Myths About the National Pension System (NPS)

1. Myths About the National Pension System (NPS)

2. Is NPS Only for Government Employees? Myth: NPS is only available to government employees. Reality: Absolutely not! While NPS was initially designed for government employees, it has been opened to all Indian citizens. Whether you’re a salaried employee, a self-employed professional, a business owner, or even a foreign national residing in India, you can invest in NPS. Why it matters: NPS provides a structured and tax-efficient way to save for retirement, regardless of your profession or income source.

3. Can I Deduct ₹50,000 Over and Above Section 80C? Myth: The ₹50,000 deduction under NPS is available only under Section 80CCD(1b). Reality: This additional ₹50,000 deduction is a significant tax-saving opportunity! It is available over and above the ₹1.5 lakh deduction under Section 80C, making your total possible deduction ₹2 lakh. Bonus Tip: If your employer contributes to your NPS account, you can claim an additional deduction of up to 14% of your salary (basic + DA) under Section 80CCD(2).

4. Is the Maximum Contribution to NPS ₹1.5 Lakh a Year? Myth: NPS contributions are capped at ₹1.5 lakh annually. Reality: There’s no upper limit on how much you can contribute to your NPS account. While the tax benefits are capped, contributing beyond ₹1.5 lakh can significantly boost your retirement corpus and monthly pension.

5. Should I Rely Solely on My Children for Financial Support During Retirement? Myth: My children will take care of me in old age. Reality: While children often support their parents, societal trends are shifting. Nuclear families, migration, and career priorities mean you cannot solely rely on children for financial support. Solution: Regular contributions in NPS ensures financial independence during retirement, enabling you to meet your needs without depending on others.

6. Does Investment in NPS Give Low Returns? Myth: NPS returns are lower compared to other investment options. Reality: NPS has proven to deliver competitive and even impressive returns. For instance, UTI Pension Fund Scheme (E Tier I): Performance as of November 14, 2024: 1 Year: 22.75% 3 Years: 17.15% (Annualized) 5 Years: 17.98% (Annualized) 7 Years: 14.53% (Annualized) 10 Years: 13.31% (Annualized) This highlights consistent performance over both short and long-term periods. * All investment instrument in NPS are market linked and hence the returns are also market linked

7. Can I Change My Pension Fund Manager? Myth: Subscribers can’t change their Pension Fund Manager (PFM). Reality: Subscribers have the flexibility to change their Pension Fund Manager once a year for both Tier I and Tier II accounts. Why This Matters: Changing your PFM lets you optimise your returns by selecting a fund manager with a strong performance record.

8. Can I Access My Funds Before Retirement? Myth: NPS contributions can only be accessed upon retirement. Reality: Partial withdrawals are allowed under specific circumstances, such as: Children's higher education Treatment of specified illness Buying first home Marriage purpose Starting any new venture Start Your NPS Journey Today!

9. Do you have any question? Contact - contact@utipf.co.in Visit - https://www.utipension.com/