New rules in National Pension Scheme bring relief to pensioners; Details here

From 1 October, non-government NPS subscribers will be able to invest their entire pension amount (100%) in equity-linked schemes in the stock market.

New Delhi: In a big relief for the subscribers under the National Pension System (NPS), the Pension Fund Regulatory and Development Authority (PFRDA) is going to roll out a Multiple Scheme Framework (MSF) from 1 October.

From 1 October, non-government NPS subscribers will be able to invest their entire pension amount (100%) in equity-linked schemes in the stock market.

Earlier, the investment limit in equities was 75%, but this limit will be removed under the new rule. The aim of this change is to give subscribers more freedom and allow them to better plan their retirement savings based on their age, needs, and risk tolerance.

Multiple Scheme Framework

Till now, NPS subscribers had to choose only one type of scheme, whether it was a Tier 1 or Tier 2 account. They had to select either the AutoChoice or ActiveChoice model and invest their entire amount accordingly. However, with the new Multiple Scheme Framework (MSP), subscribers will be able to allocate their pension funds across different schemes. This means you can allocate your investment amount in different proportions based on your age, risk tolerance, and needs. This change will make NPS more flexible than ever before.

Besides, earlier the age limit for NPS investment was 60 years. This meant that contributions could only be made until the age of 60. But now this rule has been changed. Investors can now withdraw their pension amount at the age of 50 or 55 if they wish.

But if somebody wants to continue investing, they can contribute until the age of 75. These changes will be particularly beneficial for professionals, the self-employed, and those working in the corporate sector, as their needs and planning requirements often differ. That means the subscribers will now have full freedom to decide their pension savings plan according to their age, occupation, and future needs.

Safety And Security Remain Unchanged

While new investment options are being introduced in NPS, the safety and security measures will remain the same. Investors will be provided with complete and transparent information about their returns and risks, enabling them to make informed decisions. Pension accounts will also remain portable, meaning you can easily transfer your account to any other pension fund manager if you wish. Most importantly, at the time of withdrawal, at least 40% of the total amount must be invested in an annuity, ensuring a regular monthly or annual income during retirement.