The National Pension System (NPS) helps you generate a significant corpus for your retired life. Before investing, you must take the time to understand how the NPS works and how it benefits you. Thankfully, we’re here to help. Here’s our detailed guide on everything you need to know about the NPS Tier 1 account.
NPS Tier 1 Account Features
The NPS Tier 1 account is the pension account. You can choose how the money you contribute gets invested to build a substantial corpus for your future. Let’s learn more about the features of the Tier 1 NPS account:
Tax Savings
If you still subscribe to the old tax regime, the NPS Tier 1 account offers tax-saving benefits. Contributions you make to the NPS are eligible for deductions of up to Rs. 1,50,000 per year under Section 80C of the Income Tax Act. If you contribute more, you could enjoy an additional benefit of Rs. 50,000 under Section 80CCD. The NPS allows you to enjoy tax savings of up to Rs. 2,00,000 per year against contributions to your Tier 1 account.
Low Minimum Contribution
The NPS works as an investment strategy since it requires a low annual contribution. To keep your Tier 1 account active, you must invest just Rs. 1,000 per year. Each contribution you make should be at least Rs. 500. You can decide on the number of contributions and the amount based on your finances.
Savings for Your Family
You work hard to afford your family a better standard of living. The NPS helps you in this endeavour with its nominee facility. While opening the NPS account, you can select up to three nominees and determine the percentage of the corpus each individual should receive if anything happens to you. The amount will provide a financial cushion for them to use as required.
Partial Withdrawals
Although geared to help you save for retirement, the NPS also provides immediate financial assistance in the present! You can make partial withdrawals from your NPS Tier 1 account if you intend to use the money for the following reasons:
- To pay for higher education for yourself or your children
- To pay for your child’s marriage
- To purchase a home or construct a house that is in your name or held jointly with your spouse
- To get treatment for specific illnesses for yourself, your spouse, your children, or dependent parents
- To meet your upskilling or reskilling needs for development activities outlined by the PFRDA
- To start a venture or establishment that follows PFRDA guidelines
Opening a Tier 1 NPS Account
Now that you know all the benefits, we’re sure you’re ready to open an NPS Tier 1 account. Here’s how you can start investing in your future:
- Online Process
In our digital world, you can quickly open your NPS account from the comfort of your home by following these steps:
- Visit the HDFC Pension official website and click on BUY NPS.
- Select CRA and click on the Registration button from the pop-up window.
- Complete the form and verify your mobile number via the OTP.
- Select the NPS Tier 1 account and choose a fund manager.
- Select your investment mode and provide your nominee details.
- Upload the required documents.
- Make the minimum contribution of Rs. 500 to complete the registration and generate your PRAN.
- Offline Process
You can register for the NPS offline if you prefer to do things in person. Find your nearest Point of Presence – Service Provider (PoP-SP) to collect the registration form. Fill out the details and submit the completed form with the required documents at the PoP-SP. Make the minimum payment via Demand Draft (DD) or cheque to complete the registration process.
Once you open an NPS Tier 1 account, investing in your future becomes easy. Contributing a nominal amount each year can help you bolster your retirement plans and enjoy a comfortable life.
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