One of the most renowned schemes launched by the Government of India for all its residents so that they have a safe and secure financial future even after retirement is the National Pension System or National Pension Scheme. NPS offers retirement benefits to all the sectors of society, be it unorganized or organized.Read more
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The National Pension Scheme offered by the State Bank of India is completely regulated and administered by the Pension Fund Regulatory and Development Authority (PFRDA). Let us know more about the benefits, features, calculations, etc. of the State Bank of India's National Pension Scheme.
As per the rules, any Indian resident between the age of 18 years to 65 years can open an NPS account. An individual can opt for an eNPS account which can be opened with their Aadhar Card or Pan Card information. One of the specialized divisions of the PFRDA (Pension Fund Regulatory and Development Authority), National Pension Scheme is launched to financially safeguard the lives of Indian citizens after their retirement.
Shifted from only the public sector to every Indian citizen residing in India in the year 2009, the main objective of this scheme is to provide financial support to every citizen of India post-retirement age. It is a highly beneficial scheme as it offers financial security to the investor and their family with minimal investment amount.
The SBI National Pension Scheme Calculator helps in calculating the lump sum amount that an investor is expected to receive after their retirement age from SBI NPS investment. By putting in a few basic details of self and related to the scheme, the investor can easily compound the interest formula to compute the NPS amount:
FV = P (1 + r/n) ^ nt
FV = Final Value
P = Principal Sum
r = Rate of interest per annum
n = Total number of times the interest compounds
t = Tenure
Prateek is 34 years old man who has invested in the National Pension Scheme and his monthly contribution to the State Bank of India is Rs.3,000. Taking a hypothetical Rate of Interest (ROI) to be 10% annually, Prateek needs to add the pension amount for his remaining 26 years before retirement. As per the NPS formula,
The total principal amount invested till the age of retirement will be around Rs. 9.36 lakh (approximately)
The total sum to be received at the time of maturity will be around Rs.44.35 lakh (approximately)
Some handy information required while calculation of the State Bank of India’s NPS are as follows:
SBI National Pension Scheme holder’s current age
Choice of NPS option (Auto or Active choice)
Investment type to be made (that is, monthly or yearly)
Amount to be invested
The following is the eligibility criteria for this government-backed scheme:
An NPS account is operational for citizens residing in India only
18 years is the minimum age criteria for opening National Pension Scheme Account
65 years is the maximum age criteria for opening National Pension Scheme Account
The applicant is not allowed to own more than 1 NPS account
KYC Compliance is compulsory before applying for an NPS account
Here is the process of how SBI bank works while you invest in a State Bank of India NPS account:
Visit the https://enps.nsdl.com/eNPS/NationalPensionSystem.html page
Follow the guidelines for the registration process
Enter all the required details like,
Email ID, etc.
Fill in the OTP (One Time Password) sent on your registered mobile number
Select the type of investment account as per your suitability
Select the investment strategy whether Auto or Active choice
Enter the nominee details
Once the registration process is complete, you can access the SBI NPS Account
PRAN (Permanent Retirement Account Number) is generated after the registration process is completed
Here are some of the important highlights of the State Bank of India National Pension Scheme Account:
Tier-I account is compulsory to open for investment in SBI NPS
The minimum contribution to an open Tier-I account is Rs.500
Tier-II account can be opened only if the individual has a Tier-I account
Fund Management Charges for SBI NPS account 0.01%
SBI NPS Account offers attractive linked returns
Non-Resident Indians are not eligible for opening an NPS account
NPS is a long-term investment scheme that is completely government-backed. National Pension Scheme is considered safe and hence protects the financial future of the employee after retirement without any hidden clauses.
Here are some of the top benefits offered under the National Pension Scheme:
Income Tax Act 1961
U/S 80CCD (1)
For Tier-I investment, 1.5 lakh of tax is deductible within the total ceiling
U/S 80CCD 1(B)
For Tier-I investment, up to Rs.50,000 is allowed as deductions
U/S 80CCD (2)
For Tier-I investment, deductions up to 14% for central government and 10% for the rest are eligible
“Tax benefit is subject to changes in tax laws. Standard T&C apply.”
National Pension Scheme is great for liquidity as the contributions made by the employees work systematically. An investor needs to have one of the following mentioned accounts to carry on NPS transactions. Also, with the following account, a unique Permanent Retirement Account Number (PRAN) is compulsory while attaining the liquidity benefits.
Withdrawals are subject to specific conditions and restrictions
Tier-I account works especially as a pension account
The minimum contribution to open a Tier-I account is Rs.500
Tier-II account can be operational only if Tier-I account is active
Liquidity is provided through withdrawals and investments
The minimum contribution to open a Tier-II account is Rs.250
It is a voluntary account
National Pension Scheme works as per the general requirement of the employees in India and hence is considered to be very flexible. The following choices of investment are offered under the National Pension Scheme account:
It is a default option if the employee is confused between choices
The age of the investor is taken into consideration while allocating the assets
The investor has the right to select the proportion of investment under auto choice
Under the active choice, assets are generally allocated between,
Allocation to be made as per the investors will
A maximum of 75% of asset allotment can be made under Equity
Switching between fund managers and investment options is on the investors will
Seamless portability is one of the biggest benefits of the National Pension Scheme when compared to other pension plans in the market. If a person switches from one job to another or moves from one location in India to another, the transfer of the NPS Account will be carried smoothly online without any hassles or burdens. As it is a PFRDA (Pension Fund Regulatory and Development Authority) regulated scheme, transparency is guaranteed.
National Pension Scheme is a great scheme that offers fixed income after retirement. The main aim behind NPS is to create a financial corpus for individuals after their retirement so that they can lead a happy and financially settled life.
State Bank of India NPS Calculator helps in understanding the current financial standing of the investor and planning their further investments keeping in mind their future financial needs. It is important to keep all the future aspects in mind before making any kind of investment.
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