Investing in NPS
A major preparation is going on in the country to make retirement planning very easy for employed people and common citizens. Now you will not need to visit offices or fill complex online forms to open a pension account (NPS). National Payments Corporation of India (NPCI) and Pension Fund Regulatory and Development Authority (PFRDA) are jointly bringing a system through which you will be able to open a National Pension System (NPS) account in just a few minutes through the BHIM app on your mobile. Along with this, the government is working on another big step, under which the facility to transfer the Pension Fund (EPS) money received under Employees Provident Fund (EPF) directly to the NPS account can be provided.
Pension savings will start within minutes with BHIM app.
The biggest advantage of this new digital initiative will be that the account opening process is being made completely paperless and hassle-free. Usually, to join any financial scheme, one has to go through the long process of Know Your Customer (KYC). But while opening an NPS account through BHIM app, you will not have to submit separate documents. This system will use only the existing KYC information related to your bank account. This means that any citizen of the country will be able to open his pension account in just a few clicks as easily as he transfers money through UPI. With this, even less digitally aware people will be able to easily connect with this scheme.
New option to transfer pension fund
In the current financial system, Employees’ Pension Scheme (EPS) and National Pension System (NPS) work as two different platforms. As per the current rules, there is no facility to transfer funds directly between them. But now the government is seriously considering the legal proposal of portability i.e. transferring money between these two systems. If necessary legal amendments are approved in this regard, employees will be able to directly shift the pension fund money under their Provident Fund (PF) to NPS. This step will prove to be a big change in the direction of giving investors more control over their investments.
Investors will get freedom to choose better returns
With the implementation of this system, employed people will have the right to decide where they want to keep their money. Currently, EPS offers a fixed interest on the amount deposited, whereas NPS is a completely market-linked scheme that gives returns based on market performance. In the last few years, the government has made several important reforms in NPS to make it more attractive, such as now investment in equity (stock market) up to 100% is allowed in it. In the long run, this option can give better returns than traditional savings plans. Additionally, NPS account holders can continue their investments even after the age of 60 till the age of 85, making it a flexible option.
Gig workers, small businessmen will get bigger financial security cover
The biggest impact of this digital transformation will be on the unorganized sector of the country, small shopkeepers and freelancers or gig workers. Traditionally, this class did not have any solid means of social security or regular pension after retirement. With the introduction of this facility on a big and trusted digital platform like BHIM app, it will reach directly to rural and semi-urban areas. With this, every class of person will be able to save small amounts as per his convenience and create a big fund for old age.
Also read- This is the magic of SIP, monthly investment of Rs 5000 becomes Rs 48,41 lakh
