How to Invest in NPS: Benefits of Investing in NPS

Before we know how to invest in NPS, we must understand what the National Pension System is. NPS is a pension scheme backed by the Government of India and promoted by the Pension Fund Regulatory and Development Authority of India (PFRDA). NPS is a great scheme for individuals who are planning their retirement fund. Since the scheme is overseen by a Government of India body, there is little to worry about regarding transparency about how and where your money is invested.

At superannuation, NPS allows you to have a pension i.e. regular monthly income during your retirement years, making you financially independent even if you no longer have a regular income from a job. Investing in the scheme systematically can make a huge difference during your retirement years, specifically for individuals in private sector jobs. NPS rules are amended regularly to ensure its investor friendly. Therefore, undoubtedly, it is an ideal scheme of investment for your retirement.

Before you know how to invest in NPS, you should have good knowledge of the scheme to ensure you are making the right decision. There are two types of accounts that you can invest in under the NPS scheme: - Tier 1 and Tier II accounts .

It’s essential for the readers to understand the benefits before they understand how to invest in NPS.

Every subscriber investing in this scheme works with a PRAN, which is allotted to every subscriber. The scheme is backed by the Government of India with the aim of making people financially secure during their golden years of retirement. Hence, there are some attractive benefits that one can enjoy by investing in NPS.

Investment experts consider NPS to be one of the greatest schemes on the market because of its stability, numerous tax benefits, and higher returns. An individual can invest in a pension scheme at regular intervals using the NPS scheme. Investing in a retirement scheme is becoming increasingly crucial for paid employees in the private sector who are not entitled to a monthly pension from their employer.

There are two methods through which you can open an NPS account - Online and Offline.

To open the NPS account online, visit the PFRDA Website and follow these steps:

• Select “Register with Aadhaar” from the 'Registration' drop-down menu..
• Enter your Aadhaar number and select "Generate OTP."
• Your registered mobile number will receive the OTP.
• Along with your personal information, nomination information, and bank information, enter the OTP.
• Your Permanent Retirement Allotment Number (PRAN) will be assigned once your application has been successfully filed.
• The photograph that appears in the 'Photograph and Signature' tab will be the same as the one that appears in the 'Photograph and Signature' tab.
• Select 'e-signature' from the drop-down menu. An OTP will be produced and delivered to your mobile number once more.
• To authenticate your signature and make a payment, enter the OTP.

To open an NPS account offline, go to one of the PFRDA-registered Points of Presence (POPs) and pick up a registration form. POPs are banks and financial organizations that have been designated by the PFRDA to provide services to NPS clients.

These POPs handle NPS Scheme subscriptions, fund manager changes, and other NPS-related services. You must fill out basic facts in the application form and supply relevant Know Your Customer (KYC) documents, such as an Aadhar Card, a PAN Card, and proof of address.

Now that you know how to invest in National Pension Scheme, here are the documents you would be required to submit:

Find a PoP near you and fill out an NPS subscription form. Fill out the form and attach photocopies of your KYC documents such as your Aadhaar card, PAN card, passport, and so on. If you are a current customer of the bank, you will not be required to submit the KYC documents because your information will already be stored in their database.

The returns in NPS are linked to the market. Therefore, NPS does not have interest rates. NPS is subject to stringent regulation by the PFRDA.

Any NPS subscriber can claim tax benefit u/s 80 CCD (1) with in the overall ceiling of Rs. 1.5 lac u/s 80 CCE. An additional deduction for investment up to Rs. 50,000 in trier-1 NPS account NPS is available under subsection 80CCD (1B). This will be over and above the deduction of Rs. 1.5 lakh available u/s 80C of Income Tax Act, 1961.