If you want to save for your retirement, you can invest in mutual funds. Mutual funds are one of the few investment avenues that allow you to gain inflation-beating returns on your investment. They also provide you with much-needed flexibility and liquidity.
You can start a Systematic Investment Plan (SIP) in the mutual fund of your choice to create a corpus for your retirement. Another way to invest for your retirement is through the National Pension System (NPS). Let’s know more about the NPS and its eligibility criteria.
What is NPS?
The National Pension System (NPS) is a Government-backed voluntary retirement scheme that can help you accumulate wealth for your retirement and ensure monthly income in old age. This scheme is regulated by the Pension Fund Regulatory and Development Authority (PFRDA).
Since NPS invests in market-linked instruments such as mutual funds, they can provide you with high returns in the long term. Combined with benefits such as Government security, tax savings, and flexibility to switch funds, NPS is one of the best retirement savings plans in India.
Eligibility criteria for NPS
Like any other investment scheme, the NPS, too, has an eligibility criterion that you need to fulfill before you can start investing in it. The eligibility criteria for NPS depend on the age and citizenship of the applicant.
Below are the conditions you need to meet to become eligible to invest in NPS:
- You must be between 18 to 70 years old at the time of submitting the NPS application form.
- You must be a resident citizen of India or a Non-Resident Indian (NRI) or an Overseas Citizen of India (OCI).
- You must comply with the Know Your Customer (KYC) regulations and should be able to provide the required documents.
- You should not have a pre-existing NPS account in your name.
- If you want to open a Tier II NPS account, you need to have a Tier I account in your name.
Documents required for NPS
As mentioned, you need to provide a set of documents to open an NPS account and start investing in it. Below are the documents you need to submit:
- Proof of identity – Aadhar card, PAN card, Driving License, Passport, Voter ID card
- Proof of address – Aadhar card, Passport, Driving License, Voter ID card
- Proof of age – PAN card, Birth certificate, Class X mark sheet
- A canceled cheque
Minimum and maximum contribution
As mentioned, there are two types of NPS accounts – Tier I account and Tier II account. In the case of an NPS Tier I account, you can make a minimum contribution of Rs. 500 for the first time and then Rs. 1,000 every year. There is no maximum limit on the annual contribution you can make.
In the case of an NPS Tier II account, you need to make a minimum initial contribution of Rs. 1,000. There is no maximum contribution limit for this type of account as well.
NPS invests your money in different asset classes, including equities, government securities, corporate bonds, and alternate funds. You get the choice to change your asset allocation and pension fund manager once or twice every year.
If you want to invest in NPS, you can download the Tata Capital Moneyfy App on your smartphone and do it at your convenience.