Work News: The government is preparing to change the national pension system, soon investors will be able to withdraw all their money at once.
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 the changes, PFRDA is preparing a number of changes, including more tax breaks, increasing the interest of insurance agents and linking the scheme to inflation.
Supratim Bandopadhyay, chairman of the Pension Fund Regulatory Development Authority (PFRDA), said talks were underway with the government to make several changes to the NPS. Some measures have also been taken to improve NPS. While the government is thinking of some solutions.
Now you will get more benefits
Under the change in NPS, investors will now be able to place their funds in a Systematic Withdrawal Plan (SWP) which will increase their profits. At present, investors can withdraw only 60% of their funds at the time of retirement, while an annuity has to be purchased from the remaining amount. Then on that money they continue to earn income for the rest of their lives.
Suppose you have Rs 5 lakh in your NPS, now under the new change you will be able to withdraw all your money at once. The government is considering such a change so that any investor can withdraw all his money at once if needed. A notification will be issued in the coming days. At present, investors get only 5% return under this system, which is why investors do not show much interest in it.
People are not interested because of low returns
According to Bandopadhyay, investors are getting only 5% annual return from annuity at a time of declining interest rates. This is why investors are not interested in NPS. This is the reason why PFRDA is now considering fixing the return on annuity by combining it with inflation. For that they are going to talk to the insurance regulator IRDAI. The matter is currently being considered by a committee.
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The tax exemption limit may be increased
Apart from that, PFRDA has suggested to the government to increase the tax saving limit by investing in NPS from the current Rs 50,000 to Rs 1 lakh. If this limit is doubled, investors will get a lot of benefits in tax savings.
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Consider making the pension amount tax free
According to Bandopadhyay, the government is being advised to make the amount of pension received by investing in annuity under NPS tax free up to a certain limit. It can be up to Rs 10 lakh per annum. It is either tax free or levied a nominal tax.
