Securing life?s second innings with NPS (National Pension System)

Retirement is not the end but the beginning of a new tale. Having worked all your life, you deserve a break. With precious time in your hands, you can pursue passions – old and new – or take up a hobby.

With proper planning, you can have a comfortable life. You can take the opportunity to spend some time with yourself in this second innings of life.

You can have a carefree retirement life only when all your financial needs are taken care of. Only when you are truly independent, can you begin the second innings with dignity.

A carefree retirement with NPS

NPS is a government of India scheme that allows employees to set up a pension fund for their retirement days. This social security initiative is available to all employees of private, public and unorgansied sectors.

By enrolling in NPS, you set up a pension account. At regular intervals during your employment, you are required to deposit a fixed amount towards this account. When you turn 60, you can withdraw up to 60% of the accrued amount. You receive the rest of the money as regular pension.

NPS is an investment option available to anyone and is ideal for those who are risk averse. By making regular deposits that do not hurt your day-today finances, you can save up a decent amount to take care of yourself in your retirement days. Upon retirement you can take care of your own affairs, including medical expenses, without having to ask anybody for help.

Types of NPS accounts

There are two types of NPS accounts – tier I and tier II.

Tier I: When you enrol in NPS, you are assigned a Permanent Retirement Account Number (PRAN) attached to your pension account. This is the Tier I account, which is mandatory. The minimum contribution for opening a Tier I account is Rs500 and annually, you have to contribute at least Rs. 1,000 to this account. You can’t withdraw the funds accrued in this account until you turn 60.

You can claim deduction up to Rs. 1.5 lakh in taxes for contributions to NPS. If you have invested and claimed Rs. 1.5 lakh from contributions to other investment tools, you can claim an additional Rs. 50,000 for your contributions under NPS.

Tier II: This account can be opened only when you have a Tier I account. It is more flexible than Tier I account when it comes to withdrawals and exit rules. You can start a Tier II account with Rs. 250 but have to make a minimum annual contribution of Rs. 1,000 towards this account. The contributions towards Tier II account are not eligible for tax deductions.

To invest in NPS, mutual funds and other products, click here to open an ICICIdirect trading account.

Disclaimer:

ICICI Securities Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470.  PFRDA registration numbers:  POP no -05092018. We are distributors of National Pension Scheme. Please note, National Pension Scheme related services are not Exchange traded products and I-Sec is just acting as distributor to solicit these products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing.