This is a question that we have received several times in the last few months: Since NPS (National pension scheme) is a low-cost product, can we use it as an index fund. Typically people wish to use Tier II this way since it has no lock-in. A discussion. First, the basics. NPS Tier I and…
Continue reading →Here is how you can set up an NPS SIP using the new D-Remit deposit facility and get the same-day NAV on national pension scheme contributions. To ease the process of contribution to the National Pension System(NPS), the Pension Fund Regulator(PFRDA) has introduced a new mode of deposit facility called Direct Remittance(D-Remit) starting from October…
Continue reading →The finance ministry has notified the National Pension Scheme Tier II- Tax Saver Scheme, 2020 under section 80C for central government employees.
Continue reading →Considering how the NPS equity schemes have underperformed Nifty 50 and Nifty 100 total return indices, it is high time PFRDA mandates these “low cost” fund to passively track an index instead of classifying them as “active funds” that can invest in the Nifty, Nifty 100 universe.
Continue reading →The NPS has a portfolio management fee of 0.01%. There is an additional custodian fee of 0.0032% and various transaction fee applicable on the investment amount (much like an airline charging extra for the seat, leg space and food). Nonetheless, a fee of 0.01320% is not only enticing but also leads one to assume we…
Continue reading →After ten years of investing in NPS (tier 1, central govt scheme) this is how my investments have fared since March 2010.
Continue reading →The govt is keen on offering an option to shift from EPS to NPS. While this is a good move from their viewpoint, does it make sense for existing EPF investors to shift to NPS in search of higher returns? We look at the key differences between EPF and NPS to find out
Continue reading →Here is how the NPS Tier 1 Equity Schemes (“E”) have performed since inception. Many mistakenly assume NPS equity schemes are index mutual funds tracking Nifty 50. A look at the scheme portfolios would immediately dispel that myth. The NPS E schemes hold close to 100 stocks. Getting the historical NAV history of the NPS…
Continue reading →Here is why you should not invest Rs. 50,000 to get additional tax saving in NPS under section 80CCD(1B) in 2019. The following tax deductions are applicable to the National Pension Scheme. (1) An individual can invest a maximum of Rs. 1.5 Lakhs in Tier 1 for tax deduction under Section 80CCD(1) which is part of…
Continue reading →You would be surprised as to how many people believe that by investing an additional 50,000 in NPS, they “instantly” get a return equal to their tax slab! This is a case of mis-accounting or innumeracy. In this post, I discuss what exactly is the implication of “saving tax” via investing in 80C and with…
Continue reading →In this post, I discuss why it is a terrible idea to shift your EPF corpus to the NPS (National Pension Scheme). In a circular dated 6th March 2017, the Pension Fund Regulatory and Development Authority (PDRDA) announced a road map for provident fund and superannuation plan subscribers to shift to the NPS. The shift…
Continue reading →There has been a lot of confusion regarding the exit and withdrawals rules of the National Pension System (NPS). I apologise if I have contributed to it. In this post, I shall attempt to get rid of my own confusion and clarify my understanding. Until today I have incorrectly believed that 40% of the NPS corpus…
Continue reading →NPS Tier 1 and Tier 2 plans have a corporate scheme (C) which has a mandate to invest in bonds issued by public sector undertakings (PSUs), public financial institutions (PFIs), infrastructure bonds, private corporate bonds and bank deposits. This is like a short-term diversified debt fund with about 50% of a banking and PSU fund…
Continue reading →A look at how NPS Tier 1 Equity schemes (E) have performed. With the increase in popularity of NPS because of the clever introduction of additional tax saving benefits – which one should avoid, more and more people are searching for “best NPS pension fund manager”. The reality is that there is nothing much to…
Continue reading →My mother retired 13 years ago and started receiving a pension that was indexed to inflation. Not only did it increase twice a year, thanks to DA hikes, it also increased as a result of pay commissions. The average year on year growth of her pension is close to 13%. This is an astounding number…
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