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Are you looking to plan your retirement? Then you must have heard the word ‘National Pension System’, or NPS. It is a voluntary retirement plan for individuals planning to secure their golden years financially. We’ll explore details about the National Pension System and how to open an NPS account online.
The National Pension System (NPS) is a voluntary retirement program for salaried employees. The Government of India introduced it to safeguard their future financially. NPS subscribers need to contribute regularly, and after retirement, they can collect 60% of the accumulated corpus, and the remaining 40% will be used to purchase an annuity.
Advantages of the National Pension System
1. Regulated: The National Pension System is regulated by PFRDA (Pension Fund Regulatory and Development Authority), which maintains transparency and protects the subscribers’ interests.
2. Potential for High Returns: NPS investments are market-linked as they invest in equities, which increases the potential for high returns.
3. Diversification: NPS invests in equities, corporate bonds, government securities, and AIFs. It provides the necessary diversification that an investment should have.
4. Professional Management: NPS investments are managed by professional fund managers. They have the expertise to create a balance between risk and return.
5. Portable: A subscriber’s change in job or location doesn’t impact his or her contributions. Subscribers can continue to invest in NPS without worrying about employment changes.
6. Tax Benefits: This is one of the major advantages of NPS. It provides tax benefits under Section 80(C) and 80CCD 1(B), respectively.
7. Low Investment Retirement Plan: Any Indian citizen can open an NPS account online with a minimum contribution of ₹500.
How to Open an NPS Account
Any Indian citizen between the ages of 18 and 70 can open an NPS account online. A subscriber needs to follow the below steps.
a) Go to a trusted eNPS portal: Visit a trusted eNPS portal online using your laptop or mobile device.
b) Register yourself: You can now sign up as a new ‘Subscriber” by providing your PAN card, Aadhar card number, and other relevant information.
c) Receive PRAN: You will get a Permanent Retirement Account Number (PRAN) to access your account online, after successful registration.
d) Contribute: You can begin your NPS contribution after your account is activated.
e) Choose your asset allocation: After contribution, you can allocate your assets, choose the fund manager, and add an auto or active mode to your investment approach.
f) Monitor your investments: As per your financial goals, risk tolerance, and investment horizon, you need to monitor your investments and track your portfolio’s performance.
Looking to calculate your accumulated corpus, pension amount, and tax benefits as per your contribution? Click here.
Conclusion
The National Pension System has become one of the most attractive pension plans among individuals, thanks to its benefits. Any Indian citizen between the ages of 18 and 70 can open an NPS account and gain from the benefits, such as market-linked returns, tax benefits, portability, flexibility, etc. A subscriber only needs to follow the above-mentioned steps to open an NPS and start contributing toward their retirement.
