It might just a coincidence that 'pension' rhymes with 'tension', but the fact is that if you have the former, you won't have the latter. A good pension to support your expenses during retirement will make your twilight years easy and simple to navigate.
The best way to ensure you'll be tension-free during retirement is to start as soon as you can. The earlier you start, the better off you will be. And one of the best retirement savings instruments to begin with is the National Pension System (NPS).
A government of India initiative, the NPS is the least complicated, simplest and lowest cost pension system. Here are 10 reasons why we recommend it to investors:
1 Any individual, no matter how he earns his money, can enroll in the NPS and plan for his retirement
2 NPS investments are eligible for tax deductions of up to Rs 1 lakh a year under Section 80C
3 NPS instills the discipline of saving regularly and systematically building wealth
4 Being a GoI scheme, NPS offers complete capital protection. However, do note that it does not guarantee returns
5 NPS offers liquidity in the form of early withdrawals, subject to conditions
6 NPS offers different fund options that give different exposure to equity instruments, corporate debt, fixed income instruments and government securities
7 Investors can choose from different investment options under the NPS that go from risky to moderate to safe, depending on their risk profile
8 For investors who are unsure, the NPS has a default option where the equity allocation is decided as per the investor's age
9 Investing in the NPS can be done on a monthly or quarterly basis
10 Investors can switch between funds and fund managers under the NPS, if they're not satisfied with the performance of their investments
This article was originally published on February 24, 2014.
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