PFRDA observes NPS Diwas today: How NPS allows financial freedom at retirement?

PFRDA Chairperson Shri Supratim Bandyopadhyay said: “We are happy to continue our celebration of October 1st as “NPS Diwas – A Day for Pension Planning”. Through this campaign, we reiterate our commitment towards creating awareness about pension planning among the public. As a regulatory body, our foremost aim is to cover all eligible citizens under a pension scheme to fulfil the vision of a pensioned society for India.”

The National Pension System Diwas (NPS Diwas), which is celebrated on October 1st, was established by PFRDA last year as part of a programme to encourage pension and retirement planning for a worry-free “azad” retirement. This initiative is being promoted by PFRDA via its social media channels every year on the said date.

Speaking on the NPS Diwas campaign, Sreekanth Nadella, MD and CEO, KFintech said “There are a lot of investment options nowadays that are vying for your money, from stocks, bonds and mutual funds to real estate and other more niche options. Deciding where your money needs to go, depending on the returns you expect and the risks involved, can sometimes be a challenging task. A lot of these will require some research and understanding of current financial/market trends for you to be able to optimize your returns. The intent, of course, is to get the most returns possible in the shortest amount of time. One of the easiest investment vehicles to enter into right now, is the National Pension Scheme (NPS). The PFRDA is celebrating NPS Diwas today in an effort to promote the NPS and highlight its various features and benefits.”

He further added that “KFintech also announced today its new Corporate NPS initiative, called FutuRs, which aims to promote the NPS amongst corporate employees. FutuRs is designed to work within the corporate framework and make it easier for corporate employees to understand and sign up for the NPS, while minimizing the effort for employers. NPS is often overlooked because it’s a retirement scheme, but it is one of the safest and most versatile investment options around. Given that it is backed by the Government of India and regulated by the PFRDA, the element of risk is reduced significantly and there is a lot of transparency inherently built into the system. It also doesn’t require any knowledge of market trends or active involvement from an investor since there are Fund Managers who will do the heavy lifting for you.”

Speaking on the benefits of investing in NPS, Sreekanth Nadella said “Retirement is not really an aspect of life that we put much thought into during our working years. It’s always one of those things that is in the distant future, which is why saving for it is also put off till much later. The NPS works best when you start investing in it early, all because of the power of compounding. Since the NPS only allows for withdrawals post-retirement, your investment has a lot of time to compound and grow. The earlier you start investing, the more time for it to grow, which results in greater yields post-retirement. All of this convenience also comes at a minimal cost, given that the NPS offers one of the lowest expense ratios in the world, which means that the cost of maintaining and running the account is really low. When combined with using equity as a means of boosting returns on your investment, plus the compounding that is part of the system, this means that even small investments for a long time yield significant returns for you by the time you retire. Then, there is also the immediate benefit to you in the form of saving taxes. Any investment in the NPS is deductible from your income (limits based on extant IT rules) when it comes time to calculate your taxes. The NPS has the potential to be a great investment vehicle for almost anyone today and all the added benefits that it provides make it something that you should definitely look into.”

The overall number of NPS subscribers as of September 24, 2022, was 571.86 lakhs (5.72 crores), while the total assets under management (AUM) were at ₹7,99,467 crore (7.99 trillion). The National Pension System, or NPS, is a government-backed investment programme for those wishing to plan their retirement and receive a steady income once they retire. NPS is a voluntary programme open to all Indian residents. By undertaking Active Choice and Auto Choice, NPS enables you to choose the fund allocation arrangement for your contributions across a variety of asset classes. According to the rules established by the GOI, Ministry of Finance, contributions made towards NPS are invested in equity, corporate bonds, and government securities. Because the returns are market-based, they purely vary based on the contributions made as well as wealth growth made until the point of exit from NPS.