Retirement Planning

Retirement Planning (5)

NPS has emerged as a popular tax saving tool at par with EPF. but the issue on taxation of 60% of the proceeds on maturity or buying annuity is a moot point and hoped to be resolved soon. Opening of NPS account was a herculean task till now but have been made easier through online NPS account.

Types of NPS accounts: There are Two types of account i.e TIER I and TIER II

  • Tier I is the mandatory account for long-term savings. Additional Tax benefit upto Rs.50,000 is available u/s 80CCD (1B) over and above the 80C limit of Rs1,50,000/-
  • Tier II is an add-on account which provides you the flexibility to invest and withdraw from various schemes available in NPS without any exit load.
  • To open Tier II account you need to have Tier I account first.

A subscriber is required to open a Tier 1 account with the Central Recordkeeping Agency (CRA). Each account is identified by a unique Permanent Retirement Account Number (PRAN). It is now possible to open this account online using the e-NPS system by accessing the following link:

According to a BBC study, only 4% of the Indians have adequate retirement savings. Most Indians get serious about retirement savings only in their 40s or 50s. Are you also facing a similar situation and not saved enough for retirement? 

The first step in retirement planning is estimating the retirement corpus. It will depend on your life style, monthly expenses, inflation, and investment modes. The next step is taking stock of your  retirement benefits from your employer i.e. gratuity, leave encashment, pension  and any other income /assets meant to be used post retirement .The balance of the corpus should be arranged by regular savings. You can make up for the lost time and put your retirement back on track by review of the strategies and start saving early. 

Retirement is a long awaited hope for freedom. Mr Ajay who recently retired after 35 years in service finds it very difficult in Mumbai. Both the children Son,Pranab and Daughter, Prakriti have preferred to settle in USA. Ajay and wife Sunita find the monthly pension not adequate for the monthly expenses. All the expenses are increasing continuously. Sunita needs regular visit to the hospital for checkup which cost not less than a thousand rupees for every visit. What ever investment was made in shares /Mutual Funds on the advice of a neighbour broker have declined in value. Ajay desperately trying for a job which he finds difficult to get.

It is necessary that, one should check the EPF statement periodically. Investing in EPF is good option for retirement planning process. Now it is very convenient to view the EPF statement online provided the employer has registered with the EPFO.

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