National Pension System: Know the benefits and application process - Details here

If you're concerned about post-retirement expenses, the National Pension System (NPS) emerges as a compelling investment option. While some individuals navigate the stock market for returns, NPS offers a unique advantage. This government-backed scheme not only provides excellent returns but also ensures a steady pension post-retirement. 

In the financial year 23-24, the equity market's stellar performance, with the Sensex and Nifty hitting record highs, has drawn increased investor interest towards NPS, where up to 75 percent can be invested in equity.

Key Features of NPS:

• Equity Investment Option: NPS allows investors to allocate up to 75 percent of their funds into equity, providing exposure to the thriving stock market without the intricacies of direct investment.
• Double Benefit: NPS not only offers remarkable returns but also ensures a reliable pension stream after retirement, easing concerns about future expenses.

Excellent Returns and Rapid Growth:

• Performance Highlights: In the fiscal year 23-24, investors in NPS have enjoyed substantial returns due to the robust performance of the equity market, with Sensex and Nifty reaching unprecedented levels.
• AUM Growth: The Assets Under Management (AUM) of NPS have soared to Rs 1.8 lakh crore, with equity contributing 17 percent to this growth.

Annual Returns and Subscriber Growth:

• Impressive Returns: Investors have reaped annual returns of up to 24%, making NPS a lucrative investment avenue.
• Subscriber Base: Private sector subscribers to NPS have witnessed a significant uptick, surpassing 51 lakh by December 2023. This growth is not confined to government employees, indicating a broader appeal.

Insights from PFRDA Chairman Deepak Mohanty:

• Equity Returns: According to Deepak Mohanty, Chairman of the Pension Fund Regulatory and Development Authority (PFRDA), investors have secured a remarkable 13.3 percent return in equity since the inception of NPS.
• Private Sector Momentum: The private sector's adoption of NPS is on the rise, underlining its popularity beyond government employees.

Understanding NPS:

• Launch and Objectives: The National Pension System (NPS) was introduced by the Government of India as a contributory pension scheme primarily for regular income after retirement. Initially targeted at government employees in 2004, it expanded to cover all citizens in 2009, fostering pension reforms and encouraging retirement savings.

Benefits of NPS:

• Regular Income: NPS ensures a steady income stream post-retirement, catering to financial needs.
• Tax Benefits: Investors enjoy tax benefits on both investment and withdrawal, enhancing the overall attractiveness of NPS.
• Flexibility: NPS allows the transfer of accounts between employers or pension funds, and investors can customize their investment preferences.

Investment Options:

• Equity: Investing in NPS through equity involves shares, necessitating awareness of market risks due to potential price fluctuations.
• Government Bond: Government bonds offer lower interest rates than equity but carry lower risk, providing a relatively stable investment option.
• Corporate Bond: Corporate bonds, with higher interest rates than government bonds, come with increased risk but offer potential for higher returns.

Opening an NPS Account:

• Point of Presence (PoP): NPS accounts can be opened through PoP institutions, including various private and public sector banks. The Pension Fund Regulatory and Development Authority (PFRDA) website provides access to PoPs, and online account opening is available through the eNPS website.

The National Pension System emerges as a prudent investment choice, offering double benefits with impressive returns and a secure pension, ensuring financial stability in the post-retirement phase. As the equity market continues to thrive, NPS stands as a reliable avenue for investors seeking growth and financial security.