NPS subscribers will soon get more annuity options
NPS has also begun receiving resounding acceptance as a tax-efficient instrument for retirement planning in recent times. As per data, around 14,027 corporates are currently registered with NPS, adding a total of 18.13 lakh subscribers to the system.
Having recently reached the Rs 10 lakh crore AUM in August 2023, the National Pension System (NPS) is all set to offer a mix of annuity options and systematic withdrawal plans (SWP), all to be offered by the same insurer, starting October 2023.
As of now, once an NPS subscriber turns 60, they are eligible to withdraw 60% of their accumulated retirement corpus as a lump sum. The remaining 40% is automatically allocated towards buying an annuity plan.
According to PFRDA chairman Deepak Mohanty, NPS subscribers will soon be able to customize the quantum of annuity they wish to receive. Moreover, as per media reports, they will also be able to choose from multiple annuity plans offered by the same service provider once they exit from the NPS system.
Under SWP, the subscriber can choose to withdraw their corpus periodically, instead of taking it out as a lump sum. The withdrawals can either be monthly, quarterly, semi-annually or annually, till the subscriber touches 75 years of age.
NPS has also begun receiving resounding acceptance as a tax-efficient instrument for retirement planning in recent times. As per data, around 14,027 corporates are currently registered with NPS, adding a total of 18.13 lakh subscribers to the system.
Around 53.06% of the total AUM under NPS is parked in government securities. About 25.78% of the AUM is earmarked for corporate debt. The equity exposure of NPS is limited to 17.67% of the total AUM.
Despite this, NPS has managed to deliver solid returns over a long term. Since inception, while equities have generated 12.45%, corporate bonds and government securities have delivered 9.15% and 8.68% respectively. However, over a 3-year period, equities have far outperformed its debt counterparts, generating 20.63% returns. During the same period corporate bonds saw 5.96% returns, while government securities only saw 5.19% returns.
But remember, NPS is a long-term game. The money invested here is locked in till the subscriber turns 60. Partial withdrawal is possible, but only under special circumstances like disability, child’s marriage or education. As a subscriber, you can withdraw from NPS corpus only thrice during their tenure. So, remember to stay invested for the best returns!