Maximize retirement savings with NPS flexibility, says Bhagat of DSP Pension Fund Managers

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The National Pension Scheme (NPS) is designed to provide a sustainable and long-term solution for retirement planning, says Rahul Bhagat, CEO, DSP Pension Fund Managers.

In an interview with MintGenie, Bhagat said that NPS tackles the challenge of inflation by offering the option to invest in equities, which have historically delivered higher returns than fixed-income instruments over the long term.

Unlike traditional retirement savings instruments such as the Employees’ Provident Fund (EPF) or the Public Provident Fund (PPF), NPS offers greater flexibility and choice to investors. Subscribers can choose their asset allocation and investment options based on their risk appetite and investment goals. Additionally, NPS provides the option to invest in equities, which can potentially offer higher returns over the long term compared to traditional fixed-income instruments.

NPS offers several advantages over mutual funds or direct equity investments for retirement planning. NPS has EEE status and offers tax benefits at the time of investment, as well as during maturity and withdrawals, making it an attractive tax-saving instrument. NPS is also known for its lower charges compared to many mutual funds, making it a cost-effective option for long-term retirement planning. NPS is specifically designed to meet long-term retirement goals, with features such as regular pension payments and flexibility in withdrawal options.

NPS offers unique tax benefits that distinguish it from other investment options. Contributions to NPS are eligible for tax deduction under Section 80CCD(1) of the Income Tax Act, up to a certain limit. An additional tax deduction of up to ₹50,000 is available for contributions to NPS under Section 80CCD(1B),