Contribution is made to the National Pension Scheme before retirement. At the time of retirement i.e. on attaining the age of 60 years, some part of the accumulated fund can be withdrawn in a lump sum. From the remaining amount, you can get income in the form of pension.
If you also want that after retirement you do not face any problem of money, then you should invest in National Pension Scheme. It is not only a safe investment but it also gives good returns.
This is the reason that now most of the people belonging to government and private sector want to invest in Pension Scheme (NPS), so that there is no money problem after retirement.
This scheme was started in the year 2004 and earlier only government employees could invest in it but in 2009 it was opened to all. Contribution is made in NPS till the time of retirement. At the time of retirement i.e. on attaining the age of 60 years, some part of the accumulated fund can be withdrawn in a lump sum. From the remaining amount, you can get income in the form of pension.
Tax benefits are also available on investment in NPS. If you are employed, you can be entitled to a tax deduction of Rs 50,000 per annum by investing in NPS under section 80CCD (1B). This is different from the deduction of Rs 1,50,000 lakh available under 80C.
Who can invest
Any person in the age group of 18 to 65 years can start investing in NPS. Investment in NPS is managed by a pension fund manager appointed by the Pension Fund Regulatory and Development Authority (PFRDA). PFRDA is the regulator of the National Pension Scheme. You can choose any one of the total 7 Pension Fund Managers.
One can invest in pension funds till the age of 60 years. After this you have to take an annuity plan. One can buy an annuity plan from any of the six annuity providers. Only annuity providers will give you pension every month.
Investment of Rs 5,000
A 30-year-old person who invests only Rs 5,000 in NPS every month, can get Rs 22,279 as pension every month after retirement. Apart from this, he will also get a lump sum amount of Rs 45 lakh. 5,000 every month till he attains the age of 60 years. An annual interest rate of 10 per cent and an annuity rate of 6 per cent has been assumed for this estimate.
