NPS is a long-term investment with very low costs, low risk profile: Rahul Bhagat, CEO, DSP Pension Fund
It is a long-term investment, has very low costs and comparitively low risk. Investors should look beyond tax and invest more than the deduction limit, Rahul Bhagat, CEO of DSP Pension Fund tells ET Wealth.
DSP has returned to the NPS after several years. What made you come back?
The pension market has matured and the regulatory framework is more robust now. Instead of applying for a licence every five years, we now have a perpetual licence. The very low charges have also been revised. The charges are still quite low, but enough to make the business viable in the long term. All this gives us confidence to stay in the business for the long term.
What makes the NPS a better product than other retirement options?
The NPS offers everything that one looks for in a retirement savings product. It is a long-term investment with very low costs and a low risk profile. The investor can start at 18 and remain invested in the scheme till the age of 75. The NPS is also the cheapest product available in the Indian market. The investor pays 0.03-0.09% per year, which is very low compared to what mutual funds and insurance companies charge.
NPS is also low risk because of the tightly regulated environment and the investment approach of the pension fund managers. Pension funds have to declare their portfolios to the PFRDA on a monthly basis.
That apart, the NPS equity funds invest in the top 200 companies, which is a safer universe than the broader market. The gilt funds invest in government bonds where there is no risk of
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