NPS Schemes

Consumer Voice - - Bfsi Guide -

As per the NPS in­vest­ment guide­lines, pen­sion fund man­agers man­age three sep­a­rate schemes, each in­vest­ing in a dif­fer­ent as­set class. The three as­set classes are eq­uity (E), gov­ern­ment se­cu­ri­ties (G) and credit risk-bear­ing fixed-in­come in­stru­ments (C). E Class: Here the in­vest­ment is mainly in eq­uity. The fund man­agers in­vest in In­dex funds that repli­cate the port­fo­lio of ei­ther BSE Sen­sex or NSE Nifty 50. G Class: Here the in­vest­ment is in gov­ern­ment se­cu­ri­ties like Gov­ern­ment of In­dia bonds and state gov­ern­ment bonds. C Class: Here the in­vest­ment is in fixed-in­come se­cu­ri­ties with credit risk – that is, se­cu­ri­ties other than gov­ern­ment se­cu­ri­ties.

The sub­scriber has the op­tion to de­cide how the money is to be in­vested in the three as­set classes. This is called ‘ac­tive choice’. On the other hand, if the sub­scriber does not ex­er­cise any op­tion, the con­tri­bu­tion will be in­vested in ac­cor­dance with the ‘auto choice’ op­tion. This op­tion has a pre­de­fined port­fo­lio wherein, at the low­est age of en­try of 18 years, the al­lo­ca­tion will be 50 per cent in E Class, 30 per cent in C and 20 per cent in G. This ra­tio is ap­pli­ca­ble till 36 years of age.

From 36 on­wards, the weight in E and C as­set classes de­creases and the weight in G Class in­creases an­nu­ally till it reaches 10 per cent in E, 10 per cent in C and 80 per cent in G at 55 years of age. The ‘auto choice’ op­tion is based on the time-tested tru­ism that though risky in the short run, eq­ui­ties beat all other as­set classes in the long run.

When to With­draw?

sub­scriber can with­draw 60 per cent of the amount as lump-sum; the bal­ance 40 per cent should be in­vested in life-an­nu­ity schemes that will serve as pen­sion. 60 years (tak­ing VRS or for any other rea­son), you will re­ceive 80 per cent of the ac­cu­mu­lated pen­sion wealth as an­nu­ity pen­sion ev­ery month, while 20 per cent of the pen­sion fund will be re­paid in one lump-sum. sub­scriber at any time dur­ing the sub­scribed pe­riod, the en­tire ac­cu­mu­lated pen­sion wealth shall be paid to the nom­i­nee/legal heir of the de­ceased. No an­nu­ity pen­sion is payable there­after. 2013) for par­tial with­drawal not ex­ceed­ing 25 per cent of the con­tri­bu­tion made by the sub­scriber sub­ject to cer­tain con­di­tions/reg­u­la­tions.

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