National Pension Scheme – the new Avatar
Normally the Avenues for Retirement Planning for the Indian population would be the following:
PPF , PF, EPFO , Mutual Fund Pension Schemes, Retirement Planning products from Insurance Companies, bank fixed deposits and post office schemes. A very small part of the population created its own customized Individual Products. This could be a couple of extra properties creating rental income, shares creating dividend income etc. Many people of the earlier generation would be dependant on their children – willingly, unwillingly, happily or unhappily.
Welcome the NPS – the new Avatar for Retirement Planning. Created by the government of India it has Some major advantages of the NPS. Let us look at them.
Costs Involved:
i) The total costs involved in terms of % are minimal – cheapest in the world.
ii) The charges are under various heads such as CRA Charges, PoP Charges, Custodial Charges and Fund Management Charges.
iii) Flexibility to choose the fund manager, Flexibility to choose the asset allocation.
iv) Portability across the geographical location, Transparency.
Hiren
Hello Sir,
But the EET mode for tax on income earned is still unclear. The FM did give a leeway during his budget speech but how that would be applied of the same is a question mark.
For past few days i am trying to hunt for the answers whether it would be EEE in some way or EET, but no luck. Each media house presents this in a different way.
Moreover when i tried getting some info the same agencies are interested in selling other products.
subra
It is amazing that in a country tax rules change from day to day, 25 year olds are seeing how the proceeds will be taxed when they are 60. Surely Hiren by the time you are 60 neither Dr. Manmohan Singh or Mr. P Chidambaram will be in the cabinet. I do not want to talk about the planet….Of course I have one advantage – I will not be around for you to blame me. Frankly bother about tax when it comes close to the payment date. There are solutions for that also. You should then also be worried about ESTATE DUTY (DEATH TAX)- currently not there in India, WILL SURELY be introduced in the next 35 years…what choice will you have then?
moneymanager
subra jee
itne men dil nahin bhara,
would it be possible to explain it threadbare with your recommendations as usual.
regards
Dr Mohammed Ali Khan
As always Subra is right on spot..
Im aged 32 yrs.. Im planning to start a NPS account and start investing.Why should I worry what will be the tax rate when Im 60 ( thats in 2037 AD ).
Like Subra has said the management cost of NPS is one of the cheapest in the world.. This will make a lot of difference in the long run as more of my money will get compounded over time..
By the time I start withdrawing ( in 2037 )Im sure there will be avenues to make it less susceptible to tax if not completely tax free.
Dr Mohammed Ali Khan
Excellent Article from the blog ” Business Pundit ”
http://businesspandit.wordpress.com/2009/07/14/nps-not-cheap/
Hiren
How can we find out the performance of the asset management companies for what they managed under NPS?
There are no details available anywhere to find the above.
Vijaianand
Hello
Any update on the NPS after last years announcement. I was hoping to get some information from government but nothing as per my search. Any info for NRI would help.
Vijai