Archives of articles related to the National Pension Scheme (NPS) aka the New Pension Scheme.
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 →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…
Continue reading →Here is a guide to investing in the National Pension System (NPS) with suggestions for existing and potential individual, corporate and government subscribers. Over the past few years, the government has tried hard to make the National Pension System popular. First, it used the magic phrase tax-saving by allowing an additional 50,000 invested in Tier 1 to be discounted from…
Continue reading →The Pension Fund Regulatory and Development Authority (PFRDA) has announced guidelines regarding partial withdrawal from the National Pension System (NPS). (1) A subscriber whose NPS account is at least 10 years old will be eligible for withdrawing 25% of his/her contributions alone. Employer contributions (if any) cannot be withdrawn. Notice the similarity with the recently…
Continue reading →‘In the light of budget 2016 recommendations, should I now switch or shift to the national pension scheme?’ More and more EPF and other pension scheme subscriber are asking this question. While it is clear that we need to wait for the budget recommendations to become a law, here are some important points to keep in…
Continue reading →Here are some less-understood facts about the National Pension Scheme (NPS). National Pension Scheme comes with no guarantees of returns. NPS is a mutual fund and carries with it all the risks associated with any old mutual fund. Read more: NPS investments are mutual fund investments! The aim of NPS is to generate a corpus…
Continue reading →Did you know that when you invest in the national pension scheme (NPS), you are actually investing in mutual funds? The NAV would be as volatile as any old equity or debt mutual fund and returns are not guaranteed. I was surprised that many thought the NPS investing is different from mutual fund investing. Hence…
Continue reading →Should NRIs Invest in the National Pension Scheme? A discussion on why the National Pension Scheme (NPS) is not a good option for NRIs to invest in. RBI has allowed NRIs to invest in the National Pension Scheme. While such a move would be beneficial for the country, I don’t think investing in the NPS is…
Continue reading →Here is how all NPS subscribers, including state and central govt. subscribers can make online contributions to NPS. This is post is meant for existing individual, corporate and government subscribers and is not a recommendation to invest in NPS. If you have an existing account with valid PRAN no (permanent retirement account number), you can, Go…
Continue reading →Here is a National Pension Scheme NPS Calculator for government, corporate, and individual subscribers in Excel to enable better understanding of how the scheme works. For government subscribers, the asset allocation is fixed: 15% in equity (E) and rest in fixed income (allocation to G – government bonds and C – corporate bonds is not known) The…
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