NPS has become the preferred option for building a huge corpus over the long term and building a corpus for retirement. In order to identify the risk and warn the investors in time, the pension regulator is implementing a new rule from July 15. This will make investing in NPS more secure.
New Delhi. Investing in the National Pension System (NPS) will now become even more secure. The Pension Regulatory and Development Authority (PFRDA) is implementing new rules for fund managers from July 15.
According to PFRDA, fund managers will now have to inform investors about the risk on all schemes. For this, all the schemes coming under NPS will have to be given a rating, which will tell the level of risk of that scheme. The regulator has issued a circular saying that NPS is becoming a better asset for long-term investment options and if invested properly, it can be a good corpus for retirement. For this, it is necessary that the investors are aware of the risk of the scheme.
Risk Recognition at 6 Levels
Under the new rule effective from July 15, the risk of NPS schemes will be recognized at 6 levels. It will be given ratings like low risk, low to medium risk, medium risk, medium high risk, high risk and very high risk. The regulator has said that pension funds also have risks associated with them. In such a situation, it is necessary that investors should be made aware of these risks, so that it becomes easier for them to choose the right asset.
Portfolio disclosure required on every website
It has been said in the circular that a segment named Portfolio Disclosure should be created on all the websites related to the pension fund. In this, the risk profile should be stated within 15 days after the end of every quarter. Along with this, information should also be given about how many times the level of risk has changed in a year. Overall, along with evaluating the risk profile every quarter, it will be mandatory to give its information on the website. Along with this, the pension fund will also have to give this information to the pension trust.
At the end of the year, on March 31, the pension fund will have to mention on its website how many times the risk level has changed during this period. At present, there are four types of options under the pension scheme. Equity, corporate debt, government bonds and alternative assets. There are also two tiers of plans in each asset class. The customer first selects the fund manager and then chooses any of the investment options.
Tax exemption is available on investment
Two types of accounts are opened under NPS, Tier 1 and Tier 2. Out of this, Tier 1 account is for retirement savings, in which a minimum contribution of Rs 500 can be made monthly. On this, the benefit of tax exemption is also given under section 80CCD (1B) of Income Tax. Tier 2 account can be opened for additional investment, in which a minimum investment of Rs 1,000 will be required. There is no tax exemption on this account, but you can withdraw money from it whenever you want.
We have taken all measures to ensure that the information provided in this article and on our social media platform is credible, verified and sourced from other Big media Houses. For any feedback or complaint, reach out to us at businessleaguein@gmail.com
