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 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.
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 is 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 15.3% since its launch. Ranked 2 in Retirement Fund
category. Return for 2023 was 25.3% , 2022 was -1.9% and 2021 was 20.5% . Tata Retirement Savings Fund-Moderate
Growth Launch Date 1 Nov 11 NAV (31 Oct 24) ₹63.4659 ↑ 0.25 (0.40 %) Net Assets (Cr) ₹2,233 on 30 Sep 24 Category Solutions - Retirement Fund AMC Tata Asset Management Limited Rating ☆☆☆☆☆ Risk Moderately High Expense Ratio 0 Sharpe Ratio 2.41 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 150 Exit Load 0-60 Years (1%),60 Years and above(NIL) Growth of 10,000 investment over the years.
Date Value 31 Oct 19 ₹10,000 31 Oct 20 ₹10,305 31 Oct 21 ₹13,924 31 Oct 22 ₹13,824 31 Oct 23 ₹15,403 31 Oct 24 ₹20,230 Returns for Tata Retirement Savings Fund-Moderate
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 31 Oct 24 Duration Returns 1 Month -3.2% 3 Month -0.3% 6 Month 12.2% 1 Year 31.3% 3 Year 13.3% 5 Year 15.1% 10 Year 15 Year Since launch 15.3% Historical performance (Yearly) on absolute basis
Year Returns 2023 25.3% 2022 -1.9% 2021 20.5% 2020 15.1% 2019 8.6% 2018 -3.6% 2017 38.8% 2016 6.7% 2015 7.7% 2014 55.1% Fund Manager information for Tata Retirement Savings Fund-Moderate
Name Since Tenure Murthy Nagarajan 1 Apr 17 7.51 Yr. Sonam Udasi 1 Apr 16 8.51 Yr. Data below for Tata Retirement Savings Fund-Moderate as on 30 Sep 24
Asset Allocation
Asset Class Value Cash 12.88% Equity 78.98% Debt 8.14% Top Securities Holdings / Portfolio
Name Holding Value Quantity HDFC Bank Ltd (Financial Services)
Equity, Since 30 Nov 11 | HDFCBANK5% ₹119 Cr 687,500 ITC Ltd (Consumer Defensive)
Equity, Since 30 Apr 18 | ITC4% ₹82 Cr 1,576,000 Zomato Ltd (Consumer Cyclical)
Equity, Since 31 Mar 24 | 5433203% ₹65 Cr 2,367,000
↑ 117,000 Reliance Industries Ltd (Energy)
Equity, Since 30 Apr 18 | RELIANCE2% ₹55 Cr 187,000
↓ -110,000 Solar Industries India Ltd (Basic Materials)
Equity, Since 31 Oct 22 | SOLARINDS2% ₹55 Cr 47,400 Radico Khaitan Ltd (Consumer Defensive)
Equity, Since 30 Nov 17 | RADICO2% ₹55 Cr 266,500
↓ -8,000 Tata Consultancy Services Ltd (Technology)
Equity, Since 31 Aug 20 | TCS2% ₹54 Cr 126,000
↑ 14,436 BSE Ltd (Financial Services)
Equity, Since 31 May 24 | BSE2% ₹49 Cr 132,000 Mahanagar Gas Ltd (Utilities)
Equity, Since 29 Feb 24 | MGL2% ₹45 Cr 234,000 Kirloskar Pneumatic Co Ltd (Industrials)
Equity, Since 31 Aug 22 | 5052832% ₹40 Cr 305,000 2. Tata Retirement Savings Fund - Progressive
CAGR/Annualized
return of 15.5% since its launch. Ranked 6 in Retirement Fund
category. Return for 2023 was 29% , 2022 was -3.9% and 2021 was 23.3% . Tata Retirement Savings Fund - Progressive
Growth Launch Date 1 Nov 11 NAV (31 Oct 24) ₹65.4083 ↑ 0.38 (0.59 %) Net Assets (Cr) ₹2,182 on 30 Sep 24 Category Solutions - Retirement Fund AMC Tata Asset Management Limited Rating ☆☆☆☆☆ Risk Moderately High Expense Ratio 0 Sharpe Ratio 2.6 Information Ratio -0.53 Alpha Ratio 1.94 Min Investment 5,000 Min SIP Investment 150 Exit Load 0-60 Years (1%),60 Years and above(NIL) Growth of 10,000 investment over the years.
Date Value 31 Oct 19 ₹10,000 31 Oct 20 ₹10,107 31 Oct 21 ₹14,207 31 Oct 22 ₹13,842 31 Oct 23 ₹15,502 31 Oct 24 ₹21,122 Returns for Tata Retirement Savings Fund - Progressive
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 31 Oct 24 Duration Returns 1 Month -4.5% 3 Month -1% 6 Month 13% 1 Year 36.3% 3 Year 14.1% 5 Year 16.1% 10 Year 15 Year Since launch 15.5% Historical performance (Yearly) on absolute basis
Year Returns 2023 29% 2022 -3.9% 2021 23.3% 2020 14.4% 2019 11.5% 2018 -6.1% 2017 49.1% 2016 3.1% 2015 7.8% 2014 47.4% Fund Manager information for Tata Retirement Savings Fund - Progressive
Name Since Tenure Murthy Nagarajan 1 Apr 17 7.51 Yr. Sonam Udasi 1 Apr 16 8.51 Yr. Data below for Tata Retirement Savings Fund - Progressive as on 30 Sep 24
Asset Allocation
Asset Class Value Cash 6.38% Equity 93.62% Top Securities Holdings / Portfolio
Name Holding Value Quantity HDFC Bank Ltd (Financial Services)
Equity, Since 30 Nov 11 | HDFCBANK6% ₹131 Cr 754,000 ITC Ltd (Consumer Defensive)
Equity, Since 30 Apr 18 | ITC4% ₹90 Cr 1,728,000 Zomato Ltd (Consumer Cyclical)
Equity, Since 31 Mar 24 | 5433203% ₹74 Cr 2,718,000
↑ 198,000 Reliance Industries Ltd (Energy)
Equity, Since 30 Apr 18 | RELIANCE3% ₹64 Cr 218,000
↓ -103,000 Solar Industries India Ltd (Basic Materials)
Equity, Since 31 Oct 22 | SOLARINDS3% ₹62 Cr 53,755 Tata Consultancy Services Ltd (Technology)
Equity, Since 31 Aug 20 | TCS3% ₹61 Cr 144,000
↑ 21,411 BSE Ltd (Financial Services)
Equity, Since 31 May 24 | BSE2% ₹54 Cr 146,000 Radico Khaitan Ltd (Consumer Defensive)
Equity, Since 30 Nov 17 | RADICO2% ₹51 Cr 249,600
↓ -5,000 Mahanagar Gas Ltd (Utilities)
Equity, Since 29 Feb 24 | MGL2% ₹51 Cr 261,000 DOMS Industries Ltd (Industrials)
Equity, Since 31 Dec 23 | DOMS2% ₹45 Cr 165,996 3. Tata Retirement Savings Fund - Conservative
CAGR/Annualized
return of 9% since its launch. Ranked 7 in Retirement Fund
category. Return for 2023 was 12.1% , 2022 was 0.1% and 2021 was 7.6% . Tata Retirement Savings Fund - Conservative
Growth Launch Date 1 Nov 11 NAV (31 Oct 24) ₹30.7229 ↑ 0.04 (0.13 %) Net Assets (Cr) ₹177 on 15 Oct 24 Category Solutions - Retirement Fund AMC Tata Asset Management Limited Rating ☆☆☆☆ Risk Moderately High Expense Ratio 0 Sharpe Ratio 2.21 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 Oct 19 ₹10,000 31 Oct 20 ₹10,716 31 Oct 21 ₹12,041 31 Oct 22 ₹12,059 31 Oct 23 ₹12,903 31 Oct 24 ₹14,802 Returns for Tata Retirement Savings Fund - Conservative
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 31 Oct 24 Duration Returns 1 Month -1.2% 3 Month 0.6% 6 Month 6.3% 1 Year 14.7% 3 Year 7.1% 5 Year 8.2% 10 Year 15 Year Since launch 9% Historical performance (Yearly) on absolute basis
Year Returns 2023 12.1% 2022 0.1% 2021 7.6% 2020 11.8% 2019 7.6% 2018 0.8% 2017 15.1% 2016 10.6% 2015 6.4% 2014 20.6% Fund Manager information for Tata Retirement Savings Fund - Conservative
Name Since Tenure Murthy Nagarajan 1 Apr 17 7.51 Yr. Sonam Udasi 1 Apr 16 8.51 Yr. Data below for Tata Retirement Savings Fund - Conservative as on 15 Oct 24
Asset Allocation
Asset Class Value Cash 28.03% Equity 29.17% Debt 42.8% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.17% Govt Stock 2030
Sovereign Bonds | -9% ₹15 Cr 1,500,000 7.38% Govt Stock 2027
Sovereign Bonds | -9% ₹15 Cr 1,500,000 7.36% Govt Stock 2052
Sovereign Bonds | -6% ₹11 Cr 1,000,000 7.27% Govt Stock 2026
Sovereign Bonds | -6% ₹10 Cr 1,000,000 Power Finance Corporation Limited
Debentures | -6% ₹10 Cr 100 Jamnagar Utilities And Power Pvt Limited
Debentures | -5% ₹10 Cr 100 8.24% Govt Stock 2027
Sovereign Bonds | -3% ₹5 Cr 500,000 8.2% Govt Stock 2025
Sovereign Bonds | -3% ₹5 Cr 500,000 Bharti Telecom Limited
Debentures | -3% ₹5 Cr 50 HDFC Bank Ltd (Financial Services)
Equity, Since 30 Nov 11 | HDFCBANK2% ₹4 Cr 20,750 4. HDFC Retirement Savings Fund - Equity Plan
CAGR/Annualized
return of 20.3% since its launch. Return for 2023 was 32.6% , 2022 was 8.6% and 2021 was 42.5% . HDFC Retirement Savings Fund - Equity Plan
Growth Launch Date 25 Feb 16 NAV (31 Oct 24) ₹49.913 ↑ 0.20 (0.40 %) Net Assets (Cr) ₹6,168 on 30 Sep 24 Category Solutions - Retirement Fund AMC HDFC Asset Management Company Limited Rating Risk Moderately High Expense Ratio 1.86 Sharpe Ratio 2.91 Information Ratio 0.98 Alpha Ratio 2.92 Min Investment 5,000 Min SIP Investment 300 Exit Load 0-60 Years (1%),60 Years and above(NIL) Growth of 10,000 investment over the years.
Date Value 31 Oct 19 ₹10,000 31 Oct 20 ₹10,014 31 Oct 21 ₹16,996 31 Oct 22 ₹18,071 31 Oct 23 ₹21,556 31 Oct 24 ₹29,179 Returns for HDFC Retirement Savings Fund - Equity Plan
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 31 Oct 24 Duration Returns 1 Month -4.5% 3 Month -1.4% 6 Month 10.3% 1 Year 35.4% 3 Year 19.7% 5 Year 23.9% 10 Year 15 Year Since launch 20.3% Historical performance (Yearly) on absolute basis
Year Returns 2023 32.6% 2022 8.6% 2021 42.5% 2020 18.3% 2019 5.2% 2018 -6% 2017 37.7% 2016 2015 2014 Fund Manager information for HDFC Retirement Savings Fund - Equity Plan
Name Since Tenure Shobhit Mehrotra 25 Feb 16 8.6 Yr. Srinivasan Ramamurthy 14 Dec 21 2.8 Yr. Dhruv Muchhal 22 Jun 23 1.28 Yr. Data below for HDFC Retirement Savings Fund - Equity Plan as on 30 Sep 24
Asset Allocation
Asset Class Value Cash 7.67% Equity 91.5% Debt 0.82% Top Securities Holdings / Portfolio
Name Holding Value Quantity HDFC Bank Ltd (Financial Services)
Equity, Since 29 Feb 16 | HDFCBANK8% ₹485 Cr 2,800,000 ICICI Bank Ltd (Financial Services)
Equity, Since 31 Mar 16 | ICICIBANK6% ₹395 Cr 3,100,000
↑ 100,000 Axis Bank Ltd (Financial Services)
Equity, Since 29 Feb 16 | 5322154% ₹222 Cr 1,800,000
↑ 200,000 Infosys Ltd (Technology)
Equity, Since 29 Feb 16 | INFY3% ₹206 Cr 1,100,000 Bharti Airtel Ltd (Communication Services)
Equity, Since 28 Feb 22 | BHARTIARTL3% ₹188 Cr 1,100,000 Reliance Industries Ltd (Energy)
Equity, Since 29 Feb 16 | RELIANCE3% ₹177 Cr 600,000 State Bank of India (Financial Services)
Equity, Since 29 Feb 16 | SBIN3% ₹158 Cr 2,000,000 HCL Technologies Ltd (Technology)
Equity, Since 30 Apr 23 | HCLTECH2% ₹153 Cr 850,000 Kotak Mahindra Bank Ltd (Financial Services)
Equity, Since 30 Sep 23 | KOTAKBANK2% ₹148 Cr 800,000 Maruti Suzuki India Ltd (Consumer Cyclical)
Equity, Since 31 Mar 24 | MARUTI2% ₹146 Cr 110,000 5. HDFC Retirement Savings Fund - Hybrid - Debt Plan
CAGR/Annualized
return of 8.8% since its launch. Return for 2023 was 11.2% , 2022 was 3.7% and 2021 was 8.7% . HDFC Retirement Savings Fund - Hybrid - Debt Plan
Growth Launch Date 25 Feb 16 NAV (31 Oct 24) ₹20.8815 ↑ 0.02 (0.11 %) Net Assets (Cr) ₹163 on 30 Sep 24 Category Solutions - Retirement Fund AMC HDFC Asset Management Company Limited Rating Risk Moderately High Expense Ratio 2.13 Sharpe Ratio 2.5 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 300 Exit Load 0-60 Years (1%),60 Years and above(NIL) Growth of 10,000 investment over the years.
Date Value 31 Oct 19 ₹10,000 31 Oct 20 ₹10,611 31 Oct 21 ₹11,983 31 Oct 22 ₹12,375 31 Oct 23 ₹13,406 31 Oct 24 ₹15,325 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 31 Oct 24 Duration Returns 1 Month -0.8% 3 Month 1% 6 Month 5.7% 1 Year 14.3% 3 Year 8.5% 5 Year 8.9% 10 Year 15 Year Since launch 8.8% Historical performance (Yearly) on absolute basis
Year Returns 2023 11.2% 2022 3.7% 2021 8.7% 2020 10.4% 2019 7.6% 2018 0.7% 2017 12.4% 2016 2015 2014 Fund Manager information for HDFC Retirement Savings Fund - Hybrid - Debt Plan
Name Since Tenure Shobhit Mehrotra 26 Feb 16 8.6 Yr. Srinivasan Ramamurthy 14 Dec 21 2.8 Yr. Dhruv Muchhal 22 Jun 23 1.28 Yr. Data below for HDFC Retirement Savings Fund - Hybrid - Debt Plan as on 30 Sep 24
Asset Allocation
Asset Class Value Cash 1,195.37% Debt 45.78% Top Securities Holdings / Portfolio
Name Holding Value Quantity Future on Tata Consultancy Services Ltd
Derivatives | -810% -₹1,322 Cr Future on Larsen & Toubro Ltd
Derivatives | -368% -₹601 Cr 6.67% Govt Stock 2050
Sovereign Bonds | -9% ₹15 Cr 1,500,000 Tata Consultancy Services Ltd (Technology)
Equity, Since 15 May 22 | TCS9% ₹14 Cr 32,977 Mahindra Rural Housing Finance Limited
Debentures | -6% ₹10 Cr 100 Tmf Holdings Limited
Debentures | -6% ₹10 Cr 100 6.19% Govt Stock 2034
Sovereign Bonds | -6% ₹10 Cr 1,000,000 7.57% Govt Stock 2033
Sovereign Bonds | -5% ₹8 Cr 750,000 Larsen & Toubro Ltd (Industrials)
Equity, Since 31 May 16 | LT4% ₹7 Cr 19,700 8.97% Govt Stock 2030
Sovereign Bonds | -4% ₹6 Cr 550,000
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).