With this scheme, not only investors have a higher exposure to equities, but they also earn higher returns for their long-term goals.
National Pension System (NPS) is considered one of the best investment tools for retirement planning in India. It comes with the option of investing through two options – auto and active choice to decide on asset allocation.
Under the auto choice, depending on the investor’s age, his/her investment gets categorized under aggressive, moderate, or conservative funds. The auto choice option adopts a lifecycle-based approach and is aimed at assisting investors who need help to decide their asset allocation.
In case of active choice, the investor has to decide how much allocation he/she wants to put into different asset classes. This allocation doesn’t change with age, unlike under auto choice and remains constant until the investor decides to change it.
Equity allocation in NPS under both the auto and active choice option is allowed up to 75 per cent, which was earlier capped at 50 per cent. Hence, with this scheme, not only investors have a higher exposure to equities, but they also earn higher returns for their long-term goals.
Here is how you can open an NPS account online:
• Log on to the NPS Trust website: https://www.npstrust.org.in/, and click on ‘I want to open an NPS account’ under the service tab.
• Once you click on that you will be asked to select your choice of CRA (Central Record Keeping Agency) between NSDL or KARVY.
• It also shows the charges you will be charged under each CRA: PRA opening charges, annual PRA Maintenance cost per account, and a charge per transaction.
• With either of the option, you will be taken to their respective eNPS website.
• You can click on the NPS tab to proceed to open the account – a popup page will open, click on registration option/open new NPS account online option.
• You then need to enter your PAN, choose the type of account you want to open, from the option Tier I and Tier II, or Tier I only account. With the Tier, I account, contributions are eligible for tax deduction benefit of up to Rs. 50,000 U/S 80CCD (1B), over and above Rs 1.5 lakh u/s 80C. With the other option, one can withdraw the entire accrued corpus any time and no tax benefits are available in this account.
• You will be taken to the registration form wherein you have to fill in your personal details, contact details, bank details.
• Next, you will be asked to choose an investment mode, from auto mode, and active mode.
• If you select the active management option, you will have to choose the investment mix by yourself and specify how you want to spread your corpus across fund classes.
• You need to then put in your nomination details and upload the necessary documents along with your photo and proceed to the payment details.
• Once you are done with that, click on submit to generate the acknowledgment number. The minimum amount is set at Rs 500 for Tier I and Rs 1,000 for Tier II accounts.
• After this, the acknowledge ID will be generated and your registration details will be submitted.
• Once the payment is completed, your PRAN number (Permanent Retirement Account Number) will be generated.
• After it is allotted, you can select the ‘eSign’ option in the eSign/Print and Courier page, following which your process will be completed.