Do you want to remain financially strong even after your retirement. If yes, then the National Pension System (NPS) can be a great option for you. NPS not only provides you with a monthly pension after retirement, but you also get tax benefits for investing in it.
Do you know that investment in NPS can be made not only during the job but also after retirement. Yes, the Pension Fund Regulatory and Development Authority (PFRDA) has made many changes to make NPS more flexible. Now you can invest in NPS even between the ages of 60 and 65 and contribute to it till the age of 70.
60% of the total amount can be withdrawn on final maturity
The entire amount cannot be possible to withdrawn from NPS at once. 40% of the total fund is mandatorily used for an annuity, which provides a pension after retirement. The remaining 60% can be withdrawn as a lump sum.
If you don’t want to provide the withdraw your NPS deposits even after final retirement, the government allows you to do so.
Advantages of NPS
Retirement Fund: NPS is a great retirement plan, which provides you with a regular pension and a lump sum amount after retirement.
Flexibility: Now you can continue investing in NPS even after retirement, allowing you to further grow your retirement fund.
Tax Benefits
Investing in NPS also offers you tax benefits. You are entitled to tax deductions under Sections 80CCD(1), 80CCD(1B), and 80CCD(2) of the Indian Income Tax Act, 1961.
Under Section 80CCD(1B), an additional deduction of up to Rs 50,000 can be availed on investments in NPS, which is in addition to the tax exemption of Rs 1.5 lakh under Section 80C.
Types of NPS
NPS has two different types of accounts: Tier 1 and Tier 2. A Tier 1 account is a retirement account with certain conditions applicable for withdrawal. A Tier 2 account is like a savings account from which you can withdraw money without any restrictions.
NPS is a great investment option that provides you with financial security after retirement. If you are not investing in NPS yet, start today. And if you are already investing in NPS, consider continuing to invest even after retirement. This will help you strengthen your retirement fund.