New Rules of NPS- 5 Changes That Will Make Your Life Easy

Mon, 08 Nov 2021 13:54:01 +0000

The Buyt Desk

The National Pension System is a contributory pension scheme. NPS is an equity-based investment that ensures better return from many other small saving schemes or bank FDs.It helps you in fund accumulation for your old age. You make a regular deposit in this scheme till the age of 60 years and after that subscriber is eligible to withdraw 60% of the corpus and compulsorily buy an annuity from the 40% of the corpus. The Pension Fund Regulatory and Development Authority (PFRDA) has recently changed a few rules of NPS making it more attractive. Here are the new changes

Entry Age barrier increased

Individuals up to the age of 70 years can join NPS. Earlier the entry age barrier for NPS was 65. A person more than the age of 65vyears was not allowed to open an NPS account. This will encourage people to join late if they haven’t started early.

Exit Age Increase

As the entry age barrier has been expanded so has been the exit age. The new exit age is 75 years now which was earlier 65 years. But for someone who enters the NPS post, 65 will have a mandatory 3-year lock-in.

Subscriber can Increase the Pension scheme

When the subscriber turns 60 years of age the scheme reaches its maturity. The subscriber can request for the extension of the scheme beyond the age of 60. He/She will have to give a written request for the extension. They can extend it for how many years they want to but it can’t be extended beyond 70 years.

Full Withdrawal from NPS

The NPS subscribers are not allowed to withdraw the entire corpus. He/She will have to split the maturity amount in two parts. The 60% of the corpus can be withdrawn in one go but the rest of the 40% will be used to mandatorily buy an annuity scheme. The PFRDA has relaxed this rule and if the entire corpus is Rs 5 lakhs or less then the subscriber is allowed to withdraw the full amount in one go upon the maturity without buying the annuity.

Pre-mature Exit Rules

Whenever a premature exit option is exercised the 80:20 rule is applied. As per this rule if the subscriber chooses to exit the scheme before its maturity he/she can withdraw only 20% of the corpus and the rest of the 80% will be paid as pension through an annuity plan. According to PFRDA’s September 2021 circular, if the corpus is equal to or less than Rs 2.5lakhs then the subscriber is permitted to withdraw the entire amount as a lump sum. The 80:20 rule will not be applied to premature exits.

The post New Rules of NPS- 5 Changes That Will Make Your Life Easy appeared first on .

Planning for an Early Retirement? Don’t Miss These 5 Steps

Thu, 07 Oct 2021 04:50:05 +0000

The Buyt Desk

Early retirement is a thought that sounds pleasant. But planning an early retirement is not that easy. It requires meticulous financial preparation and goals.

For this, mere saving is not enough as it will not help you with the corpus you would need to support your retirement life. It requires some extra effort, so here, we have prepared five steps that you can take to plan early retirement.

Start Saving Early

If you are vigilant for early retirement, focus on your present earning and expenditure. Because the thumb rule for early retirement is to plan early, perhaps from the day you begin to earn. Every year lost in this planning will augment your burden to accumulate the sizable corpus that would let you sail through retirement time.

If you are a spendthrift, you need to change your habit and start saving more rigorously. You can do this by refraining from impulsive buying, taking lifestyle-related loans, spending on transportation, clothes and food.

You can save significantly by cutting down these costs.

Invest in Financial Assets

Saving is not enough for early retirement you must invest. You need your money to grow with time. Harness the power of compounding and put your money in investment schemes that assure you higher returns. Mutual Funds are one such financial asset that can give you inflation-beating returns. You don’t need a hefty amount to start your investment in mutual funds. As low as only Rs 500 per month could be the starting point. Mutual Funds also gives you the flexibility to invest via small monthly instalments which are called systematic investment plans (SIPs). You can also take the help of professional SEBI registered financial advisors. They can help you with customizing your investment plans based on your income and goal.

Hedge Your Health With Health Insurance Plan

Don’t let your or a family member’s illness wipe out all your savings. With the ever-rising treatment cost, health insurance is a must. And the thumb rule here is, the earlier you will start, the better it will be. With the rise in age, the premium of health insurance also increases. And for people with lifestyle-related diseases, it comes with more stringent terms and conditions. So, it makes sense to buy a health insurance plan when you are young.

Avert Debt

If you are planning early retirement, avert debt as much as possible. This will help you in achieving your early retirement goal faster. A debt trap can not only cause financial stress but cause mental stress too. Never think of using your retirement corpus to pay off your debt.

In any case, if it is unavoidable to take a loan, try to pay it as early as possible. Pre-paying will save your principal amount and will also help you save on interest.

Manage Your Investment

Investing the money and forgetting is not a thoughtful move for the early retirement plan. Instead, you must be watchful of how your money is growing. If you find your corpus is not growing as anticipated, you can shift your money to another investment plan to get better returns. This way, you would be able to accumulate a huge corpus in a few years.

The post Planning for an Early Retirement? Don’t Miss These 5 Steps appeared first on .

Retirement Planning Archives -

New Rules of NPS- 5 Changes That Will Make Your Life Easy

Entry Age barrier increased

Exit Age Increase

Subscriber can Increase the Pension scheme