National Pension System (NPS)-PRAN(Permanent Retirement Account Number )For Every Bhartiya Nagarik

NPS is an ORPHAN Product.

My purpose for Blog is its Proper Introduction as Investment Option.

There is no incentive or if at all: – it is pitiable incentive for the middle man to sell it, even PFM who manage money cannot do mischief with funds as it is strictly PFRDA regulated.

The reason is overall charges all-inclusive for NPS is in range of minimum 382 INR to maximum 982 INR for 10 lakhs invested funds. This is segregated as 0.005% NPS Trust Charges+0.0032% Custodian Charges+0.03% to 0.09% Pension Fund Management charges as per AUM of PFM. (Higher the AUM, lower the charges.)

For NPS Tier 2, only PFM charges apply. NPS Trust & Custodian charges are waived off, as one must have NPS Tier 1 Account Operative to operate NPS Tier 2 Account.

In simple language if 1,00,000 INR is invested, only 98.2 INR, that is less than 100 INR will be charges & total 99,902 INR will be invested to grow. Compare this with 2.5% Expense ratio of Mutual Funds (2500 INR for 1,00,000 INR Investment)

 One will never find good words for NPS easily. It is Never Possible in Financial Products Markets, because everyone who is involved in it, is interested in his own interests, FIRST, & the client’s interest is LAST.

If a simple product, at the LEAST Expenses Ratio in the World, permits to participate in the Equity Markets of India Growth Story, to an Average Bhartiya Nagarik with Average Financial Literacy, it should have been more welcomed.

But Vote Bank Politics push for the Old Pension System, which is just Impossible to sustain for any government, from any political party.

Those who are in opposition today,they only initiated this NPS Reforms .

The earlier it is realised, the better it is for Bharat.

The Issue of Compulsory Lock In till 60 years of Age (for Only NPS Tier 1 Account) is marketed as Negative Feature. In Fact, it is the Most Welcome Positive Feature as it permits Compounding to make miracles out of invested funds over long period, for a multidecade Retirement Planning Goal.

In my humble opinion, Another issue of Annuity rates & It’s Taxation is unnecessarily emphasized to demote   NPS.

Solution is to delay & defer Annuity part till 70 years of age.

Two advantages make it attractive.

More & attractively better Annuity rates, as older the age.

More likelihood is to ignore taxation, because by age 70, active income gets minimum, so practically it is tax free for individuals.

Such a Deferment for Annuity Part alone is definitely offered in NPS, even as on today.

For years 60 to 70, SWP from 60% available Tax-Free Corpus at age 60, would be a right strategy to provide cash flow.

There is always a solution to a problem.

Search & Seek the Solution.

NPS has so far evolved to be more & more Investor Friendly & it will remain so in future as well, because it is & will remain ,also, a significant Vote Bank like EPF Subscribers.

But one thing is for sure, there will be NO intermediary or middle man promoting NPS.

As earlier said quite well, Genuinely Genuine products are not sold, they are to BE BOUGHT.

As Simple As That Sir…

Now I Copy & Paste, Veteran’s Views.

First Page By Dhirendra Kumar, Editor In Chief, Value Research Online

AUGUST 2023 Issue Of Mutual Fund Insight

The National Pension System makes me sad. Well, not the NPS itself, but how little it is being used. Of all the investment options available to the Indian saver, the NPS is the most underutilized. The contrast between how well-suited the NPS is for every saver and how little it is used is the largest among all investment classes.

The NPS should be the primary long-term investment of every saver. Once you are done with your emergency money, term insurance and health cover, it should be considered the first among the rest. Only when the possibilities of the NPS are exhausted, or for those needs that the NPS cannot fulfil, should you turn to mutual funds or equity. Yet, hardly anyone does this. If you ask a thousand mutual fund investors whether they use the NPS on a discretionary basis (meaning, not counting those who have the NPS at their workplace), you may find one or two who do.

All of us understand what the reason is. Investment products are not bought; they have to be sold. They are sold only if there is money in selling them.

Not just any small amount of money but money that can compete with that earned out of selling competitive products. The low-cost and simple nature of the NPS, which makes it such a great way of saving, is exactly what makes it unremunerative for businesses and individuals to promote.

That’s why Value Research has been so assiduously promoting the NPS right since the beginning: it’s such a great product, but no one else is interested in publicizing it. We cover the NPS in detail; we carry the NPS data just as thoroughly as we do mutual fund and stock data, and above all, the NPS is a first-class member of our groundbreaking ‘My Investment’ portfolio tracker. You can track and analyze your NPS holdings in ‘My Investments’ just as thoroughly as you can stocks, mutual funds and other asset types.

Originally, the NPS was not part of the subject area of Value Research. However, we have written about it and promoted it from when it was not even launched. We have always enthusiastically recommended it as one of the best possible options for retirement savings. To be clear, just as there is no money in selling the NPS, there is no money in promoting NPS and incorporating it into our website as we do. You don’t need to subscribe to our paid products to learn about and track the NPS on our website.

However, promoting the NPS is our dharma.

In any case, the NPS is effectively a special-purpose system of mutual funds that is regulated differently from normal mutual funds because the legalities surrounding them are different.

However, from the ‘mutuality’ of the investments to professional management, they fit every other definition of mutual funds, and investors should treat them as such. In the beginning, the NPS had many problems, including taxation, the annuity obligation and much else. However, over the years, all those have been fixed, and one can justifiably say that there is no substantial shortcoming to the NPS any more. There is no special reason that everyone should not look at it.

I hope (and perhaps believe) that the NPS will attract an increasing number of individuals due to its advantageous returns, comparative security, and affordability. Over time, a growing proportion of people will choose to allocate their flexible savings towards the NPS. This shift suggests a growing trust and interest in the NPS as a reliable and beneficial platform for savings.

I hope that our readers will take the NPS as seriously as they do all other investment types— just like we at Value Research do.

DHIRENDRA KUMAR

Listen to Dhirendra Kumar in short video discussing The Essentials of National pension System.

Also Download following PDF file to know more about NPS as published in Wealth Magazine of Economic Times Dated 29-05-2023

Click to access nps-an-orphan-neglected-product-15-09-2023.pdf

Also Download following PDF file, a Study Document of Wealth Con Group of Allopathic Doctors. It is old document, so some of its information may need revalidation.

Click to access study-of-national-pension-scheme.pdf

To summarise everything about NPS, explore following short but all-inclusive link.

https://www.valueresearchonline.com/stories/49999/an-essential-guide-to-national-pension-system-nps/

If you are curious to know more about Pension Fund Managers & how they have performed in terms of Returns, Explore &Download the following Link based on valuations as on 05-September- 2023

Click to access nps.pdf

I am confident that this blog will convince the reader to Explore this ORPHAN Investment Product.

To invest or not, is reader’s discretion, my job is to introduce.

I definitely have NO misunderstandings of becoming God -Father to this ORPHAN Investment Product,nor do I have that capacity either.

As Simple As That, Sirs.

To update I share an article link that updates NPS Rules changed in 2023,of course in Investor Benefits

NPS RULE CHANGES 2023Download

ADDENDUM AS ON 30-04-2024.

NPS WEALTH 29-04-2024Download

https://www.valueresearchonline.com/stories/201115/how-to-set-up-systematic-withdrawal-from-nps