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Investment Plans 3736 views September 24, 2020
Many individuals are worried about their life after retirement. Therefore, it is better to start planning for your retirement at an early age so that you will not have to face any financial problem after your retirement. So the government has introduced the National Pension Scheme in which you can make a contribution at an early age and accumulate funds for your retirement. In this scheme, you are allowed to make partial withdrawals up to 60% of the maturity corpus as lump-sum and the balance amount is invested to annuities. Now, you must go through some of the features and benefits of this scheme. See how you can enjoy tax benefits under the National Pension Plan.
Table of Contents
There are four types of NPS Account available and you can easily differentiate among them once you go through all of them.
In this account, the account holder is the only contributor to the pension scheme. The individual is free to choose the investment options and schemes as per his choice. Any individual who is a citizen of India can voluntarily open this account and he can also enjoy tax benefits on this investment.
This account is usually opened by corporate companies or by the employers for the employees. In this account, both employees and employers make contributions to the NPS scheme. The employer’s contribution must not exceed 10% of the employee’s basic salary and dearness allowances.
In this account, the contributions made are eligible for additional tax deduction benefit of up to Rs.50000 as per section 80CCD (1B) and above Rs.150000 under section 80C. Withdrawals are restricted as per the terms and conditions.
The account holders can invest an additional amount in Tier-II NPS Account. You are free to withdraw the entire accrued corpus in this Tier at any point in time. If in case you have not contributed towards the Tier II account then it will be automatically deactivated as per process. No tax benefits can be availed in this account.
There are 8 Fund Managers chosen by the Pension Fund Regulator under the Government of India and you can see all of them below
Here are the insurance companies that are registered under the Pension Fund Regulator under the Government of India. After the completion of 60 years, you can start annuity with the following insurance companies.
Particulars | Charges |
---|---|
Initial Subscriber Registration | Rs.200 |
Initial Contribution | 0.25% of the Initial Contribution with a minimum of Rs.20 and a maximum of Rs.25000 |
All Non-Financial Transactions | Rs.20 |
Persistency | Rs.50 per annum |
PRA Opening Charges | Rs.39.36 |
Annual PRA Maintenance cost per account | Rs.57.63 |
Charge per transaction | Rs.3.36 |
Particulars | Tier 1 | Tier 2 |
---|---|---|
Minimum Contribution Needed at the time of opening an account | Rs.500 | Rs.1000 |
Minimum Subsequent Contribution Needed | Rs.500 | Rs.250 |
Minimum Contribution Needed every year | Rs.1000 | NIL |
Minimum number of Contributions needed in a Year | 1 | NIL |