Time to Investment in New Pension System

Information about Time to Investment in New Pension System

Published on September 25, 2014

Author: elitewealth

Source: authorstream.com

Content

slide 1: New Pension System Pension nahi yeh Pran hai NSDL Click Here For More Details slide 2: Plan early for those SUNSET YEARS: Click Here For More Details slide 3: How do you prepare your self for Life after Retirement: Click Here For More Details slide 4: Add Pension to SAVINGS Traditionally Pension is a not a part of the savings Add it Now Click Here For More Details slide 5:  Government of India introduced NPS for Central Government Employees joining services w.e.f 1 st Jan 2004. On 1 st May 2009 on voluntary basis NPS was made available for All citizens of India.  PFRDA was created as regulator for the Pension sector.  NPS is based on Personal retirement accounts PRAs created for individual members.  NPS accretes savings into subscribers PRA while he is working and use the accumulations at retirement to procure a pension for the rest of his life. What is New Pension System NPS Age Group 0 to 18 18 to 60 NPS aims at creating enough corpus to enable subscriber for purchasing Annuity post retirement 60 Onwards Click Here For More Details slide 6: Click Here For More Details slide 7: Why NPS is a Smart Choice Click Here For More Details slide 8: NPS - Account Opening Phase Every individual subscriber is issued a Permanent Retirement Account Number PRAN card 12 digit unique number Issued by Government of India In case lost/stolen Provision of reprint of PRAN card on chargeable basis Click Here For More Details slide 9: NPS - Account Opening Phase Under NPS two types of accounts are available Tier-I account: Subscriber shall contribute his savings for retirement into Tier-I non-with drawable account. Tier-II account: • Voluntary savings facility. • Subscriber will be free to withdraw his savings from this account whenever he wishes. Click Here For More Details slide 10: NPS - Tier I Account  Subscriber will make first contribution at the time of applying for registration with POP-SP .  The subscriber has option to contribute anytime during the year as per his convenience. Minimum Contribution at the time of account opening Rs. 500 Minimum amount per contribution Rs. 500 Minimum total contribution in the year Rs. 6000 Minimum no. of contributions 1 per year Click Here For More Details slide 11: NPS - Tier II Account Tier II is a pension savings account with a facility for withdrawal to meet financial contingencies  No Account Opening Account Maintenance Charges by CRA  Only transactions are charged by CRA POPs  No limit on withdrawals from Tier II account  Investment Patterns same as Tier I Minimum Contribution at the time of account opening Rs. 1000 Minimum amount per contribution Rs. 250 Minimum amount balance at the end of financial year Rs. 2000 Minimum no. of contributions 1 per year Click Here For More Details slide 12: Swavalamban Benefit Announcement of Swavalamban scheme in the Union budget 2010-11 Government to contribute Rs.1000 to each NPS account provided 1. Subscriber has given Swavalamban declaration 2. Annual contribution is in the range 1000-12000 3. Subscriber is not covered under any other social security schemes like PF Pension etc Recovery of Swavalamban benefits and penal interest from Subscriber in case subscriber gives false declaration Click Here For More Details slide 13: NPS - Investment Options • ICICI Prudential Pension Fund • Kotak Mahindra Pension Fund • Reliance Capital Pension Fund • SBI Pension Fund • UTI Retirement Solutions Pension Fund • IDFC Pension Fund Management Company Ltd Choice of Six Pension Funds • Asset Class E: Equity • Asset Class C: Fixed Income • Asset Class G: Government Securities Choice of Three Schemes • Active Choice Active Fund Management by Subscriber • Auto Choice Default scheme with a life cycle fund option Choice of Approach Click Here For More Details slide 14: NPS - Schemes / Investment Approach NPS offers two approaches to invest subscriber money Active choice - Individual Funds Asset class E C and G Auto choice – Lifecycle Fund Gives the subscriber right to decide as to how his contribution is to be invested Where the subscriber doesn’t have financial knowledge the contribution will be made in pre- defined portfolio Click Here For More Details slide 15: NPS - Active Choice Click Here For More Details slide 16: NPS - Auto Choice Click Here For More Details slide 17: NPS - Charges Structure Intermediary Charge head Service Charges Method of Deduction CRA PRA Opening charges Rs. 50 Through cancellation of units Annual PRA Maintenance cost per account Rs. 225 Charge per transaction Rs. 5 POP Maximum Permissible Charge for each subscriber Initial subscriber registration and contribution upload Rs. 100 + 0.25 of the amount subject to minimum of Rs 20 and maximum of Rs 25000 To be collected upfront Any subsequent transactions Rs. 20 Trustee Bank Per transaction emanating from a RBI location Zero Through NAV deduction Per transaction emanating from a non-RBI location Rs. 15 Custodian On asset value in custody Asset Servicing charges 0.0075 p.a for Electronic segment 0.05 p.a. for Physical segment Through NAV deduction PFM charges Investment Management Fee Upto 0.25 p.a. Through NAV deduction Service tax and other levies as applicable will be levied as per the existing tax laws. Click Here For More Details slide 18: Annuity in NPS Annuity is the fixed monthly periodic income which a subscriber will get against the corpus invested. In case of normal retirement subscriber can annuities a minimum of 40 and maximum of 100 of his corpus towards buying annuity. NPS provides an option to the subscriber to decide his retirement age which can be anytime before 60. In such case subscriber can annuities a minimum of 80 and maximum of 100 of his corpus towards buying annuity. At the time of exit the subscriber will have an option to purchase annuity online. Click Here For More Details slide 19: Annuity Selection Subscriber would be given the following online facilities – Selection of Annuity Service Provider ASP. Selection of annuity scheme. Option to change ASP scheme if already registered before attaining retirement age. The entire transfer of amount between NPS System and ASP will take without any manual intervention. ASP empanelled by PFRDA. 1. Bajaj Allianz Life Insurance Co. Ltd. 2. HDFC Life Insurance Co. Limited 3. ICICI Prudential Life Insurance Co. Ltd. 4. Life Insurance Corporation of India 5. Reliance Life Insurance Co. Ltd. 6. SBI Life Insurance Co. Ltd. 7. Star Union Dai-ichi Life Insurance Co. Ltd. Click Here For More Details slide 20: When can Subscriber WITHDRAW the amount Click Here For More Details slide 21: Phased WITHDRAWL On attaining Normal Retirement age of 60 years subscriber is required to invest minimum 40 of his/her accumulated savings pension wealth to purchase a life annuity from any IRDA- regulated life insurance company and remaining pension wealth can be withdrawn as lump sum or in phased manner. Lump sum / Phased withdrawal can be considered if - If market is high subscriber can withdraw 60 lump sum on attaining 60 years of age to avail better returns. If market is low subscriber can opt for phased withdrawal and can stay invested in NPS till 70 years of age and withdraw – •Min 10 every year •Any amount lying to the credit at age of 70 years should be withdrawn compulsorily as lump sum Click Here For More Details slide 22: Return Illustration - 7 Growth What do you pay - Monthly Contribution Rs. How long you pay - Investment Period 10 years 20 years 30 years 40 years What you get - Monthly Pension Returns in Rs. 500 423 1317 3073 6529 1000 847 2633 6147 13059 2000 1694 5266 12294 26118 Benefits are variable with returns based on future performance of the Investment Funds managed by PFMs. For the purpose of this illustration we have used 7 as growth rate of investment return in the calculations. •Other Assumption •Return from any of the asset allocation E C and G is taken as 7 both during investment and retirement period •Subscriber would annuitize 100 pension corpus on retirement •Subscriber would receive monthly pension returns as per Life Annuity plan Click Here For More Details slide 23: Statement of Transaction Statement of Transaction SoT is sent by CRA to all subscribers between April and June for all transactions done in previous financial year. Alternatively subscribers can get their SoT by the following ways: 1.Login to CRA site and view SoT 2.Visit PoP and request for SoT print out for a charge up to Rs 20 taxes extra Click Here For More Details slide 24: Subscriber’s POP SP Details Subscriber’s Account Details Net Asset Value and Unit details on day of transaction Name of Scheme and allocation Date on which any transaction Contribution payment charge deduction unit allocation etc. tales place Subscriber’s contribution in last financial year Click Here For More Details slide 25: NPS - USPs Click Here For More Details slide 26: NPS -Stakeholders Unbundled Architecture where each function is performed by different entity. NPS provides an opportunity for subscribers to be serviced by intermediaries which are renowned in their area that too at low cost  PFRDA a Prudent Regulator created by Govt. of India.  Central Record Keeping lies with NSDL which is associated in various National level projects for recordkeeping functions.  Renowned Financial Institutions covering Public/Private Sector Banks NBFCs Broking house acting as POP.  Funds are managed by Funds Managers from Public Private sector with proven track record.  Bank of India a nationalized bank with wide spread across India functions as Trustee Bank.  Stock Holding Corporation of India Ltd who introduced Custodial Services in India functions as custodian for NPS. Click Here For More Details slide 27: Click Here For More Details

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