Table of Contents
What is NPS (National Pension Scheme)?
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.
National Pension Scheme or NPS Scheme Details
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.
How to Invest in NPS Scheme?
One can invest in a National Pension Scheme through Points of Presence (POP). The investment can be allocated in 3 kinds of portfolios:
- Asset Class E - Investment in predominantly equity market instruments
- Asset Class C - Investment in Debt securities apart from Government Securities
- Asset Class G - Investments in Government Securities
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Benefits of a National Pension Scheme (NPS)
National Pension Scheme Tax Benefits
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.
Diversification of Funds in NPS Scheme
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%.
NPS Schemem is Less Costly
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.
NPS Account is Managed by Professionals
The funds under the NPS are managed by experienced Fund Managers which ensures better investment management of funds that leads to good NPS returns.
National Pension Scheme: Tax Treatment on Withdrawals
Budget 2017 has introduced the following provisions:
Withdrawal Before Retirement
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.
Withdrawal on Retirement or at the Age of 60
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.
Withdrawal Upon the Death of 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.
100% Withdrawal at the Time of Retirement or When Attaining 60
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 2019 was 8.6% , 2018 was -3.6% and 2017 was 38.8% . Tata Retirement Savings Fund-Moderate
Growth Launch Date 1 Nov 11 NAV (22 Jan 20) ₹31.8458 ↓ -0.09 (-0.28 %) Net Assets (Cr) ₹1,157 on 31 Dec 19 Category Solutions - Retirement Fund AMC Tata Asset Management Limited Rating ☆☆☆☆☆ Risk Moderately High Expense Ratio 2.33 Sharpe Ratio 0.48 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 Dec 14 ₹10,000 31 Dec 15 ₹10,770 31 Dec 16 ₹11,497 31 Dec 17 ₹15,958 31 Dec 18 ₹15,380 31 Dec 19 ₹16,709 Returns for Tata Retirement Savings Fund-Moderate
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 22 Jan 20 Duration Returns 1 Month 0.5% 3 Month 3.3% 6 Month 10.5% 1 Year 10.9% 3 Year 12.2% 5 Year 9.9% 10 Year 15 Year Since launch 15.1% Historical performance (Yearly) on absolute basis
Year Returns 2018 8.6% 2017 -3.6% 2016 38.8% 2015 6.7% 2014 7.7% 2013 55.1% 2012 2.6% 2011 20% 2010 2009 Fund Manager information for Tata Retirement Savings Fund-Moderate
Name Since Tenure Murthy Nagarajan 1 Apr 17 2.67 Yr. Sonam Udasi 1 Apr 16 3.67 Yr. Ennette Fernandes 18 Jun 18 1.45 Yr. Data below for Tata Retirement Savings Fund-Moderate as on 31 Dec 19
Asset Allocation
Asset Class Value Cash 2.27% Equity 84.1% Debt 13.62% Top Securities Holdings / Portfolio
Name Holding Value Quantity HDFC Bank Ltd (Financial Services)
Equity, Since 30 Nov 11 | HDFCBANK8% ₹89 Cr 700,000 ICICI Bank Ltd (Financial Services)
Equity, Since 31 Dec 18 | ICICIBANK6% ₹75 Cr 1,456,800 Reliance Industries Ltd (Energy)
Equity, Since 30 Apr 18 | RELIANCE5% ₹63 Cr 408,000
↓ -22,000 ITC Ltd (Consumer Defensive)
Equity, Since 30 Apr 18 | ITC5% ₹55 Cr 2,215,000 Kotak Mahindra Bank Ltd (Financial Services)
Equity, Since 28 Feb 17 | KOTAKBANK4% ₹47 Cr 288,050 7.26% Govt Stock 2029
Sovereign Bonds | -4% ₹44 Cr 4,200,000
↓ -300,000 GOVT STOCK
Sovereign Bonds | -4% ₹42 Cr 4,000,000 Housing Development Finance Corp Ltd (Financial Services)
Equity, Since 31 Jul 17 | HDFC4% ₹41 Cr 179,500 Axis Bank Ltd (Financial Services)
Equity, Since 31 Jan 19 | 5322153% ₹34 Cr 455,000
↑ 40,000 Larsen & Toubro Ltd (Industrials)
Equity, Since 30 Sep 17 | LT3% ₹33 Cr 250,000 2. Tata Retirement Savings Fund - Progressive
CAGR/Annualized return of 15% since its launch. Ranked 6 in Retirement Fund category. Return for 2019 was 11.5% , 2018 was -6.1% and 2017 was 49.1% . Tata Retirement Savings Fund - Progressive
Growth Launch Date 1 Nov 11 NAV (22 Jan 20) ₹31.4636 ↓ -0.10 (-0.32 %) Net Assets (Cr) ₹743 on 31 Dec 19 Category Solutions - Retirement Fund AMC Tata Asset Management Limited Rating ☆☆☆☆☆ Risk Moderately High Expense Ratio 2.5 Sharpe Ratio 0.64 Information Ratio -0.12 Alpha Ratio -4.72 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 Dec 14 ₹10,000 31 Dec 15 ₹10,783 31 Dec 16 ₹11,120 31 Dec 17 ₹16,582 31 Dec 18 ₹15,575 31 Dec 19 ₹17,366 Returns for Tata Retirement Savings Fund - Progressive
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 22 Jan 20 Duration Returns 1 Month 0.4% 3 Month 3.6% 6 Month 11.9% 1 Year 14.3% 3 Year 14.6% 5 Year 10.6% 10 Year 15 Year Since launch 15% Historical performance (Yearly) on absolute basis
Year Returns 2018 11.5% 2017 -6.1% 2016 49.1% 2015 3.1% 2014 7.8% 2013 47.4% 2012 1.5% 2011 21.7% 2010 2009 Fund Manager information for Tata Retirement Savings Fund - Progressive
Name Since Tenure Murthy Nagarajan 1 Apr 17 2.67 Yr. Sonam Udasi 1 Apr 16 3.67 Yr. Ennette Fernandes 18 Jun 18 1.45 Yr. Data below for Tata Retirement Savings Fund - Progressive as on 31 Dec 19
Asset Allocation
Asset Class Value Cash 3.63% Equity 96.37% Top Securities Holdings / Portfolio
Name Holding Value Quantity HDFC Bank Ltd (Financial Services)
Equity, Since 30 Nov 11 | HDFCBANK9% ₹65 Cr 506,000 ICICI Bank Ltd (Financial Services)
Equity, Since 31 Dec 18 | ICICIBANK7% ₹53 Cr 1,030,000 Reliance Industries Ltd (Energy)
Equity, Since 30 Apr 18 | RELIANCE6% ₹47 Cr 302,500
↓ -7,500 ITC Ltd (Consumer Defensive)
Equity, Since 30 Apr 18 | ITC5% ₹40 Cr 1,608,000 Kotak Mahindra Bank Ltd (Financial Services)
Equity, Since 28 Feb 17 | KOTAKBANK4% ₹33 Cr 201,600 Housing Development Finance Corp Ltd (Financial Services)
Equity, Since 31 Jul 17 | HDFC4% ₹31 Cr 134,000
↑ 8,000 Axis Bank Ltd (Financial Services)
Equity, Since 31 Jan 19 | 5322153% ₹25 Cr 340,000
↑ 45,000 Larsen & Toubro Ltd (Industrials)
Equity, Since 30 Sep 17 | LT3% ₹24 Cr 181,500 HDFC Life Insurance Co Ltd (Financial Services)
Equity, Since 31 May 19 | 5407772% ₹17 Cr 300,000 Jubilant Foodworks Ltd (Consumer Cyclical)
Equity, Since 31 Jan 18 | JUBLFOOD2% ₹17 Cr 103,000 3. Tata Retirement Savings Fund - Conservative
CAGR/Annualized return of 9.4% since its launch. Ranked 7 in Retirement Fund category. Return for 2019 was 7.6% , 2018 was 0.8% and 2017 was 15.1% . Tata Retirement Savings Fund - Conservative
Growth Launch Date 1 Nov 11 NAV (22 Jan 20) ₹20.9332 ↓ -0.02 (-0.09 %) Net Assets (Cr) ₹135 on 31 Dec 19 Category Solutions - Retirement Fund AMC Tata Asset Management Limited Rating ☆☆☆☆ Risk Moderately High Expense Ratio 2.4 Sharpe Ratio 0.95 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 Dec 14 ₹10,000 31 Dec 15 ₹10,641 31 Dec 16 ₹11,767 31 Dec 17 ₹13,546 31 Dec 18 ₹13,650 31 Dec 19 ₹14,689 Returns for Tata Retirement Savings Fund - Conservative
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 22 Jan 20 Duration Returns 1 Month 0.4% 3 Month 1.7% 6 Month 4.8% 1 Year 8.7% 3 Year 7.3% 5 Year 7.7% 10 Year 15 Year Since launch 9.4% Historical performance (Yearly) on absolute basis
Year Returns 2018 7.6% 2017 0.8% 2016 15.1% 2015 10.6% 2014 6.4% 2013 20.6% 2012 5.7% 2011 10.9% 2010 2009 Fund Manager information for Tata Retirement Savings Fund - Conservative
Name Since Tenure Murthy Nagarajan 1 Apr 17 2.67 Yr. Sonam Udasi 1 Apr 16 3.67 Yr. Ennette Fernandes 18 Jun 18 1.45 Yr. Data below for Tata Retirement Savings Fund - Conservative as on 31 Dec 19
Asset Allocation
Asset Class Value Cash 5.3% Equity 29.01% Debt 65.69% Top Securities Holdings / Portfolio
Name Holding Value Quantity GOVT STOCK
Sovereign Bonds | -19% ₹26 Cr 2,500,000 GOVT STOCK
Sovereign Bonds | -8% ₹10 Cr 1,000,000 Power Finance Corporation Limited
Debentures | -7% ₹10 Cr 100
↑ 100 6.84% Govt Stock 2022
Sovereign Bonds | -7% ₹9 Cr 916,800 8.24% Govt Stock 2027
Sovereign Bonds | -4% ₹6 Cr 550,000 8.20% Govt Stock 2025
Sovereign Bonds | -4% ₹5 Cr 500,000 Food Corporation Of India
Debentures | -4% ₹5 Cr 50 7.73% Govt Stock 2034
Sovereign Bonds | -4% ₹5 Cr 500,000 B) Repo
CBLO/Reverse Repo | -4% ₹5 Cr 7.80% Govt Stock 2021
Sovereign Bonds | -4% ₹5 Cr 500,000 4. HDFC Retirement Savings Fund - Equity Plan
CAGR/Annualized return of 15.5% since its launch. Return for 2019 was 5.2% , 2018 was -6% and 2017 was 37.7% . HDFC Retirement Savings Fund - Equity Plan
Growth Launch Date 25 Feb 16 NAV (22 Jan 20) ₹17.552 ↓ -0.06 (-0.36 %) Net Assets (Cr) ₹846 on 31 Dec 19 Category Solutions - Retirement Fund AMC HDFC Asset Management Company Limited Rating Risk Moderately High Expense Ratio 2.73 Sharpe Ratio 0.2 Information Ratio -0.67 Alpha Ratio -3.32 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 Dec 16 ₹12,616 31 Dec 17 ₹17,373 31 Dec 18 ₹16,325 31 Dec 19 ₹17,180 Returns for HDFC Retirement Savings Fund - Equity Plan
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 22 Jan 20 Duration Returns 1 Month 2.5% 3 Month 4.7% 6 Month 6.1% 1 Year 7.9% 3 Year 10.3% 5 Year 10 Year 15 Year Since launch 15.5% Historical performance (Yearly) on absolute basis
Year Returns 2018 5.2% 2017 -6% 2016 37.7% 2015 2014 2013 2012 2011 2010 2009 Fund Manager information for HDFC Retirement Savings Fund - Equity Plan
Name Since Tenure Shobhit Mehrotra 25 Feb 16 3.68 Yr. Chirag Setalvad 25 Feb 16 3.68 Yr. Chirag Dagli 31 Jul 19 0.25 Yr. Data below for HDFC Retirement Savings Fund - Equity Plan as on 31 Dec 19
Asset Allocation
Asset Class Value Cash 7.67% Equity 80.1% Debt 12.19% Other 0.04% Top Securities Holdings / Portfolio
Name Holding Value Quantity HDFC Bank Ltd (Financial Services)
Equity, Since 29 Feb 16 | HDFCBANK8% ₹64 Cr 502,000 Treps - Tri-Party Repo
CBLO/Reverse Repo | -8% ₹63 Cr Reliance Industries Ltd (Energy)
Equity, Since 29 Feb 16 | RELIANCE7% ₹55 Cr 354,000
↑ 10,000 ICICI Bank Ltd (Financial Services)
Equity, Since 31 Mar 16 | ICICIBANK6% ₹46 Cr 900,000 Housing Development Finance Corp Ltd (Financial Services)
Equity, Since 30 Jun 18 | HDFC5% ₹44 Cr 190,000
↑ 38,000 Infosys Ltd (Technology)
Equity, Since 29 Feb 16 | INFY4% ₹34 Cr 487,174 Larsen & Toubro Ltd (Industrials)
Equity, Since 31 Mar 16 | LT3% ₹27 Cr 201,000 Housing And Urban Development Corporation Ltd.
Debentures | -3% ₹27 Cr 250 Power Finance Corporation Ltd.
Debentures | -3% ₹27 Cr 250 6.79% Govt Stock 2029
Sovereign Bonds | -3% ₹25 Cr 2,500,000 5. HDFC Retirement Savings Fund - Hybrid - Debt Plan
CAGR/Annualized return of 8.7% since its launch. Return for 2019 was 7.6% , 2018 was 0.7% and 2017 was 12.4% . HDFC Retirement Savings Fund - Hybrid - Debt Plan
Growth Launch Date 25 Feb 16 NAV (22 Jan 20) ₹13.869 ↑ 0.01 (0.05 %) Net Assets (Cr) ₹75 on 31 Dec 19 Category Solutions - Retirement Fund AMC HDFC Asset Management Company Limited Rating Risk Moderately High Expense Ratio 2.56 Sharpe Ratio 1.14 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 Dec 16 ₹11,160 31 Dec 17 ₹12,539 31 Dec 18 ₹12,624 31 Dec 19 ₹13,579 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 22 Jan 20 Duration Returns 1 Month 1.3% 3 Month 2.8% 6 Month 4% 1 Year 8.5% 3 Year 6.6% 5 Year 10 Year 15 Year Since launch 8.7% Historical performance (Yearly) on absolute basis
Year Returns 2018 7.6% 2017 0.7% 2016 12.4% 2015 2014 2013 2012 2011 2010 2009 Fund Manager information for HDFC Retirement Savings Fund - Hybrid - Debt Plan
Name Since Tenure Shobhit Mehrotra 25 Feb 16 3.68 Yr. Chirag Setalvad 25 Feb 16 3.68 Yr. Chirag Dagli 31 Jul 19 0.25 Yr. Data below for HDFC Retirement Savings Fund - Hybrid - Debt Plan as on 31 Dec 19
Asset Allocation
Asset Class Value Cash 18% Equity 15.11% Debt 66.88% Other 0.02% Top Securities Holdings / Portfolio
Name Holding Value Quantity Treps - Tri-Party Repo
CBLO/Reverse Repo | -14% ₹11 Cr 7.37% Govt Stock 2023
Sovereign Bonds | -11% ₹8 Cr 750,000 7.68% Govt Stock 2023
Sovereign Bonds | -10% ₹7 Cr 700,000 Indian Railway Finance Corporation Limited
Debentures | -7% ₹5 Cr 50 Power Grid Corporation Of India Limited
Debentures | -7% ₹5 Cr 50 6.79% Govt Stock 2029
Sovereign Bonds | -7% ₹5 Cr 500,000 Starlite Lighting Limited
Debentures | -6% ₹5 Cr 50 State Bank Of India
Debentures | -6% ₹5 Cr 45 Net Current Assets
Net Current Assets | -4% ₹3 Cr Reliance Utilities And Power Private Limited
Debentures | -3% ₹3 Cr 25
NPS Calculator
After the benefits, let’s learn how to calculate NPS.
| 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 below to know more
Know Your Monthly SIP Amount
So, do not compromise your living standards in your advancing years, invest in a National Pension Scheme (NPS).
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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