NPS gives 60% returns in one year! Is it a good option for retirement planning?

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The New Pension System (NPS) has gained a good hold among the investors in the last few years. The big reason for this is the confidence of the government being associated with it, extra tax saving and giving good returns. Recently NPS has given a return of 60% in a year. So is it the best option for retirement planning?




The Government of India implemented NPS from 1 January 2004. This is a retirement scheme which was initially introduced for central employees. But later it was extended to state government employees, individuals and corporate employees as well. NPS funds are managed by PFRDA

The reason for the popularity of NPS is that its regulation is in the hands of the government, as well as it also gives extra tax saving on deposits of Rs 50,000 in a year. This tax saving is different from the exemption available on section 80(C) of the Income Tax Act.

NPS is a market linked investment scheme. The money invested in this is invested in the stock market, corporate and government bonds. Investors can choose from different schemes of NPS where to invest their money. The risk in the scheme investing in the stock market is high, but it is also expected to get good returns because if the market performance is good then the returns of this scheme of NPS are also good. PFRDA distributes NPS funds to several different fund managers. Right now their number is 7.

Presently 7 companies work to manage the funds of NPS. These companies are Aditya Birla Sun Life Pension Management, HDFC Pension Management Company, UTI Retirement Solutions, SBI Pension Funds Pvt, ICICI Prudential Pension Funds Management, Kotak Mahindra Pension Fund and LIC Pension Fund.

The stock market has been touching new heights for some time now. In such a situation, the fund managers of NPS have given good returns in one year in Tier-1, NPS’s stock market investment scheme. LIC Pension Fund has given the best return of 59.56%. While the lowest return was also 50.99% by Aditya Birla Sun Life Pension Management. In this way, the average return in this equity scheme of NPS was 59.35% in the last one year.

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Article first Appeared on Informalnewz

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