For the starters, NPS is a retirement focused scheme regulated by a statutory body, Pension Fund Regulatory and Development Authority (PFRDA).
NPS is a defined contribution scheme i.e. what an investor accumulates and gets as a pension after retirement depends on how much s/he puts into the scheme. The return, therefore, is not guaranteed but depends on performance of underlying assets. What makes NPS stand out among other investment alternatives is its low-cost, easy accessibility and its added advantage of building a corpus through market-linked asset classes.
Anyone between the ages 18-65 can join NPS, with a minimum investment of Rs 1,000 a year after fulfilling the KYC requirements. One gets a Permanent Retirement Account Number (PRAN), which captures all the data including personal details and transactions. At the age of 60, the contributions stop, and one is allowed to withdraw up to 60 percent of the corpus while annuity starts on the balance 40 percent of the NPS corpus from any of the designated annuity providers.
The returns in NPS are linked to market performance and there are two options to manage funds – Active Choice and the Auto Choice. Under the Active choice, there are three fund options – E, C, G.
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Denne historien er fra April 2019-utgaven av Investors India.
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