National Pension Scheme (NPS Scheme): Interest Rate 2024, Benefits & Eligibility Criteria

The National Pension Scheme (NPS) is a government-sponsored pension scheme that aims to provide financial security to individuals during their retirement years. The interest rate for the NPS scheme in 2024 is 9% - 12%, making it a popular choice among individuals looking to build a retirement corpus.

What is the National Pension Scheme (NPS Scheme)?

The National Pension Scheme (NPS) is a voluntary retirement savings scheme initiated by the government of India in 2004. It is regulated by the Pension Fund Regulatory and Development Authority (PFRDA) and aims to provide financial security to individuals post-retirement. 

The NPS offers two types of accounts - Tier I and Tier II, with Tier I being mandatory for government employees and optional for others. The scheme provides an opportunity for individuals to invest in equities, fixed-income securities, and government bonds, thereby offering diversification and the potential for higher returns. 

 National Pension Scheme Interest Rate 2024

Here is the latest National Pension Scheme Interest Rate in 2024 based on the you can invest for a tenure of 65 years.

Benefits of the National Pension Scheme

There are many benefits of the national pension scheme such as tax benefits, retirement income, investment options, flexibility, low-cost, etc.

• Tax benefits: Contributions made towards the National Pension Scheme (NPS) are eligible for tax benefit under Section 80C of the Income Tax Act, up to a limit of Rs. 1.5 lakh per year. Additionally, contributions towards NPS are also eligible for an additional tax benefit of up to Rs. 50,000 under Section 80CCD(1B).

• Retirement income: The NPS Scheme provides a regular income stream for individuals post-retirement, ensuring financial security and independence in their old age.

• Investment options: The NPS offers a range of investment plans, including equities, corporate bonds, and government securities, allowing individuals to diversify their investment portfolio and potentially earn higher returns.

• Flexibility: Individuals have the flexibility to choose their investment options and fund managers based on their risk appetite and financial goals. They can also switch between investment options and fund managers if needed.

• Portability: The NPS is a portable retirement savings scheme, meaning individuals can continue their contributions even if they change jobs or move to a different location.

• Transparency: The NPS provides regular updates on the performance of the investments, ensuring transparency and accountability in the management of the retirement funds.

• Low cost: The NPS has one of the lowest cost structures among retirement savings schemes, with fund management charges capped at 0.01% of the assets under management.

• Regulation: The NPS is regulated by the Pension Fund Regulatory and Development Authority (PFRDA), which ensures that the scheme is managed efficiently and in the best interest of the subscribers.

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Tax Benefits on the National Pension Scheme

The National Pension Scheme offers tax benefits under sections 80CCD (1), 80CCD 1(B), and U/S 80CCD (2).

Different Types of NPS Accounts

There are two main types of accounts under the NPS known as Tier I and Tier II. Tier I is the standard account, whereas Tier II is an additional optional account. The following table offers a comprehensive overview of these two types of accounts.

National Pension System v/s Atal Pension Yojana (APY)

Here is the difference between the National Pension Scheme and Atal Pension Yojana which you should look at before choosing the best retirement plans.

How to Invest in NPS?

To open a National Pension Scheme (NPS) account in India, you can follow the below easy steps.

• Choose a service provider: You can open an NPS account through any of the authorized service providers like banks, and financial institutions, or online platforms like eNPS.

• Fill out the registration form: You will need to fill out the NPS account opening form provided by the chosen service provider. You will need to provide details such as your name, address, date of birth, mobile number, email ID, etc.

• Submit required documents: Along with the filled-out form, you will need to submit certain documents like identity proof (Aadhar card, PAN card, voter ID, passport, etc.), address proof (Aadhar card, utility bills, passport, etc.), and proof of age.

• Make the initial contribution: You will need to make an initial contribution to activate your NPS account. The minimum amount required to open an NPS account is Rs. 500.

• Get your PRAN: Once all the documents are submitted and the initial contribution is made, you will receive a Permanent Retirement Account Number (PRAN). This PRAN will be the unique identifier for your NPS account.

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Eligibility Criteria for the National Pension Scheme

Below, we have mentioned the eligibility criteria for the National Pension Scheme (NPS) which you should look at before investing for your retirement.

• Age: The NPS is open to individuals aged between 18 and 65 years.

• Bank Account: You must have an active bank account to contribute to the NPS.

• Aadhaar Number: Having an Aadhaar card is mandatory for enrolling in the NPS.

• Employment Status: Both salaried and self-employed individuals can join the NPS.

• No Existing Pension: You should not already be receiving any pension benefits from the government or any other source.

• Residential Status: The NPS is open to Indian residents as well as Non-Resident Indians (NRIs) voluntarily.

NPS Scheme Withdrawals

The rules regarding withdrawals in the NPS provide options for partial and premature withdrawals, as well as various choices for withdrawals upon reaching maturity. The PFRDA is responsible for overseeing the NPS and implementing withdrawal policies.

Current rules:

• Individuals are allowed to take out a lump sum of up to 60% of their NPS savings once they turn 60 years old.

• NPS subscribers have the option to withdraw 60% of their corpus over 15 years, from the age of 60 to 75, in monthly, quarterly, half-yearly, or annual installments.

• The remaining 40% of the corpus is allocated for purchasing annuities. Should the corpus amount to less than Rs 2 lakh, the full amount can be withdrawn.

• NPS tier 1 account holders are allowed to make up to three partial withdrawals after investing for 3 years.

• Nevertheless, withdrawals must be separated by a minimum of 5 years.

• Leaving the NPS before reaching the superannuation age requires a waiting period of 10 years. If a contributor decides to discontinue their contributions, they are only allowed to withdraw 20% of their total amount, with the remaining funds required to be invested in annuities.

Read More:

Aam Aadmi Bima Yojana (AABY) - Application, & Benefits

Senior Citizen Saving Scheme (SCSS) 

Pradhan Mantri Vaya Vandana Yojana Scheme (PMVVY)

PLI Interest Rate 2024: PLI Scheme & Eligibility

Conclusion 

In conclusion, the National Pension Scheme (NPS) offers a viable retirement savings option for individuals looking to secure their financial future. With tax benefits, flexible contribution options, and a choice of investment avenues, the NPS provides a comprehensive solution for retirement planning. You can contact “Our Experts” to buy the best retirement plans now.