Explaining The New Pension Scheme

The new Pension Scheme started by the government of India’s PFRDA is a boon for all those working in the Private Sector and the unorganized sectors. It is a voluntary scheme to take care of us all in the Old age. The PFRDA has defined the Following objectives for the scheme

· To provide Old age Income
· Reasonable market based returns over long term
· Extend old age security coverage to all citizens

You basically have to apply for PRAN (Permanent Retirement account number), which is yours for life and is accessible from across India. The PRAN basically provides you access to two types of account

Tax Benefit – The Tax benefit for this account is like any other pension plan and as per the income tax act.

The Contributions to this scheme are as per below

Minimum amount per Contribution – Rs. 500/-
Minimum Contribution per year – Rs. 6000/-
Minimum no. of Contributions – 04

There are basically two approaches to invest in your account

1. Active Choice - Individual Choices (E, C &G type accounts)
2. Auto Choice – Life Cycle Fund

To be contd....

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