The National Pension Scheme is a scheme in which employers and employees both contribute, and the entire amount is paid to the employee after he retires. This scheme was introduced to facilitate systematic savings amongst employees of state and central governments and among common citizens. The NPS was put in to practice on 1st January 2004 with the intent of revolutionizing the pension scenario in India.
How does the National Pension Scheme work?
Under the National Pension Scheme, a customer can invest in several different pensions’ funds. Generally, investment of these funds is done by the Pension Fund Regulatory and Development Authority, and is handled by professional fund managers. You get an option to switch between various pension funds but you have to continue with your funds for at least a year before you switch from one to the other.
If you want to open NPS account online, you will have to start with two accounts- Tier-I and Tier-II. You will have to open a Tier-I account, in order to make yourself eligible for starting the Tier-II account. The difference between the two accounts is that the Tier-I account does not give you the freedom to withdraw money whenever you want. You can only do so, once you reach 60 years of age. Whereas when it comes to the Tier-II account, you can withdraw money whenever you like.
What documents are required for investing in the National Pension Scheme?
You will need to submit the following documents if you are planning to invest in the National Pension Scheme-
- Identity Proof such as Aadhar Card, PAN card, Ration card with a photograph, Passport, Water Bill, Bank Passbook, Electricity Bill and Job Card provided by NREGA. Anyone of these documents will suffice.
- Address Proof such as Ration Card with a photograph, Passport, Bank Passbook, Aadhar Card, PAN Card, Photo Identity Card etc.
How much investment do you have to make?
You will have to invest in the NPS scheme in the following way-
- You will have to invest at least Rs.6000 annually and the minimum one-time contribution is Rs.500. However, keep in mind that these figures are only applicable for Tier-I accounts.
- If you have a Tier-II account, you will have to invest at least Rs.2000 annually and Rs.250 one time.
All these funds can be contributed to, or invested in the form of cash or cheques.
The National Pension Scheme is one of the most favourable ways of saving money for your retirement. It encourages and fosters the habit of savings amongst people with the intent of showing them the value of having a retirement fund, and how it can tremendously help you in your old age.
How does the National Pension Scheme work?
Under the National Pension Scheme, a customer can invest in several different pensions’ funds. Generally, investment of these funds is done by the Pension Fund Regulatory and Development Authority, and is handled by professional fund managers. You get an option to switch between various pension funds but you have to continue with your funds for at least a year before you switch from one to the other.
If you want to open NPS account online, you will have to start with two accounts- Tier-I and Tier-II. You will have to open a Tier-I account, in order to make yourself eligible for starting the Tier-II account. The difference between the two accounts is that the Tier-I account does not give you the freedom to withdraw money whenever you want. You can only do so, once you reach 60 years of age. Whereas when it comes to the Tier-II account, you can withdraw money whenever you like.
What documents are required for investing in the National Pension Scheme?
You will need to submit the following documents if you are planning to invest in the National Pension Scheme-
- Identity Proof such as Aadhar Card, PAN card, Ration card with a photograph, Passport, Water Bill, Bank Passbook, Electricity Bill and Job Card provided by NREGA. Anyone of these documents will suffice.
- Address Proof such as Ration Card with a photograph, Passport, Bank Passbook, Aadhar Card, PAN Card, Photo Identity Card etc.
How much investment do you have to make?
You will have to invest in the NPS scheme in the following way-
- You will have to invest at least Rs.6000 annually and the minimum one-time contribution is Rs.500. However, keep in mind that these figures are only applicable for Tier-I accounts.
- If you have a Tier-II account, you will have to invest at least Rs.2000 annually and Rs.250 one time.
All these funds can be contributed to, or invested in the form of cash or cheques.
The National Pension Scheme is one of the most favourable ways of saving money for your retirement. It encourages and fosters the habit of savings amongst people with the intent of showing them the value of having a retirement fund, and how it can tremendously help you in your old age.
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