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POSTED BY ON September 29, 2010 12:03 am COMMENTS (2)
Sir,
In http://www.jagoinvestor,com/2009/05/nps-new-pension-scheme-detailed.html there is a clear statement that you can get a lump sum at your retirement and a fixed monthly income for the lifetime in NPS. It will work almost the same way as Private Pension Schemes .And if it has equity option and than, why cant we say that it is better than purely debt oriented EPF?. After all EPF gives us only 8.5% +taxfree & NPS can give double digit return +Taxfree in revised DTC.Both the schemes have same objective of forming a corpus at the time of retirement.
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PL NOTE THAT THE EPF IS CONNECTED WITH YOUR WORKING IN AN ORGANISATION WHO HAS TAKEN EPF MEMBERSHIP. YOU CEASE TO BE A MEMBER THE DAY U QUIT OUR JOB. . SECONDLY ALL DOCUMENTATION ARE DONE BY THE ORGANISATION. THE EMPLOYER’S SHARE IS VERY IMPORTANT IN SAVINGS . IT GETS DISTRIBUTED TO PENSION AND SAVINGS COMPONENTS . EMPLOYER ALSO PAYS 1.33 % ADMIN CHARGES YOU GET 8.5 % INTEREST.
ON THE CONTRARY ANY CITIZEN OF INDIA CAN BECOME A NPS MEMBER. THE MONEY IS INVESTED AS PER MARKET AND RETURNS ARE BETTER THAN 8.5 % . UR CONTRIBUTION CAN CONTINUE TILL U CHOOSEMTO CLOSE IT.
EVENU DONT TAKE TOO MUCH RISK U MAY TOTALLY GAIN MUCH MORE THAN EPF.
BLESSINGS
Portion of NPS is invested in stock market whereas EPF is not exposed to market (yet). Hence EPF returns are “assured” and backed by government whereas NPS returns are “not assured”. Though experts have proved that stock market can give double digit return over long duration, returns are still not assured.
Most of the Indians want to play safe and want to have an assurance on their return. That’s one of the reasons why stock market has not penetrated as much in India as in some of the western countries. (I’m not saying this is good or bad, I’m just stating what I heard again and again from other experts).
One has to choose between EPF and NPS (for that matter, any other investment schemes, be equities or mutual funds or gold/silver etc.,) based on their risk appetite (considering their age and investment objectives/requirement)