National Pension System- Age for Joining 18 Years to 65 years
The Pension Fund Regulatory and Development Authority (PFRDA) on 1st November,2017 has raised the maximum age of joining National Pension System (NPS) for the private sector citizens to 65 yrs from the existing 60 yrs. Now any Indian citizen, resident or nonresident, between the age of 60 to 65 yrs, can also join NPS and continue up to the age of 70 yrs in NPS. With this increase of joining age, the subscribers who are willing to join NPS at the later stage of life will be able to avail the benefits of NPS. This initiative will allow a larger segment of the society particularly senior citizens to reap the benefit of NPS and plan for their regular income.
What is NPS?
NPS is a voluntary, defined contribution retirement savings scheme It has been designed to enable systemic savings during the subscriber’s working life. It is an attempt towards finding a sustainable solution to provide adequate retirement income to every citizen of India. All citizens above the age of 18 yrs (up to age of 65yrs) are now eligible
How it works?
Under NPS an individual savings is pooled in pension funds_ These funds are invested by PFRDA regulated professional fund managers as per the approved guidelines in diversified portfolios comprising of Government bonds,bills,corporate debentures and shares. These contributions would grow and accumulate over the years depending on the returns earned on investment made. Besides, under provisions of Income-Tax, an individual making voluntary, contributions under NPS would get an additional benefit up to Rs 50, 000 under section 😯 CCD ( 1B) which would be over and above the ceding limit of Rs 1, 50,000 .prescribed under Section 8OCCE.
Now the increase in joining age will provide the options to the subscribers who are at the fag end of their employment and expecting lump sum amount at the time of retirement but willing to defer their retirement planning for future, may open NPS account and contribute the lump sum corpus to NPS for better fund management by professional fund managers to fetch better returns and plan for the regular income after some time. The following are applicable clauses :
- The subscriber joining NPS beyond the age of 60 yrs will have the same choice of the pension fund as well as the investment choice as is available under the scheme for subscribers joining before the age of 60 yrs.
- The subscriber joining NPS after the age of 60 yrs will have an option of normal exit from NPS after completion of 3 yrs. in the scheme In this case, the subscriber will be required to utilize at least 10% of the corpus for purchase of Annuity and the remaining amount can be withdrawn m lump sum
- In case of such subscriber willing to exit from NPS before completion of 3 yrs in the NPS, he/she will be allowed to do so but in such case the subscriber will have to utilize at least 8O% of the corpus for purchase of Annuity and the remaining can be withdrawn in lump sum. In case of subsscriber’s death the entire corpus with be paid to the nominee.
In today’s uncertain job market, a lay-off can lead to months of unemployment. A serious illness or disability due to accident can also hamper one’s ability to earn for a prolonged period. When life throws nasty financial surprises your way, have a Plan B ready. An adequate emergency fund can help you tide over the crisis.
To a great extent, credit cards have done away with the need for emergency funds. You can use them to tide over the emergency till you are able to arrange funds. But credit cards should not be seen as a replacement for setting up an emergency fund.
Financial planners usually suggest keeping aside six month worth of expenses for emergencies. However, this thumb rule varies according to individual circumstances. If you have health insurance, you won’t need a contingency fund during a medical emergency. However, be prepared for situations where you or a family member might not need hospitalisation, but will need cash for doctor visits, tests and medicines.
The size of the contingency fund will also depend on how secure your job is and how many earning members are there in a family. You also need to take into account EMIs and insurance premiums that need to be serviced. Households that are paying huge EMIs experience financial stress when income reduces. Their emergency fund has to be that much bigger. “An emergency fund goes a long way in servicing debt while alternatives like restructuring the outstanding loan is being worked out,” says Gaurav Roy, Head, Products at BigDecisions.com.
Where do you keep it?
After you figure out how big a kitty you need, you need to choose an appropriate investment option for the fund. Remember, returns are not important here. What is more critical is that the money should be easily accessible at short notice. Financial planner Malhar Majumder suggests parking at least 25% of the emergency fund in a savings bank account. You can withdraw it 24×7 (see box). Ensure you have a debit card with adequate cash withdrawal limit. Many people remain unaware of their debit card’s daily cash withdrawal limit till the time they attempt to withdraw huge amounts of cash during an emergency.
But savings bank accounts give very low interest of 4% on the balance. A better idea is to go for a sweep-in account where excess funds are automatically transferred into a fixed deposit and earn higher returns of 7-8%. When you withdraw, the money is paid by breaking the fixed deposit. If your bank does not have a sweep-in facility, you can put the money in a fixed deposit that can be broken anytime.
The other reasonably comfortable option is to park your cash in liquid funds, says Majumder. The money will earn a decent return and can be withdrawn at any time. Liquid funds have returned 8.24% over the last one year and ultra-short term funds have returned 8.52% during the same period. Redemption takes a day. Some fund houses offer liquid funds that come with ATM cards so the investor can withdraw the money directly without the redemption first going to his bank account.
Revisit your kitty A contingency kitty once formed is not the end of the process of providing for a rainy day. You need to revisit the fund and replenish it regularly to adjust for inflation, lifestyle changes, increase in family members and changes in debt commitments. The kitty should be reviewed at least once a year.
Neha Pandey Deoras,TNN
He has introduced Aparnna to the basics of banking and encouraged her to learn about financial concepts and investment products. Two years ago, she topped the South zone in the National Financial Literacy Assessment Test (NFLAT). The exam is conducted by the National Institute of Securities Market (NISM) for students of Classes VIII to X and tests basic financial awareness. Now 15, she already knows about the different types of insurance covers and how mutual funds work.
“Knowledge of financial concepts is necessary to succeed in the real world. It is perhaps the best gift you can give to your child,” says her father Rajendra Chaudhari.
Her money quotient:
– Manages her own bank account but has not yet started investing.
– Knowledge of finance came handy when she co-founded a company that makes eco-friendly water sprinklers.
– Conducts Money Tree workshops where she teaches finance to children from the low-income group
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When Arun Kumar Pathak booked a flat in Noida four years ago, the builder had promised to hand over possession within 18 months. He had even offered a hefty 9% discount if Pathak paid the entire amount up front. Not convinced, Pathak opted for a smaller 2% early bird discount and paid only 30% of the price at the time of booking.
“The rest 70% is payable only when I get possession,” he says with a sense of relief. That is because the project is still not finished and there is no saying when the project will be handed over.
Pathak was lucky, but thousands of other buyers are not. Delay in projects has become a common thing across the country. The best option of buyers is to opt for a construction linked payment plan under which they pay as work on the project progresses. This way you don’t lock up your money in a project that is not moving ahead.
This week’s story examines the arithmetic behind each payment option and explains which of these suits you best.
1. Construction-linked plan: Cushion buyers against delay in projects
2. 30:70 subvention plan – Requires a small 3 down payment
3. Subvention without loan: Rigorous due diligence required
4. Interest waiver on home loan: Cuts EMI burden
5. Assured rentals: Reduces cost of borrowing
Read the detailed analysis at:
Retirement may be many years ahead, but what you do today will determine how smoothly you handle your post-retirement life.
Dreaming about your retirement is the first step; planning and working towards your retirement goals is what will actually get you there.
Here are some of the common mistakes to avoid and what to do instead.
Mistake #1: Not creating a retirement road map
Mistake #2: Not knowing how much you need at the time retirement
Mistake #3: Not starting early enough
Mistake #4: Not including contingencies such as health care expenses in your retirement plan
Mistake #5: Not making smart investment decisions
When planning for retirement, it’s important to realize where you want to be, in order to know what you need to do to get there.