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NPS ( National Pension Scheme)

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NPS ( National Pension Scheme)

NPS (National Pension Scheme) – Retirement Security with Tax Efficiency and Optional Protection The National Pension Scheme (NPS) is a government-backed voluntary long-term investment plan aimed at securing your retirement while offering significant tax advantages. It is designed to help individuals build a retirement corpus by investing regularly in a mix of equity, corporate bonds, and government securities, managed by professional fund managers under the supervision of PFRDA (Pension Fund Regulatory and Development Authority). While NPS itself is not an insurance product, many investors choose to pair their NPS contributions with life insurance policies or term plans for added protection—creating a comprehensive financial strategy that ensures post-retirement stability and family security in case of an untimely event.

Requirement of document

Key Features of NPS (National Pension Scheme):

✅ Retirement Corpus Builder – Invests in diversified assets for long-term capital growth
✅ Low-Cost Structure – One of the lowest fund management charges in the financial market
✅ Flexible Contributions – You can decide the amount and frequency of investment
✅ Tax Benefits –

  • Up to ₹1.5 lakh deduction under Section 80C

  • Additional ₹50,000 deduction under Section 80CCD(1B)
    ✅ Annuity Option – A portion of the maturity amount must be used to purchase an annuity plan to ensure post-retirement income
    ✅ Choice of Fund Managers – Select from multiple fund managers and switch between them
    ✅ Portable & Transparent – Can be accessed across locations and sectors (public/private/self-employed)

Why Combine NPS with Insurance?

While NPS secures your post-retirement financial needs, it doesn’t offer life insurance on its own. That’s why many individuals choose to pair NPS with Term Life Insurance or ULIPs. This combination provides:

  • Family protection during your working years

  • Market-linked returns for long-term corpus building

  • Tax savings on both insurance premiums and NPS contributions

  • Peace of mind that your loved ones are protected financially

Example Scenario:

You invest ₹5,000/month in NPS and ₹2,000/month in a term life insurance policy. Over 25 years:

  • You accumulate a retirement corpus of ₹50+ lakhs through NPS

  • You enjoy annual tax deductions of ₹2 lakh under Sections 80C and 80CCD(1B)

  • Your family receives life cover of ₹25+ lakhs in case of an unfortunate event

  • You secure a regular monthly pension post-retirement with the annuity purchased through NPS maturity

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