Government preparing to make changes in National Pension System, soon investors will be able to withdraw all their money
Pension fund regulator PFRDA is in talks with the government to change the rules related to the National Pension System (NPS). These changes are being made to make NPS more attractive. Under these changes, PFRDA is preparing to make many changes including more tax exemption, increasing the interest of insurance agents and linking the scheme with inflation.
Pension Fund Regulatory Development Authority (PFRDA) Chairman Supratim Bandopadhyay has informed that talks are being held with the government to make various changes in NPS. Some measures have also been initiated to further improve the NPS. While some are under consideration from the government.
Now you will get more benefit
Under the change in NPS, investors will now be able to put their entire fund in the Systematic Withdrawal Plan (SWP), which will increase their profit. At present, investors can withdraw only 60% of their corpus at the time of retirement, while the remaining amount has to be used to buy an annuity. After that, on that money, they keep getting an income for the rest of their life.
Suppose you have 5 lakh rupees in your NPS, now under the new change you will be able to withdraw all your money at once. The government is contemplating such a change so that any investor can withdraw their entire money in one go, if needed. A notification regarding this will be issued in the next few days. Currently, investors get only 5% return under this system, due to which investors do not show much interest in it.
People are not taking interest due to low returns
According to Bandopadhyay, in this era of falling interest rates, investors are getting only 5% annual return from annuity. Because of this many investors are not taking interest in NPS. This is the reason why PFRDA is now considering fixing the annuity returns by linking them with inflation. For this, he is going to talk to the insurance regulator IRDA. A committee is presently considering the matter.
Tax exemption limit may increase
Apart from this, PFRDA has suggested to the government that the limit of tax saving amount by investing in NPS should be increased from the current 50 thousand to 1 lakh rupees. If this limit is doubled, then investors will also get huge benefits in tax saving.
Consideration of making pension amount tax free
According to Bandopadhyay, it is being suggested to the government that the amount of pension coming with the help of investment in annuity under NPS should be made tax free up to a certain limit. It can be up to Rs 10 lakh per annum. It is either made tax free and a nominal tax should be levied on it.
