National Pension System: Five reasons why NRIs should consider NPS as a long-term investment option

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National Pension Scheme (NPS) by adhering to KYC norms. The NRIs can make contributions to NPS from their NRO/NRE account. While investing depends on individual financial goals, risk tolerance, and investment preferences, Kurian Jose, CEO, of Tata Pension Management listed some reasons for NRIs to consider investing in NPS NPS is designed as a long-term retirement planning tool.

It is a defined contribution (DC) tool that encourages individuals to contribute systematically over their working years. NPS offers asset allocation, based on individual risk tolerance and investment preference. One can select between equities, corporate bonds, government securities, and alternative assets, allowing them to tailor their investment strategy.

Equity participation through NPS in the listed equity capital market provides for capital appreciation over the long term. This helps in inflation-beating returns. NPS funds are managed by professional fund managers appointed by the Pension Fund Regulatory and Development Authority (PFRDA), which regulates NPS schemes.

These fund managers make investment decisions based on market conditions and long-term trends. NPS is an Exempt-Exempt-Exempt product. While NRIs may not be able to benefit from the first “E" (tax deductions on NPS contribution), they can benefit from the other two Es (contributions earning returns without any tax implications and Withdrawal (up to 60%) is tax-exempt).