Now a day’s busy corporate professionals are looking for a relatively safe and hassle-free way of investing in generating retirement corpus. If you are one of them, NPS (National Pension System) account opening online via NPS App is one of the easiest ways. Not only corporate professionals, but public sector employees also looking from the same type of option. Generating a retirement corpus is not an easy thing it takes long planning and continuous monitoring and re-balancing of funds and it takes time and effort. National Pension System (NPS) is an option for those who are looking for an easy way to generate generating retirement corpus as well as regular monthly income after retirement. Today we will discuss the easiest way of NPS account opening online via NPS App and the benefits and type of NPS (National Pension System) accounts.
What is NPS (National Pension System) account?
NPS (National Pension System) is introduced by the Government of India to help its citizens generate a retirement corpus and generate a regular income after retirement. In NPS you can systematically contribute throughout your professional life to generate retirement corpus and generate a regular income after retirement. Investment in NPS will be somewhat the same as mutual fund SIP, in a specific time interval you must contribute an amount but NPS has some other distinct features which are totally different that mutual fund but National Pension System is a market-linked product, so it is subjected to market risk.
NPS Account Opening Online via NPS App or via Paytm Money:
You can open NPS account online or offline, but it is easy to open NPS account online in our busy life. The online account can be opened via NSDL or you can open it in a specific pension management company via company website that includes private and public sector companies like HDFC pension management, SBI Pension Funds Pvt Ltd, LIC Pension Fund Ltd (All Pension Fund company names in this article are, for example, not a recommendation).
You can purchase Pension Fund from apps like Paytm Money (For example, not a recommendation). Mane benefits of purchasing of Pension fund for Paytm Money like platforms is you will get all private and public sector companies pension management funds in one single platform. Dividing retainment corpus in multiple funds will give you better stability.
NPS account opening online via Paytm Money:
The process is very easy you just have to do a KYC registration via Paytm Money, a totally online process (If you already having KYC registration in Paytm Money for mutual fund investment then also you have to do it again for NPS investment) and details required for KYC registration via Paytm Money for NPS investment are below
- Personal Details
- Nominee details
- Correspondence Address
- Signature as PAN card
NPS funds available in Paytm Money:
- Aditya Birla Sun life Pension Management Limited
- HFDC Pension Management Company Limited
- SBI Pension Funds Pvt Ltd
- ICICI Prudential Pension Funds Management Co Ltd
- Kotak Mahindra Pension Fund Ltd
- UTI Retirement Solutions Ltd
- LIC Pension Fund Ltd
Investment Preference for NPS:
For all funds, you can select 4 types of Investment Preference Conservative, Moderate, Aggressive, and Custom.
- Conservative: 25% Equity, 45% corporate debt plans, 30% Government Bond Plans it is the safest approach for NPS gives you relatively more stability in your portfolio but with less expected returns than other approaches. It is effective if you are near your retirement age.
- Moderate: 50% Equity, 30% corporate debt plans, 20% Government Bond Plans it is a balances approach. If you do not what to take the very high risk but want to generate relatively more expected returns it is the best approach.
- Aggressive: 75% Equity, 10% corporate debt plans, 15% Government Bond Plans it is high risk and high reward approach is effective if you are a young investor and you have a long way to retirement age.
- Custom: You can customize your plan it is for investors who want to invest more actively by monitoring the market condition.
Note: If you select one preference you can change it later as per your requirement
Benefits of NPS Account:
- Automatic rebalancing of the portfolio
- Tax benefit
- Online performance tracking
- Different preference can be set (Conservative, Moderate, Aggressive and Custom)
- Preference can be changed once a year.
- Online account opening without paperwork
Types of NPS Account:
NPS Tier 1 account:
NPS Tier 1 basically gives you a tax saving option with a lock-in period. It is compulsory for the Central government employees to contribute 10% of their basic salary + DA. Maximum NPS contribution: No limit.
NPS Tier 1 Tax Benefit:
Contribution tax-exempt Rs 2 lakh P.A under 80C and 80CCD. (For salaried person additional 50000 P.A is eligible for the tax deduction, 1.5 P.A for compulsory contribution).
- 60% of the corpus will be tax-free on maturity.
NPS Tier 1 withdrawal rules:
- Lock in till 60, you can withdraw on your 60th birthday.
- 60% of the corpus can be withdrawn as a lump sum
- 40% of the corpus should be used to purchase of annuity monthly plan.
NPS Tier 2 account:
No tax benefit in NPS tier 2 account with no lock-in. Maximum NPS contribution: No limit.
NPS Tier 2 Tax Benefit:
- Units held less than a year 15% tax applicable
- Units held more than a year 10% tax applicable
NPS Tier 2 withdrawal rules:
- No lock-in. (lock-in of 3 years for government employees who are investing in NPS Tier 2 to avail of a tax deduction)
- Zero Exit Load
NPS (National Pension System) account opening online via NPS App is easy but always remember it is a market-linked product, so it is subjected to market risks and carefully check updated rules and regulations in the NSDL site before investing. If you like our article on “NPS (National Pension System) account opening online via NPS App” leave a comment below.