter provides fixed returns on a fixed income, NPS features an equity pension fund that can provide greater returns over the long term. That said, the PPF carries fewer risks compared to NPS holdings, which depend upon the markets. Ultimately, you should pick an investment best suited to your investor profile, financial goals, and needs.
The NPS interest rate currently ranges between 9%-12%. Indian citizens between the age group of 18-60 years can subscribe to the scheme.
Online: Visit www.onlinesbi.com and check 'Deposit & Investment'. Offline: Visit your nearest registered State Bank of India branch for NPS and submit the NPS Contribution Instruction Slip (NCIS) along with the contribution amount.
