Tax Savings Through National Pension Scheme: PFRDA Newsletter

Published: March 27, 2015 at 12:06 pm

Last Updated on

The following is a communication clarifying tax savings through the National Pension Scheme (NPS) from the Pension Fund Regulatory and Development Authority (PFRDA).  Click on the image to enlarge.  I am posting it purely by way of information because I have received several emails on the subject.  This is not a recommendation for NPS.  If you are considering using the NPS for saving tax or for your retirement, please do read the following:

Do Not Invest Rs. 50,000 in NPS For Saving Tax! 

National Pension Scheme (NPS): Do not invest unless you get tax benefits! 

National Pension Scheme (NPS): Returns generated by Pension Fund Managers

Performance of New Pension Scheme: Central Government Employee Subscriptions 

New Pension Scheme and Me

The PFRDA chairman writes, “it is important to save for retirement, but also effectively and efficiently”.

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An effective and efficient retirement plan involves investing for retirement.

You can plan for your retirement with a lot more freedom, with lot less tax outgo and with a lot more returns (fingers crossed!) with a combination of equity mutual funds (or stocks) + PPF+ EPF. Do not invest in a product with poor liquidity and unclear taxation status (upon withdrawal).

Subscribers want clarity on the taxation angle and not the tax-saving  angle.  PFRDA is aware of this. Let us hope that their next newsletter will shed light on this.

This note clarifies that government employees can now invest separately in Tier 1. This was not possible earlier.  Not suggesting that you do it considering they have no control over the asset allocation. As of now they have only 15% equity exposure. Most of the folio has long-term GOI bonds.

NPS-tax-deduction

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