NPS Calculator: National Pension System (NPS) is the best investment plan for your retirement time. This investment helps you when your regular income stops. You can also plan your retirement by investing in NPS.
NPS gives Tier-I and Tier-II accounts to the people. Tier-I is a mandatory pension account with certain withdrawal conditions, Tier-II is an optional savings account with more withdrawal options.
Lump sum amount can be deferred for 70 years
Under NPS, on reaching the age of 60 years, the investor will have to buy an annuity of at least 40 percent of the corpus from the life insurance company. Also, 60 percent of the NPS corpus can be withdrawn as a lump sum amount. This amount is tax free. If you decide not to withdraw the entire NPS corpus till the age of 60 years, then they can defer the lump sum withdrawal till the age of 70 years.
During this, an annuity will have to be bought with at least 40 percent of the corpus. In case of early exit before the age of 60, the subscriber can withdraw only a lump sum amount up to 20 per cent of the NPS corpus. The remaining 80 percent amount can be used to buy annuity. But you should have all the information about it before investing.
1. Fund Management Charge
NPS is the least expensive investment option. In this, the fund management cost is fixed at 0.09 percent. This further reduces on the basis of Assets Under Management (AUM) under the management of the pension fund. For AUM up to 10,000 crores, the maximum fee will be 0.09 percent. From Rs 10,001 to Rs 50,000 crore, it is 0.06 per cent. Similarly, from Rs 50,001 to Rs 1,50,000 crore, this fee is 0.05 percent. For AUM above Rs 1,50,000 crore, this fee is the lowest at 0.03 per cent.
2. Equity exposure up to 75 percent
Two options are given by NPS. First active and second auto. The four funds for selection under the active category are Equity or E, Corporate Debt or C, Government Securities or G and Alternative Investment Fund or AIF. The maximum equity exposure under E Option is 50%. Whereas, under the auto option, you can get up to 75 per cent equity exposure depending on the age. You get three options in Auto Choice – Aggressive, Moderate and Conservative. The maximum equity exposure for the aggressive fund is 75% up to 35 years.
3. Same day NAV through UPI
You can opt for Direct Remittance (D-Remit) by transferring money directly from your bank account to avail Same Day Net Asset Value (NAV). You do not need to involve any mediator in this. D-Remit is an electronic system which enables same day NAV to be received for NPS investments.
4. e-NPS is the cheapest option
You can open an NPS account in two ways. First Point of Presence (POP) and second online (through e-NPS). The easiest and cheapest way to open an NPS account is online. To open NPS account online, Rs 400 + GST is required. It is payable at the time of your first investment. Thereafter, a convenience fee of 0.20% of the investment amount + GST, subject to a minimum of Rs 15 and a maximum of Rs 10,000, is applicable.
5. AIF option
NPS investors get an opportunity to invest in Alternative Investment Fund (AIF) or Scheme A. It offers attractive avenues in Alternative Investment Funds (AIF Category I & II), Real Estate Investment Funds (REITs), Infrastructure Investments. Trust (InvIT), CMBS CMBS and MBS.
Most of the pension fund managers offer this option. But before falling prey to the lure of high returns, it is important to know that Scheme A is available exclusively for Tier-I NPS investors. Also it is not available under Tier-2 account.
6. Pension Eligibility
You have to contribute for at least three years for pension under NPS. Also, your age should not be more than 60 years. After fulfilling all these criteria, you can get monthly pension. Apart from this, NPS customers should also be aware that they can take multiple annual schemes from the same live insurance company.
7. Portability
The most important thing for NPS investors is that such customers can operate their account from anywhere. Even if your city has changed or employment has changed. You can continue investing in NPS from any location without the fear of changing the city or place of employment. You will have to provide your PRAN number to maintain continuity.
