Hey there, folks! Ready to dive into the exciting world of the National Pension Scheme? Well, brace yourselves because we’re about to take a wild ride through this rollercoaster of retirement goodness. If you’re looking for an in-depth analysis of numbers and stats, you might want to hit the snooze button. But if you’re up for a casual chat about all things retirement, then buckle up and let’s get started! After all, who said planning for your golden years had to be boring? Just remember, no napping on this blog ride!
Understanding the National Pension Scheme:
So you’ve decided to be a responsible adult and think about your retirement. Good for you! But wait, retirement planning? Doesn’t that sound boring? Well, lucky for you, the National Pension Scheme (NPS) is here to make it exciting! Okay, maybe not exciting, but definitely worth your attention. What is the National Pension Scheme, you ask? Well, it’s like a magical tool that helps you save for your golden years. Think of it as a piggy bank, but instead of coins, you fill it with your hard-earned money. Sounds thrilling already, doesn’t it?
Now, let’s get down to the nitty-gritty of how this pension scheme works. You contribute a part of your salary to the NPS. It’s like paying for a fancy gym membership, except instead of getting toned muscles, you’re building up a retirement corpus. Don’t worry, you can thank me later for this comparison. But hey, what about when you finally retire and want to enjoy the fruits of your labor? Well, you can withdraw a part of your corpus and use it to buy a luxurious beach house or a lifetime supply of your favorite chocolate. Okay, maybe that dream is a bit unrealistic, but you get the idea.
So there you have it, folks! The National Pension Scheme is not just another boring retirement plan. It’s an opportunity to secure your future in a financially savvy way. Trust me, future you will thank you for being responsible. And who knows, maybe you’ll get that beach house after all. But hey, don’t spend too much time dreaming about it just yet. We’ve got some recent updates on the NPS that you won’t want to miss! Hang tight, we’re keeping it interesting.
Recent Updates
1- Lump sump payment of corpus on exit
For subscribers who are on boarded within 18-60 years of an age.
A) Premature Exit : For government Employees, if the corpus is <=2.5 lacs than entire amount can be withdrawn. For non-government employees same rule applies given that he she has completed 10 years of subscription. If corpus is >2.5 lacs than at least 80% of corpus must be used to purchase annuity and rest 20% can be withdrawn lump sump.
B) Normal Exit (beyond 60 years of age) : If corpus is <=5 lacs then entire amount can be withdrawn for both govt employees as well as for others. If corpus in >5 lacs then at least 40% should be utilized to purchase annuity and rest 60% can be withdrawn as lump sump.
For subscribers who are on boarded between 60-70 years of age.
The exit before 3 years is treated as ‘premature exit’ and exit after 3 years as ‘normal exit’. For ‘premature exit’ and ‘normal exit’ the entire amount can be withdrawn as lump sum id corpus is <=2.50 and <=5 lacs respectively. If corpus value is above these limits, then at least 80% and 40% of corpus must be annuitized for ‘premature exit’ and ‘normal exit’ respectively.
2- Increase of entry age
The earlier entry age limit of 18-65 years has now revised up to 18-70 years. Any Indian citizen and Overseas citizen of India (OCI) between the age of 65-70 years can now join NPS and continue or defer their NPS account up to the age of 75 years.
The subscribers who are joining NPS beyond the age of 65 years, can opt for maximum equity exposure of 50% and 15% under Active and Auto choice respectively. They cam opt to change Pension Fund once per year whereas asset allocation can be changed twice per year.
3- Purchase of Multiple annuities
Earlier the subscribers were allowed to buy only one annuity scheme from ASP at the time of exit. Now one can purchase multiple annuities shall be provided to those subscribers who earmark more than Rs 10 lacs as annuity corpus wherein Rs 5 lacs can be utilized to buy each annuity scheme.
4- Allowing equity exposure of up to 75% throughout
Earlier NPS Subscribers who opted for ‘Active choice’ mode of asset allocation, had the option to allocate their contributions to different asset classes with two restrictions- maximum 5% can be allocated to alternate asset and maximum 75% can be allocated to equity asset class. They could allocate maximum 100% to other two asset classes – corporate bonds and govt. securities.
However the limit of 75% on equity asset classes used to get reduced by 2.5% every year and the same is reallocated to govt securities, between the subscriber’s age of 51 to 60. Now this has modified, The subscriber now can allocated upto 75% of his/her contribution to equity asset class.
