National Pension Scheme (NPS) is the government’s retirement cum investment scheme. Through this scheme, an individual can build a big corpus for himself/herself. The person needs to deposit money every month until the age of 60 to be able to reap the benefits of it. A person is allowed to withdraw only 60% of the sum invested as of now once he/she has attained the age of 60.
One can open a pension account in the National Pension System (NPS) with just Rs 1000. This is a retirement cum saving scheme of the government. NPS was launched by the central government on 1 January 2004. Earlier only government employees were part of it, then after 2009, those working in the private sector also got permission to open NPS account. It is regulated under the Pension Fund Regulatory and Development Authority (PFRDA).
NPS is a long-term investment. A person can close the NPS account only after he/she retires. After the age of 60, an individual can withdraw 60% of the deposit amount and with 40% one has to buy an annuity plan. The government has relaxed the rules for withdrawing money from June 2021.
If the total amount deposited in NPS at the time of retirement is less than Rs 5 lakh, then the capping of 60% on withdrawal is removed. Such subscribers will now be able to withdraw the entire investment at once.
The age of entry in NPS has also been increased by 5 years. The people belonging to the age group from 18 to 70 years will be able to open an NPS account. Earlier only people up to 65 years of age could invest in it.
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