What is National Pension System? What are the benefits of NPS?Should you invest in NPS for retirement?

 National pension system. In the name it is clear that it a retirement scheme and is an essential aspect to take care of financial planning at retirement phase. It is an initiative undertaken by the government of India, the NPS provides  the retirement benefits to all the sectors even it's unorganised. NPS introduced in 2004 by government of India. It is a voluntary  retirement system for Indian citizen between 18 to 65 years.

  • It is regulated by Pension Fund Regulatory and development Authority. In NPS fund managers also played a huge role. Fund managers are:- 
  • Aditya birla fund manager
  • SBI fund manager
  • LIC fund manager
  • HDFC fund manager
  • UTI fund manager
  • Kotak Mahindra fund manager
  • ICICI Prudential fund manager
  • And they are approved by Government of India.
  • Now the question is where does your money get invested?
  • Your money will invest in four asset class:-
  • 1. Equity
  • 2. Govt bonds 
  • 3. Corporate bonds 
  • 4. Alternative investment

  • You can decide your asset allocation according to your risk profile. There are two ways to choose your asset allocation:- 
  • Active choice:- here you can decide your asset allocation. How much percentage of your money you want to invest in equity,govt. bonds, corporate bonds and alternative investment. 
  • Auto choice:- here asset allocation is decided by your fund manager.
  • Now we will discuss what are the main benefits of Nation Pension System:-
  • Tax deduction of ₹ 50,000 available under section 80CCD(1B) over & above ₹ 1.5 Lakh available under Section 80C.
  • You can start with minimum amount 500.
  • * Liquidity and flexibility by two types of accounts . They are - 
  • Tier-I account
  • Tier-II account
  • In tier II accounts, they are voluntary account, they provide liquidity of funds with investments and withdrawal. The minimum deposit for Tier-II account one should make is Rs 250.
  • However, investments in Tier-II accounts are allowed only when an active Tier I account in the subscriber’s name exists.
  •  Flexibility of investment  by two different options.
  • Auto choice- It is available as a default option for subscribers as per the system.
  • Active choice- Under this option, individuals are free to decide among available asset classes in which to invest their funds. 
  •  Option to make a partial withdrawal- It gives individuals partial accessibility to their funds saved over the years, thus allowing them to meet financial needs before retirement during  emergencies. Contributions   of minimum upto 10 years must be made for the partial withdrawal facility to apply.Also, there should be a minimum gap of 5 years between two consecutive withdrawals.

  • Now how to apply for NPS 
  • Applying for NPS account you need
  • Aadhar or PAN 
  • Net Banking facility .debit or credit card
  • Passport size photo of 4-12kb
  • Scanned image of signature of 12kb
  • Log on to NPS trust website.click on registration and choose individual.


  • Enter your Aadhar or PAN. Choose type of account. Key in OTP for authentication.
  • Fill in personal details.
  • Choose pension fund manager.
  • Choose investment mode.
  • Choose investment mix.
  • Select or assign your nominees.
  • Upload the photograph and the signature scanned .
  • Make the contribution and get PRAN.
  • Download the completed form. For more updates click this link http://mudrainvest.com


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