Mumbai, December 22: National Pension System (NPS), a Government of India pension scheme administered and regulated by the Pension Fund Regulatory and Development Authority (PFRDA) posted 35 per cent subscriber growth so far during the financial year 2019-20. As far as Maharashtra is concerned, NPS has been gowning steadily in the state and has become second largest state having maximum number of subscribers. As of November 30, 2019, in Maharashtra alone as many as 48,392 new subscribers were added.
3.5 crore more subscribers likely by March 2020
PFRDA, the pension sector regulator, has envisioned to expand the subscribers base by targeting 3.5 crore people by March 2020. This growth states the rise of awareness amongst the youth pertaining to retirement planning. According to Melbourne Mercer Global Pension Index (MMGPI) 2019 released recently India also rose to 45.8 from 44.6 last year in global pension index, stating the rise of retirement planning awareness in India. India’s index value increased largely due to the improvement in all three sub-indices of adequacy, sustainability and integrity.
96% people not covered by social security schemes
Commenting on the development Supratim Bandyopadhyay of WTM Finance said, “We are overwhelmed to see such growth in the number of subscribers under NPS. However, there is a long way to go as currently there are around 96 per cent people who are not under any other social security scheme, however, with the government support the target of providing pension coverage to such people can be achieved.”
PFRDA has been organising various promotional campaigns with the support of banks and continue to undertake various initiatives for promoting NPS and Atal Pension Yojana (APY) and taking it to the next level and contribute towards making India a pensioned society.
NPS has only bettered over the years
According to Suresh Sadagopan, Founder Ladder7 Financial Advisories, NPS has over time become better and better for the investing public. Equity component in NPS, which was limited to just 50 per cent earlier, has now gone up to 75 per cent, with certain limitations. There were equity, corporate and government funds before. Now a new class of funds namely alternatives has also been added and one may contribute there up to 5 per cent.
“One may withdraw NPS contributions to the extent of 60 per cent, without incidence of tax at age sixty. The deferment of annuity can be done till age seventy,” Sadagopan said.
The other advantages of NPS like the very low charges were always there. One could opt for the fund manager of their choice too. One can also withdraw up to 25 per cent of one's own contribution from NPS, till age 60 for specified emergency funding needs.
Tax saving: A boon
“NPS also comes under Section 80C and one may invest Rs 1.5 lakh under this section and save taxes. Also, there is a separate section 80CCD (1B), where an additional contribution of up to Rs 50,000 can be made and that amount is available as a deduction,” he added. Employers can also contribute up to 10 per cent of the basic pay into NPS and such amount will be a deduction from the taxable income. There is no upper limit to the contribution into NPS.
Sadagopan says that NPS has been growing steadily in popularity and it is not surprising that NPS subscriber growth is 35 per cent in 2019. NPS has become a credible source to accumulate a long-term retirement corpus and is getting better over time. “The next keenly awaited development regarding NPS - will annuities become tax-free?,” he concluded.