Table of Contents
NPS, also known as National Pension Scheme is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). National Pension Scheme is a voluntary contributory scheme formulated by the Central Government with an aim of providing retirement Income to the citizens of India.
The NPS scheme targets to establish pension reforms and induce the habit of saving for retirement among people. Under National Pension Scheme or NPS, you can open a personal retirement account in which pension corpus can be saved during the working life. NPS Scheme is open to all but is mandatory for all government employees.
NPS scheme is specially formulated to meet the post-retirement needs of people. Pension plans ensure financial stability and security at old age when people usually do not have a regular income.
National Pension Scheme or NPS is one of such plan that gives us an opportunity to invest money and let the contributions grow over years, leading to good NPS returns. On retirement, you can use these savings to manage the needs and expenses of your family.
You can also use the accumulated pension wealth to purchase a life annuity product from any of the Life Insurance companies in India. Or you can also withdraw a part of your Earnings as a lump sum, depending on your age.
There are two types of pension accounts offered. These include-
NPS Tier I - This is a pension account that has restrictions on withdrawal.
NPS Tier II - This is a Savings Account that is withdrawable to meet financial contingencies. An active Tier I account is mandatory for opening an NPS Tier II account.
One can invest in a National Pension Scheme through Points of Presence (POP). The investment can be allocated in 3 kinds of portfolios:
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Investments upto INR 50,000 are liable for deductions under section 80 CCD (1B). Additional investments upto INR 1,50,000 are tax Deductible under Section 80C of the income tax Act. So, the investors looking for higher tax saving options can invest in an NPS.
Another beneficial feature of the NPS scheme is that the investment can be diversified into three classes of assets including equity, fixed return instruments, and Government Bonds. Thus, investors have an opportunity to choose the allocation of assets based on their preference and risk appetite. Though, equity investments have a maximum limit of 50%.
The minimum amount required to invest in an NPS scheme is INR 6,000 annually. So, those having annual saving as less as INR 6,000 can easily invest in this scheme. Also, the fees charged by Fund Managers handling the funds is low, as it is a Government-backed scheme.
The funds under the NPS are managed by experienced Fund Managers which ensures better investment management of funds that leads to good NPS returns.
Budget 2017 has introduced the following provisions:
If a subscriber wants to withdraw from the scheme before the age of 60/or before retirement (other than the purpose specified for partial withdrawal), the amount withdrawn will not be taxable. However, the corpus that can be withdrawn is limited to only 20 percent of the accumulated wealth. And the balance 80 percent of the accumulated wealth has to be utilized for the purchase of annuity providing for the monthly pension to the subscriber. In such a case, the annuity income shall be taxable in the year of receipt as per the income tax slab rate applicable to the user.
In Budget 2017-18, the government had allowed partial withdrawal of 25 percent of the contribution made by a subscriber exempted from income tax.
However, this exemption is currently not available to non-employee subscribers. But, as per the Budget 2018, the Finance Minister Arun Jaitley has proposed to extend the benefits of tax-free withdrawal from NPS to non-employee subscribers also. Non-employee subscribers can also do tax-free withdrawal up to 40 percent of their maturity corpus from their NPS Account. The new rule will be effective from April 1, 2019.
At the time of retirement, withdrawal up to 40 percent the accumulated wealth is exempt from tax. However, the maximum corpus that you can withdraw at the retirement is 60 percent (of the accumulated wealth) and the balance, i.e., 40 percent needs to be utilized for the purchase of annuity providing monthly pension to the subscriber.
The corpus withdrawn in the event of the death of the subscriber shall be exempt from tax. The entire accumulated wealth would be paid to the legal nominee of the user. However, in case of government employees, the entire amount cannot be withdrawn. Purchase of annuity plan is mandatory by the nominee.
In case, the total amount in the NPS account is less than INR 2 Lakhs as on the date of retirement or attaining the age of 60, the subscriber (other than Swavalamban users) can avail the option of complete withdrawal.
To provide a financial planning tool for long term financial security for investors based on their retirement planning goals. However, there can be no assurance
that the investment objective of the fund will be realized, as actual market movements may be at variance with anticipated trends. Tata Retirement Savings Fund-Moderate is a Solutions - Retirement Fund fund was launched on 1 Nov 11. It is a fund with Moderately High risk and has given a Below is the key information for Tata Retirement Savings Fund-Moderate Returns up to 1 year are on To provide a financial planning tool for long term financial security for investors based on their retirement planning goals. However, there can be no assurance
that the investment objective of the fund will be realized, as actual market movements may be at variance with anticipated trends. Tata Retirement Savings Fund - Progressive is a Solutions - Retirement Fund fund was launched on 1 Nov 11. It is a fund with Moderately High risk and has given a Below is the key information for Tata Retirement Savings Fund - Progressive Returns up to 1 year are on To provide a financial planning tool for long term financial security for investors based on their retirement planning goals. However, there can be no assurance
that the investment objective of the fund will be realized, as actual market movements may be at variance with anticipated trends. Tata Retirement Savings Fund - Conservative is a Solutions - Retirement Fund fund was launched on 1 Nov 11. It is a fund with Moderately High risk and has given a Below is the key information for Tata Retirement Savings Fund - Conservative Returns up to 1 year are on The investment objective of the Investment Plans offered under the Scheme is to generate a corpus to provide for pension to an investor in the form of income to the extent of the redemption value of their holding after the age of 60 years by investing in a mix of securities comprising of equity, equity related instruments and/or Debt/Money Market Instruments. HDFC Retirement Savings Fund - Equity Plan is a Solutions - Retirement Fund fund was launched on 25 Feb 16. It is a fund with Moderately High risk and has given a Below is the key information for HDFC Retirement Savings Fund - Equity Plan Returns up to 1 year are on The investment objective of the Investment Plans offered under the Scheme is to generate a corpus to provide for pension to an investor in the form of income to the extent of the redemption value of their holding after the age of 60 years by investing in a mix of securities comprising of equity, equity related instruments and/or Debt/Money Market Instruments. HDFC Retirement Savings Fund - Hybrid - Debt Plan is a Solutions - Retirement Fund fund was launched on 25 Feb 16. It is a fund with Moderately High risk and has given a Below is the key information for HDFC Retirement Savings Fund - Hybrid - Debt Plan Returns up to 1 year are on 1. Tata Retirement Savings Fund-Moderate
CAGR/Annualized
return of 15.1% since its launch. Ranked 2 in Retirement Fund
category. Return for 2020 was 15.1% , 2019 was 8.6% and 2018 was -3.6% . Tata Retirement Savings Fund-Moderate
Growth Launch Date 1 Nov 11 NAV (09 Apr 21) ₹37.5565 ↓ -0.04 (-0.11 %) Net Assets (Cr) ₹1,334 on 28 Feb 21 Category Solutions - Retirement Fund AMC Tata Asset Management Limited Rating ☆☆☆☆☆ Risk Moderately High Expense Ratio 2.33 Sharpe Ratio 0.72 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 500 Exit Load 0-60 Years (1%),60 Years and above(NIL) Growth of 10,000 investment over the years.
Date Value 31 Mar 16 ₹10,000 31 Mar 17 ₹12,607 31 Mar 18 ₹14,442 31 Mar 19 ₹15,283 31 Mar 20 ₹12,776 31 Mar 21 ₹18,867 Returns for Tata Retirement Savings Fund-Moderate
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 9 Apr 21 Duration Returns 1 Month -1.2% 3 Month 0.5% 6 Month 14.3% 1 Year 41.2% 3 Year 8.5% 5 Year 13.8% 10 Year 15 Year Since launch 15.1% Historical performance (Yearly) on absolute basis
Year Returns 2020 15.1% 2019 8.6% 2018 -3.6% 2017 38.8% 2016 6.7% 2015 7.7% 2014 55.1% 2013 2.6% 2012 20% 2011 Fund Manager information for Tata Retirement Savings Fund-Moderate
Name Since Tenure Murthy Nagarajan 1 Apr 17 4 Yr. Sonam Udasi 1 Apr 16 5 Yr. Ennette Fernandes 18 Jun 18 2.79 Yr. Data below for Tata Retirement Savings Fund-Moderate as on 28 Feb 21
Asset Allocation
Asset Class Value Cash 6.78% Equity 84.5% Debt 8.71% Top Securities Holdings / Portfolio
Name Holding Value Quantity HDFC Bank Ltd (Financial Services)
Equity, Since 30 Nov 11 | HDFCBANK7% ₹95 Cr 617,000
↑ 47,000 ICICI Bank Ltd (Financial Services)
Equity, Since 31 Dec 18 | ICICIBANK7% ₹91 Cr 1,515,000
↓ -158,000 Reliance Industries Ltd Shs Dematerialised (Energy)
Equity, Since 30 Apr 18 | RELIANCE7% ₹90 Cr 432,000 Infosys Ltd (Technology)
Equity, Since 31 Jul 20 | INFY3% ₹43 Cr 345,000
↓ -37,000 7.27% Govt Stock 2026
Sovereign Bonds | -3% ₹42 Cr 4,000,000 Axis Bank Ltd (Financial Services)
Equity, Since 31 Dec 20 | 5322153% ₹38 Cr 531,000
↑ 122,000 ITC Ltd (Consumer Defensive)
Equity, Since 30 Apr 18 | ITC3% ₹38 Cr 1,886,000 HCL Technologies Ltd Shs Dematerialised (Technology)
Equity, Since 30 Jun 20 | HCLTECH2% ₹31 Cr 345,000 SBI Cards and Payment Services Ltd Ordinary Shares (Financial Services)
Equity, Since 30 Sep 20 | 5430662% ₹30 Cr 285,000
↑ 63,000 Dixon Technologies (India) Ltd (Technology)
Equity, Since 30 Apr 20 | 5406992% ₹29 Cr 14,500
↓ -4,164 2. Tata Retirement Savings Fund - Progressive
CAGR/Annualized
return of 14.9% since its launch. Ranked 6 in Retirement Fund
category. Return for 2020 was 14.4% , 2019 was 11.5% and 2018 was -6.1% . Tata Retirement Savings Fund - Progressive
Growth Launch Date 1 Nov 11 NAV (09 Apr 21) ₹37.1238 ↓ -0.05 (-0.13 %) Net Assets (Cr) ₹977 on 28 Feb 21 Category Solutions - Retirement Fund AMC Tata Asset Management Limited Rating ☆☆☆☆☆ Risk Moderately High Expense Ratio 2.5 Sharpe Ratio 0.69 Information Ratio -0.55 Alpha Ratio -6.28 Min Investment 5,000 Min SIP Investment 500 Exit Load 0-60 Years (1%),60 Years and above(NIL) Growth of 10,000 investment over the years.
Date Value 31 Mar 16 ₹10,000 31 Mar 17 ₹13,004 31 Mar 18 ₹15,302 31 Mar 19 ₹16,083 31 Mar 20 ₹13,087 31 Mar 21 ₹20,311 Returns for Tata Retirement Savings Fund - Progressive
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 9 Apr 21 Duration Returns 1 Month -1.6% 3 Month 0.8% 6 Month 16.3% 1 Year 46.8% 3 Year 8.8% 5 Year 15.6% 10 Year 15 Year Since launch 14.9% Historical performance (Yearly) on absolute basis
Year Returns 2020 14.4% 2019 11.5% 2018 -6.1% 2017 49.1% 2016 3.1% 2015 7.8% 2014 47.4% 2013 1.5% 2012 21.7% 2011 Fund Manager information for Tata Retirement Savings Fund - Progressive
Name Since Tenure Murthy Nagarajan 1 Apr 17 4 Yr. Sonam Udasi 1 Apr 16 5 Yr. Ennette Fernandes 18 Jun 18 2.79 Yr. Data below for Tata Retirement Savings Fund - Progressive as on 28 Feb 21
Asset Allocation
Asset Class Value Cash 2.67% Equity 97.33% Top Securities Holdings / Portfolio
Name Holding Value Quantity HDFC Bank Ltd (Financial Services)
Equity, Since 30 Nov 11 | HDFCBANK8% ₹82 Cr 533,500
↑ 47,000 ICICI Bank Ltd (Financial Services)
Equity, Since 31 Dec 18 | ICICIBANK8% ₹78 Cr 1,305,000
↓ -123,000 Reliance Industries Ltd Shs Dematerialised (Energy)
Equity, Since 30 Apr 18 | RELIANCE8% ₹76 Cr 363,000 Infosys Ltd (Technology)
Equity, Since 31 Jul 20 | INFY4% ₹37 Cr 297,000
↓ -29,000 ITC Ltd (Consumer Defensive)
Equity, Since 30 Apr 18 | ITC3% ₹33 Cr 1,613,000 Axis Bank Ltd (Financial Services)
Equity, Since 31 Dec 20 | 5322153% ₹33 Cr 452,000
↑ 105,000 HCL Technologies Ltd Shs Dematerialised (Technology)
Equity, Since 30 Jun 20 | HCLTECH3% ₹27 Cr 294,000 SBI Cards and Payment Services Ltd Ordinary Shares (Financial Services)
Equity, Since 30 Sep 20 | 5430663% ₹27 Cr 249,000
↑ 60,000 Dixon Technologies (India) Ltd (Technology)
Equity, Since 30 Apr 20 | 5406993% ₹25 Cr 12,500
↓ -3,474 Tata Consultancy Services Ltd (Technology)
Equity, Since 31 Aug 20 | TCS2% ₹23 Cr 78,500
↑ 15,500 3. Tata Retirement Savings Fund - Conservative
CAGR/Annualized
return of 9.5% since its launch. Ranked 7 in Retirement Fund
category. Return for 2020 was 11.8% , 2019 was 7.6% and 2018 was 0.8% . Tata Retirement Savings Fund - Conservative
Growth Launch Date 1 Nov 11 NAV (09 Apr 21) ₹23.5048 ↓ 0.00 (-0.02 %) Net Assets (Cr) ₹164 on 28 Feb 21 Category Solutions - Retirement Fund AMC Tata Asset Management Limited Rating ☆☆☆☆ Risk Moderately High Expense Ratio 2.4 Sharpe Ratio 0.8 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 500 Exit Load 0-60 Years (1%),60 Years and above(NIL) Growth of 10,000 investment over the years.
Date Value 31 Mar 16 ₹10,000 31 Mar 17 ₹11,590 31 Mar 18 ₹12,430 31 Mar 19 ₹13,062 31 Mar 20 ₹13,038 31 Mar 21 ₹15,434 Returns for Tata Retirement Savings Fund - Conservative
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 9 Apr 21 Duration Returns 1 Month 0% 3 Month -0.1% 6 Month 5.5% 1 Year 17.5% 3 Year 7% 5 Year 9.2% 10 Year 15 Year Since launch 9.5% Historical performance (Yearly) on absolute basis
Year Returns 2020 11.8% 2019 7.6% 2018 0.8% 2017 15.1% 2016 10.6% 2015 6.4% 2014 20.6% 2013 5.7% 2012 10.9% 2011 Fund Manager information for Tata Retirement Savings Fund - Conservative
Name Since Tenure Murthy Nagarajan 1 Apr 17 4 Yr. Sonam Udasi 1 Apr 16 5 Yr. Ennette Fernandes 18 Jun 18 2.79 Yr. Data below for Tata Retirement Savings Fund - Conservative as on 28 Feb 21
Asset Allocation
Asset Class Value Cash 18.73% Equity 29.31% Debt 51.96% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.32% Govt Stock 2024
Sovereign Bonds | -16% ₹27 Cr 2,500,000 7.27% Govt Stock 2026
Sovereign Bonds | -6% ₹11 Cr 1,000,000 Power Finance Corporation Limited
Debentures | -6% ₹10 Cr 100 6.84% Govt Stock 2022
Sovereign Bonds | -6% ₹10 Cr 916,800 8.24% Govt Stock 2027
Sovereign Bonds | -4% ₹6 Cr 550,000 8.20% Govt Stock 2025
Sovereign Bonds | -3% ₹5 Cr 500,000 7.73% Govt Stock 2034
Sovereign Bonds | -3% ₹5 Cr 500,000 Food Corporation of India
Debentures | -3% ₹5 Cr 50 7.80% Govt Stock 2021
Sovereign Bonds | -3% ₹5 Cr 500,000 HDFC Bank Ltd (Financial Services)
Equity, Since 30 Nov 11 | HDFCBANK2% ₹4 Cr 26,500
↑ 2,000 4. HDFC Retirement Savings Fund - Equity Plan
CAGR/Annualized
return of 17.4% since its launch. Return for 2020 was 18.3% , 2019 was 5.2% and 2018 was -6% . HDFC Retirement Savings Fund - Equity Plan
Growth Launch Date 25 Feb 16 NAV (09 Apr 21) ₹22.728 ↓ -0.03 (-0.14 %) Net Assets (Cr) ₹1,382 on 28 Feb 21 Category Solutions - Retirement Fund AMC HDFC Asset Management Company Limited Rating Risk Moderately High Expense Ratio 2.73 Sharpe Ratio 0.94 Information Ratio -0.39 Alpha Ratio 1.56 Min Investment 5,000 Min SIP Investment 500 Exit Load 0-60 Years (1%),60 Years and above(NIL) Growth of 10,000 investment over the years.
Date Value 31 Mar 16 ₹10,000 31 Mar 17 ₹13,002 31 Mar 18 ₹15,044 31 Mar 19 ₹15,752 31 Mar 20 ₹11,511 31 Mar 21 ₹20,394 Returns for HDFC Retirement Savings Fund - Equity Plan
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 9 Apr 21 Duration Returns 1 Month 0.2% 3 Month 8.2% 6 Month 30.9% 1 Year 71.1% 3 Year 10.1% 5 Year 15.9% 10 Year 15 Year Since launch 17.4% Historical performance (Yearly) on absolute basis
Year Returns 2020 18.3% 2019 5.2% 2018 -6% 2017 37.7% 2016 2015 2014 2013 2012 2011 Fund Manager information for HDFC Retirement Savings Fund - Equity Plan
Name Since Tenure Shobhit Mehrotra 25 Feb 16 5.1 Yr. Chirag Setalvad 25 Feb 16 5.1 Yr. Anand Laddha 21 Oct 20 0.44 Yr. Data below for HDFC Retirement Savings Fund - Equity Plan as on 28 Feb 21
Asset Allocation
Asset Class Value Cash 2.47% Equity 93.15% Debt 4.38% Top Securities Holdings / Portfolio
Name Holding Value Quantity HDFC Bank Ltd (Financial Services)
Equity, Since 29 Feb 16 | HDFCBANK6% ₹89 Cr 582,000 Reliance Industries Ltd Shs Dematerialised (Energy)
Equity, Since 29 Feb 16 | RELIANCE5% ₹74 Cr 354,000 ICICI Bank Ltd (Financial Services)
Equity, Since 31 Mar 16 | ICICIBANK5% ₹69 Cr 1,160,000 Housing Development Finance Corp Ltd (Financial Services)
Equity, Since 30 Jun 18 | HDFC5% ₹62 Cr 245,000 Infosys Ltd (Technology)
Equity, Since 29 Feb 16 | INFY4% ₹61 Cr 487,174 Larsen & Toubro Ltd Shs Dematerialised (Industrials)
Equity, Since 31 Mar 16 | LT4% ₹50 Cr 350,000 ITC Ltd (Consumer Defensive)
Equity, Since 31 Mar 20 | ITC3% ₹39 Cr 1,900,000 State Bank of India (Financial Services)
Equity, Since 29 Feb 16 | SBIN3% ₹36 Cr 920,000
↑ 240,000 Bajaj Electricals Ltd (Utilities)
Equity, Since 30 Apr 16 | 5000312% ₹34 Cr 353,406 Cyient Ltd (Industrials)
Equity, Since 31 Oct 20 | CYIENT2% ₹28 Cr 425,000 5. HDFC Retirement Savings Fund - Hybrid - Debt Plan
CAGR/Annualized
return of 8.9% since its launch. Return for 2020 was 10.4% , 2019 was 7.6% and 2018 was 0.7% . HDFC Retirement Savings Fund - Hybrid - Debt Plan
Growth Launch Date 25 Feb 16 NAV (09 Apr 21) ₹15.4748 ↓ 0.00 (-0.03 %) Net Assets (Cr) ₹113 on 28 Feb 21 Category Solutions - Retirement Fund AMC HDFC Asset Management Company Limited Rating Risk Moderately High Expense Ratio 2.56 Sharpe Ratio 0.85 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 500 Exit Load 0-60 Years (1%),60 Years and above(NIL) Growth of 10,000 investment over the years.
Date Value 31 Mar 16 ₹10,000 31 Mar 17 ₹11,413 31 Mar 18 ₹12,166 31 Mar 19 ₹12,719 31 Mar 20 ₹12,897 31 Mar 21 ₹14,910 Returns for HDFC Retirement Savings Fund - Hybrid - Debt Plan
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 9 Apr 21 Duration Returns 1 Month 1.1% 3 Month 1.4% 6 Month 7.3% 1 Year 16.5% 3 Year 6.8% 5 Year 8.4% 10 Year 15 Year Since launch 8.9% Historical performance (Yearly) on absolute basis
Year Returns 2020 10.4% 2019 7.6% 2018 0.7% 2017 12.4% 2016 2015 2014 2013 2012 2011 Fund Manager information for HDFC Retirement Savings Fund - Hybrid - Debt Plan
Name Since Tenure Shobhit Mehrotra 25 Feb 16 5.1 Yr. Chirag Setalvad 25 Feb 16 5.1 Yr. Anand Laddha 21 Oct 20 0.44 Yr. Data below for HDFC Retirement Savings Fund - Hybrid - Debt Plan as on 28 Feb 21
Asset Allocation
Asset Class Value Cash 24.35% Equity 14.32% Debt 61.33% Top Securities Holdings / Portfolio
Name Holding Value Quantity 6.19% Govt Stock 2034
Sovereign Bonds | -8% ₹9 Cr 1,000,000 7.57% Govt Stock 2033
Sovereign Bonds | -7% ₹8 Cr 750,000 Vedanta Limited
Debentures | -6% ₹7 Cr 70 L&T Infrastructure Finance Company Limited
Debentures | -6% ₹7 Cr 65 Indian Railway Finance Corporation Limited
Debentures | -5% ₹5 Cr 50 7.50% Govt Stock 2034
Sovereign Bonds | -5% ₹5 Cr 500,000 6.79% Govt Stock 2029
Sovereign Bonds | -5% ₹5 Cr 500,000 6.67% Govt Stock 2050
Sovereign Bonds | -4% ₹5 Cr 500,000 State Bank of India
Debentures | -4% ₹5 Cr 45 Shriram Transport Finance Company Limited
Debentures | -2% ₹3 Cr 27,500
After the benefits, let’s learn how to calculate NPS.
Here's an illustration -
Parameter | Credentials |
---|---|
Age in years | 20 |
Monthly contribution | INR 1,000 |
Total years of investment | 40 years |
Expected Return on Investment | 10% |
Total pension wealth | INR 63,76,781 |
Percentage of corpus reinvested in annuity | 60% |
Amount for purchase of annuity plan | INR 38,23,069 |
Expected annuity rate | 6% |
Monthly pension | INR 19, 131 |
Withdrawal on maturity | INR 25, 50,172 |
Use retirement calculator given below for better understanding-
Know Your Monthly SIP Amount
So, do not compromise your living standards in your advancing years, invest in a National Pension Scheme (NPS).