5 Things to Know About the National Pension Scheme
National Pension
The National Pension Scheme (NPS) has been one of the most successful government introduced social-security initiatives in India.
Not only does it guarantee a financially secure retirement life but also stands out due to its inclusivity, returns, special features, etc.
It was established in 2004 and is a dual benefit scheme that secures your retirement planning while also providing great tax savings.
You can save up to Rs 1,50,000 a year on taxes by investing in National Pension Scheme (NPS). In fact, both, private and government employees can be a part of the NPS.
Just like any old laws and acts in India, in the last few months, the National Pension Scheme (NPS) too was amended by the Pension Fund Regulatory and Development Authority (PFRDA).
However, here is all you need to know about the NPS. Following is a simplified explanation of each of the 5 changes made in the NPS:
- Introduction of the NACH Mandate in the NPS: The PFRDA has decided to make the National Pension Scheme (NPS) a lot easier for the common man by keeping up with digitalization and going paperless. The NACH (National Automated Clearing House) mandate will allow all the transaction steps to be digital right from the Point of Presence (PoP) to other NPS Distributors. PFRDA brought into existence, this mandate with the help of Trustee Bank and Central Record-Keeping through the National Automated Clearing House run by the National Payments Corporation of India. This means the employee can now use the digital mode that will reduce transaction failures thereby making the process error-free and more efficient to a great extent.
- Permission to withdraw all of the accumulated wealth: Earlier, the working individual who invested in the NPS could withdraw only up to 60% of the total corpus compounded in the account. The balance of 40% was by default mandated to purchase an annuity plan. However, the big relief in this 2nd change is that now you can withdraw the entire amount for pension installments on maturity.
- Deadlines and timelines relaxed: The second wave of the pandemic hit each industry very badly. Keeping this in mind, the PFRDA has revised certain time schedules for both- NPS and NPS Lite (Swavalamban) schemes. The Point of Presence (POPs) has been instructed to undertake NPS-related activities within the prescribed Turn Around Time (TAT) under the PFRDA Regulations, 2018, and guidelines issued there-under, in order to ensure timely and convenient service to subscribers. This basically means that the employee will not have to face hassles with respect to documents for compliance, with the authorities.
- Allowing partial withdrawal after self-declaration: Earlier, you had to submit certain documents for final approval before any partial withdrawal. Yet again, to make the process faster and more convenient; an amendment was made. Now, you as an NPS subscriber can do this by using the web and filling in an online and paperless self-declaration. To know more about other paperless and online schemes to safely park your money, make sure to check out the Bajaj Finance website too.
- Instantization of Deposit procedures using IMPS: The PFRDA has now allowed NPS subscribers to make deposits under D Remit (direct remittance) using an immediate payment system (IMPS). This brings a lot of convenience and speed to the process.
The idea behind all the changes has been to keep up with the way certain companies in the finance industry are digitalizing.
A good example would be Bajaj Finance that now provides the option to invest in a Fixed Deposit (FD) online without the need to do any step offline.
Therefore, the changes have been made to move towards a quicker and delay-free process.
The NPS changes, therefore, come as welcome relief to investors-working individuals.
Author Bio:
Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at Highlight Story.
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Category: Family Finances
