How can your retirement planning become stress-free with NPS?

Retirement planning is one of the most significant decisions to make as the inflation rate keeps rising. The cost of commodities and services will keep rising, and this is not in your control. And when your professional days are over, you will need a consistent amount to meet your financial goals. 

Here, retirement planning comes into the picture. There are many retirement plans available in the market, but NPS has become a popular choice among Indian citizens. The Government of India introduced the National Pension System in 2004, aiming to provide financial support during the golden years. 

So, how can NPS help you to meet your financial objectives, and what are its benefits? Let’s explore in this blog. 

National Pension System – Introduction 

NPS is a government-backed voluntary retirement savings scheme that encourages individuals to invest systematically during their earning years. The contributions made by you are invested in a mix of asset classes such as equities, corporate bonds, government securities, and alternative assets. 

National Pension System – Key Features 

1. Market-Linked Returns: NPS has the potential to provide high returns compared to other traditional retirement plans.  
2. Flexibility: You can invest in NPS from anywhere around the world; moreover, you can choose your investment option and fund manager as well. 
3. Low Cost: NPS is one of the most cost-effective retirement plans. Any Indian citizen can open an NPS account with ₹1000 with minimal fund management charges. 
4. Portability: Your NPS account remains active even if there is a change in your job, city, or location. 
5. Regulated: A government entity, the Pension Fund Regulatory and Development Authority (PFRDA), manages the transparency of the NPS. 

How NPS Helps You Meet Financial Objectives

• Builds wealth over time: In NPS, small monthly contributions can grow into a substantial corpus over time. Since NPS is a long-term investment, compounding plays a significant part in managing your medical and daily expenses. 
• Dual Benefits: Upon retirement, you can withdraw up to 60% of your tax-free financial corpus. The remaining 40% is used to buy annuities to receive a regular pension. 
• Tax Benefits: NPS offers attractive tax benefits. There is up to ₹1.5 lakh tax deduction under Section 80(C); moreover, an additional benefit of up to ₹50,000 is applicable under Section 80CCD (1B). So, in total, you can have up to ₹2 lakh tax benefits. 

National Pension System – Benefits 

1. Higher Returns: NPS offers 8-10% annual returns over the long term, which is higher than fixed deposits and PPFs. 
2. Accessibility: NPS is open to all Indian citizens aged 18-70. It makes NPS inclusive.
3. Digital Ease: Account opening and contributions can be done online with minimal paperwork.

Click here to learn about NPS withdrawal rules. 

Final Words

Retirement is not the end of your journey; it’s the beginning of a new phase where you should focus on living comfortably, pursuing passions, and spending quality time with loved ones without financial stress. Planning for this stage is essential, and the National Pension System (NPS) offers a smart, disciplined, and tax-efficient way to achieve it.