The Pension Fund Regulatory and Development Authority (PFRDA) has implemented new regulations, granting National Pension System (NPS) subscribers the flexibility to choose up to three fund managers for different asset classes. NPS, a voluntary retirement investment scheme overseen by the PFRDA and the Central government, encourages individuals to contribute to a pension account regularly during their employment, with the aim of securing financial stability during retirement.
Upon retirement, subscribers can withdraw a portion of their accumulated corpus, while the remaining amount is received as a monthly pension. Under the old tax regime, NPS investors are eligible for tax benefits of up to Rs. 1,50,000 under Section 80C of the Income-Tax Act (ITA), 1961, along with an additional exclusive benefit of up to Rs. 50,000 under Section 80CCD (1B).
Previously, a single pension fund manager handled all asset classes. However, the new regulations allow subscribers to select separate fund managers for equity, corporate bonds, government bonds, and alternative asset classes. This move empowers subscribers to tailor their investments according to the performance of each asset class, thereby enhancing customization options.
This facility is available to subscribers who have chosen the active choice in asset allocation, as opposed to the auto mode, where asset distribution is based on the investor’s age. Existing subscribers under the NPS All Citizen Model (Tier-I), NPS Corporate Model (Tier-I), and Tier-II accounts can avail of this feature, except for government employees with only a Tier-I NPS account, who are ineligible unless they have a Tier-II account.
New NPS subscribers will gain access to the multiple fund manager option three months after registration. The objective of this initiative is to offer NPS subscribers a wider range of investment choices across all asset classes, excluding the alternate asset class (Scheme A). This move by the PFRDA aims to empower NPS investors and enhance their investment flexibility for better financial planning and retirement security.
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