Key Takeaways
- NPS is one of the most affordable and low-cost investment plans in today’s time and age.
- The Pension Fund Regulator regulates the NPS under the Ministry of Finance of India.
All About National Pension Scheme
A National Pension Scheme, commonly known as NPS, has become one of the most preferred investment plans as a means of financial security after your retirement. The National Pension Scheme is an investment plan backed by the Government of India.
In this article, we will look at everything you should know about investing in the best NPS scheme.
Did You Know?
The PRAN you get for the NPS account remains the same irrespective of whether you change your job or hometown.
Why Can Opting For NPS Be Beneficial For You?
A few reasons why opting for National Pension Scheme can be beneficial are as follows –
Provides Financial Security to You and Your Family
One of the key benefits of opting for the best NPS scheme is that it provides financial security after you retire. Financial security is one of the key benefits of investing in a National Pension Scheme. After you retire, there are chances that you might worry about how you will manage your financial requirements. Investing in a National Pension Scheme will provide you with financial security after retiring. Moreover, it will provide you with income or pension every month. This will ensure that you or your family do not encounter any financial hassles and can continue your lives easily.
Lump-Sum Tax Benefits
Another key benefit of investing in the best NPS scheme is that it offers a lump sum amount of tax deduction benefits. By investing in this plan, the policyholder can claim a lump sum amount of tax benefits of upto Rs 50,000 under Section 80CCD of the Income Tax Act, 1961.
Ideal for Policyholders Who are Looking for Low-Risk Investments
For those looking for an investment plan with a low level of risk, NPS is an ideal investment plan. Investing in the best NPS Scheme comes with a lower risk compared to other insurance policies in India.
Comes with Affordable Premiums
Investing in the best NPS scheme comes with the benefit of affordable and cheaper premiums compared to other insurance policies. Moreover, this plan provides the policyholder with lump sum compounding returns after retirement.
Things to Know About NPS before Investing in NPS
Types of NPS Account
There are 2 types of NPS accounts –
- Tier 1
- Tier 2
To open an NPS Tier 2 account, it is mandatory to have a Tier 1 account.
Withdrawal Policy
The best NPS scheme offers a withdrawal policy wherein the policyholder can claim 60% of the lump sum amount. The remaining 40% can only be invested in annuities or pension plans. In case the policyholder comes across a financial emergency, they might have to make partial withdrawals. In this case, the best NPS scheme offers the policyholder to make partial withdrawals after the policy completes 10 years. However, the maximum partial withdrawal a policyholder can make is 25% of their contribution.
Modes of Investment
There are 2 investment modes for NPS –
- Active – If you can choose the active mode of investment, you can choose your type of investment, such as equity, corporate and government bonds.
- Auto – If you choose the auto mode of investment, then the fund experts will choose the type of investment for you to help you reduce the level of risk.
Best NPS Schemes to Invest in 2022
ICICI NPS Scheme
- ICICI offers one of the best national pension schemes for you to consider investing in.
- They offer tax deduction benefits of upto Rs. 50,000 under Section 80CCD and over and above the ceiling limit of ₹ 1,50,000 under section 80C of the Income Tax Act, 1961.
HDFC NPS Scheme
- HDFC also offers one of the best NPS plans for you to invest in.
- They offer 9.56 interest returns on a one-year investment and 11.90% of interest returns on a 5-year investment.
Reliance NPS Scheme
- Reliance NPP scheme is another NPS best scheme for you to consider.
- They offer 9.15% interest returns on a one-year investment and 10.32% on a 5-year investment.
Kotak Mahindra Pension Fund
- Kotak Mahindra Pension Fund is another best pension fund for NPS in today’s time and age.
- They offer 9.28% interest returns on a one-year investment and 11.12% on a 5-year investment.
LIC Pension Fund Ltd.
- LIC Pension Fund Ltd has become one of the best NPS plans in India.
- They offer 8.13% interest returns on a one-year investment and 10.22% on a 5-year investment.
How to Choose the Most Suitable Fund For Yourself?
Know Your Financial Requirements
We all have different long-term financial requirements. Moreover, as we grow old, there are high chances that our health deteriorates and we might get diagnosed with an illness. In such cases, managing our expenses becomes difficult. In such cases, the best NPS schemes come in. Investing in the best NPS scheme will provide you with monthly pensions to ensure you do not face any financial hassles after retirement.
Know the Amount of Premiums You Can Afford to Pay
Before choosing the best NPS scheme, make sure you can pay the premiums for this policy. This will ensure that the policy does not lapse in case of non-payment of premiums.
Policyholder’s Demise
In case of unforeseen demise of the policyholder, 100% of the lump sum amount will directly go to the nominee or the legal heir of the policyholder.
Word to Remember
Exempt-Exempt-Exempt (EEE) – Investment plans that are EEE means that are tax exempted, and the policyholder can claim taxes in one financial year under the Income Tax Act, 1961.
Conclusion
You now know everything about the best NPS schemes in India. Investing in the best NPS scheme will ensure that you have a safe and secure retirement and can enjoy your golden years with your loved ones. So, if you are planning to invest in the best NPS scheme in India, you can get in touch with the leading insurance providing companies. Their life insurance experts will help you choose the best NPS scheme that matches your financial requirements and help you with your way forward.
FAQs
A few reasons why opting for National Pension Scheme can be beneficial are as follows –
Provides Financial Security to You and Your Family
One of the key benefits of opting for the best NPS scheme is that it provides financial security after you retire. Financial security is one of the key benefits of investing in a National Pension Scheme. After you retire, there are chances that you might worry about how you will manage your financial requirements. Investing in a National Pension Scheme will provide you with financial security after retiring. Moreover, it will provide you with income or pension every month. This will ensure that you or your family do not encounter any financial hassles and can seamlessly continue your lives.
Lump-Sum Tax Benefits
Another key benefit of investing in the best NPS scheme is that it offers a lump sum amount of tax deduction benefits. By investing in this plan, the policyholder can claim a lump sum amount of tax benefits of upto Rs 50,000 under Section 80CCD of the Income Tax Act, 1961.
Ideal for Policyholders Who are Looking for Low-Risk Investments
For those who are looking for an investment plan that involves a low level of risk, NPS is an ideal investment plan. Investing in the best NPS Scheme comes with a lower risk compared to other insurance policies in India.
Comes with Affordable Premiums
Investing in the best NPS scheme comes with the benefit of affordable and cheaper premiums compared to other insurance policies. Moreover, this plan provides the policyholder with lump sum compounding returns after retirement.
A National Pension Scheme, commonly known as NPS, has become one of the most preferred investment plans as a means of financial security after your retirement. The National Pension Scheme is an investment plan that is backed by the Government of India. This plan offers monthly incomes in the form of pensions after the policyholder has retired. Moreover, this will ensure that the policyholder does not encounter any financial hassles and can seamlessly continue with his or her life.
Know Your Financial Requirements
We all have different long-term financial requirements. Moreover, as we grow old, there are high chances that our health deteriorates and we might get diagnosed with an illness. In such cases, managing our expenses becomes difficult. In such cases, the best NPS schemes come in. Investing in the best NPS scheme will provide you with monthly pensions to ensure you do not face any financial hassles after retirement.
Know the Amount of Premiums You Can Afford to Pay
Before choosing the best NPS scheme, make sure you can pay the premiums for this policy. This will ensure that the policy does not lapse in case of non-payment of premiums.
Policyholder’s Demise
In case of unforeseen demise of the policyholder, 100% of the lump sum amount will directly go to the nominee or the legal heir of the policyholder.
ICICI NPS Scheme
-ICICI offers one of the best national pension schemes for you to consider investing in.
-They offer tax deduction benefits of upto Rs. 50,000 under Section 80CCD and over and above the ceiling limit of ₹ 1,50,000 under section 80C of the Income Tax Act, 1961.
HDFC NPS Scheme
-HDFC also offers one of the best NPS plans for you to invest in.
-They offer 9.56 interest returns on a one-year investment and 11.90% of interest returns on a 5-year investment.
Reliance NPS Scheme
-Reliance NPP scheme is another NPS best scheme for you to consider.
-They offer 9.15% interest returns on a one-year investment and 10.32% on a 5-year investment.
Kotak Mahindra Pension Fund
-Kotak Mahindra Pension Fund is another best pension fund for NPS in today’s time and age.
-They offer 9.28% interest returns on a one-year investment and 11.12% on a 5-year investment.
LIC Pension Fund Ltd.
-LIC Pension Fund Ltd has become one of the best NPS plans in India.
-They offer 8.13% interest returns on a one-year investment and 10.22% on a 5-year investment.
The best NPS scheme offers a withdrawal policy wherein the policyholder can claim 60% of the lump sum amount. The remaining 40% can only be invested in annuities or pension plans. In case the policyholder comes across a financial emergency, they might have to make partial withdrawals. In this case, the best NPS scheme offers the policyholder to make partial withdrawals after the policy completes 10 years. However, the maximum partial withdrawal a policyholder can make is 25% of their contribution.
