Well, Kindly let me know why someone should go for NPS?
I mean what I personally feel is that, locking money in NPS for full 30 years is not a logical thing in my opinion.
I mean suppose if I have to lock-in my money for FULL 30 years than I will probably go for 100% Midcap Mutual Funds.
This is because if I have to lock-in my money for full full 30 years than why not to go with midcap mutual funds which appreciate extra-ordinary in these much of years?
In case of NPS we have equity scheme but it invests only in the largecap stocks.
I mean I really surprise why people even think of lock-in their money for full 30 years in NPS?
Kindly let me know your view points.
I mean from which angle you see NPS good or Bad and why?..
NPS in brief:-
1. In the year 2009 Government of India introduced this scheme for non govt. employees for pension at their old age (60 years).
2. There are two types of NPS accounts, Tier -I & II. This classification is based on the conditions of withdrawal of money before retirement.
2. Minimum contribution in a year is Rs. 6000/- for Tier I and Rs. 2000/- for Tier II account.
3. According to revised Direct Tax Code, withdrawal from NPS account is exempt from tax.
4. The Govt. appointed six fund managers, who will take the decisions of investment according to rules of PFRDA (Pension Fund Regulatory and Development Authority).
5. Asset allocation of NPS is of three classes depending upon the risk profile. Class G (Ultra safe), Class C (Safe) & Class E (Medium). Class G investment will be on govt. bonds, class C on fixed income securities other than govt. and class E on equity related products restricted to 50% in equity investment.
6. The Govt. also approved some nationalized banks, LIC of India, some trustee banks etc. to facilitate opening of NPS account which are called POP (Point of Presence).
7. To withdraw money from Tier I account before the age of retirement is difficult. One can withdraw up to 20% of total provided that rest 80% is to be invested in an insurance product of the intermediaries.
8. To withdraw money from Tier II account before the age of retirement is easy. As such there is no major restrictions.
9. Fund Managers will charge Annual Fees of .00009% (90 paisa for Rs 10,000) for Managing the fund and off course there is a service charge of the banks as per their norms which is regulated by PFRDA (e.g. annual maintenance charge Rs. 350/-).
10. Once account is opened through POP, a permanent retirement account number (PRAN) is allotted. All transactions, investments are well maintained and can be accessed through internet.
My Personal Observations:-
1. This scheme is good for common people.
2. Smart investor will be away from this, they think, "Only a fool gives his money to the government".