NPS (National Pension Scheme) in 2024 – Ultimate Guide in Hindi

Summary

The video script by Mukul Malik for the Asset Yogi Show offers a comprehensive breakdown of India's National Pension System (NPS). It discusses the scheme's tax benefits, investment options, and the process of retirement planning. The script compares NPS with mutual funds and explains the advantages and disadvantages, including the minimum lock-in period and the annuity phase. It also covers the eligibility, contribution limits, and tax implications under both the old and new tax regimes, providing a clear guide for potential investors.

Takeaways

• 📈 The National Pension System (NPS) is a retirement scheme launched by the Government of India, regulated by the PFRDA, and aimed at retirement planning and tax saving.
• 💼 Initially for government employees, NPS was opened to all citizens in 2009, offering two types of accounts: Tier 1 for retirement planning and Tier 2 for investment planning.
• 🔢 NPS assigns a 12-digit PRAN to each subscriber, with Tier 1 requiring a minimum Rs.500 investment and Tier 2 a minimum Rs.1000 for account opening, and no maximum limit on contributions.
• 🚫 A minimum lock-in period of 3 years applies to Tier 1 accounts, allowing partial withdrawal after this period, with a full withdrawal only after 60 years.
• 💰 Tax benefits are a significant incentive for NPS investments, with contributions up to Rs.2 lakh deductible in Tier 1, but no tax benefits for Tier 2.
• 👤 Eligibility for NPS includes all Indian citizens between 18 and 70 years for Tier 1, and those with a Tier 1 account for Tier 2.
• 📊 Investment options in NPS include choosing a pension fund manager and selecting between active or auto asset allocation, with varying risk levels from government bonds to AIFs.
• 💹 At retirement, 60% of the NPS corpus can be withdrawn as a lump sum, with the remaining 40% invested in annuity for a monthly pension, but with potentially lower returns compared to market investments.
• 🔑 Subscribers can partially withdraw up to 25% of their total contributions after 3 years for specific emergencies, with no tax on such withdrawals.
• 💡 Taxation under the old regime offers deductions under sections 80C, 80CCD-1, and 80CCD-2, with the new regime providing only employer contributions under 80CCD-2, and annuity income taxed as regular income.
• 💼 Charges for NPS include account opening, points of presence (POP) charges, and fund management fees, which are generally lower than those of mutual funds but come with lower liquidity.

Q & A

What percentage of urban Indians over 50 regret not starting retirement planning early according to the MaxLife study?

According to the MaxLife study, 90% of urban Indians over the age of 50 regret not starting retirement planning early.

What is the National Pension System (NPS)?

The National Pension System (NPS) is a pension scheme launched by the Government of India, regulated by the PFRDA, aimed at retirement planning and tax saving.

Who can open a Tier 1 account in NPS?

Any Indian citizen between the ages of 18 and 70 can open a Tier 1 account in NPS.

What is the minimum lock-in period for a Tier 1 account in NPS?

The minimum lock-in period for a Tier 1 account in NPS is 3 years, after which partial withdrawals are allowed.

What is the minimum amount required to open a Tier 1 account in NPS?

The minimum amount required to open a Tier 1 account in NPS is Rs.500.

What are the two types of accounts offered by NPS?

NPS offers two types of accounts: Tier 1, primarily for retirement planning, and Tier 2, mainly for investment planning.

What is the tax deduction limit for employee contributions in NPS under Section 80C in the old regime?

In the old regime, the tax deduction limit for employee contributions in NPS under Section 80C is up to Rs.2 lakh in a Tier 1 account.

How does the asset allocation change with age in the active choice option of NPS?

In the active choice option of NPS, subscribers can choose their asset allocation, with a maximum of 75% in equity at the age of 50, decreasing by 2.5% every year until reaching 50% at the age of 60.

What are the three types of auto choice funds available in NPS?

The three types of auto choice funds in NPS are the aggressive lifecycle fund, the moderate lifecycle fund, and the conservative lifecycle fund, each with different risk levels and equity allocation based on the subscriber's age.

How much of the total corpus can be withdrawn as a lump sum upon retirement in NPS?

Upon retirement, 60% of the total corpus can be withdrawn as a lump sum in NPS, with the remaining 40% invested in the form of an annuity.

What is the maximum amount one can withdraw in case of an emergency from NPS after 3 years of contribution?

After 3 years of contribution, one can withdraw up to 25% of their total contribution in case of an emergency, regardless of the total corpus value.

What are the major charges associated with NPS?

The major charges associated with NPS include account opening charges, points of presence (POP) charges, and fund management charges, which range from 0.03% to 0.09% annually.