Do you want to live your life in peace after turning 40? If yes, then you should start planning for retirement right now. Most people do not think about retirement and keep working till the age of retirement. It is advised by experts that retirement planning should be started at an early time. You can prepare for retirement even with a small amount.
If you are thinking of retirement then National Pension Scheme (NPS) can be a very good option. This is a government scheme, so there will be no possibility of losing money. With the NPS scheme, the subscriber can make a minimum contribution of around Rs 6,000 in a financial year in the form of lump-sum or monthly installments of Rs 500. Any Indian citizen aged between 18 and 70 years can enroll in this scheme.
NPS scheme is one of the ideal pension and retirement planning schemes available in India for salaried, self-employed professionals and freelancers.
Opening an account under National Pension Scheme is easy and its account can be opened sitting at home and invested with a fixed amount every month. NPS is run by the Pension Fund Regulatory and Development Authority (PFRDA), so it is quite safe. PFRDA monitors this entire system.
Benefits of NPS
Returns and Interest
NPS route gives higher returns as compared to traditional tax-saving investment options like PPF, as it invests the contributions towards equities. It is ideal for those looking to settle down post-retirement as it accumulates an interest rate of 9 to 12 per cent, depending on the type of NPS account you choose.
Tax exemption is available
In NPS, customers also get the facility of tax exemption. Tax exemption is available under sections 80CCD(1), 80CCD(1b) and 80CCD(2) of the Income Tax Act. Apart from section 80C i.e. Rs 1.5 lakh on NPS, you can take a further exemption of Rs 50,000. By investing in NPS, you can avail income tax exemption of Rs 2 lakh.
Money can be withdrawn after 60 years
Under the National Pension Scheme, you can withdraw 60 percent of the money after the age of 60. This means that you can withdraw 60 percent of your maturity amount after 60 years without any tax.
Withdrawal and Exit Rules
Although one has to invest in NPS till the age of 60 years, but in case of an emergency, you can withdraw 25 percent before the completion of 60 years. However, for this, you have to invest continuously for three years first. You can withdraw money from NPS if you want your children’s education, their marriage, construction of house or any medical treatment for yourself or any family member.