RETIREMENT PRODUCTS AVAILABLE IN INDIA :

We can classify retirement products under two category,Pre-Retirement Products for planning before retirement and Post Retirement Products for after retirement. Before Retirement Products are designed to create retirement corpus and After Retirement Products are for income generating instruments to generate income from that corpus to meet livelihood.

For the retirement planning we will discuss here only Category One products:

1. Pension for Central & State Government/PSU/PSU Bank Employees: This is Defined Pension Scheme. Pension amount for this type of pension is calculated on the basis of last drawn salary at the time of retirement.
2. Provident Fund & Gratuity: These two schemes provide lump sum benefit at the time of termination of employment. They are mandatory, based on salary insurance for disability and death is embedded.
3. Employees’ Pension Scheme, 1995: Employees Provident Fund Organization or EPFO is designated authority to manage it. The Central Board of Trustee (CBT) is the apex decision-making body of EPFO. This pension scheme came into force from 16th November, 1995. This pension is for members, widows, widower, children, dependent parents, nominee and physically disabled members.

Maximum amount goes for pension fund is Rs.541.00 due to  wage ceiling of Rs.6500.00. In the year 2014, this wage ceiling has been raised to Rs.15000.00.Government has approved a proposal to provide a monthly pension of minimum Rs.1000.00.

            When employee can  get Pension in EPF ?

• If one has completed the age of 58;
• If one has completed 10 years of continuous service;
• If one has completed 50 years of age and atleast 10 years of service;
• If one is permanently and totally disabled during the employment and has made at least one month’s contributioon to the Pension Fund;

TYPES OF PENSION:

BENEFITS OF EPS :

Pension Benefits :

1.Member can get pension as per eligibility norms;

2.Family members can get pension if member died;

Withdrawal Benefits :

1.If not eligible for member can withdraw the accumulated amount from his/her pension account;

2.Commutation maximum 33% can be done ;

Death Benefits :

Insurance (named as EDLI Scheme) amount payable to Family or to Nominee.The employer is not entitled to deduct the employer’s contribution payable by him under this Scheme from the wages of the employees or to recover it from them in any other manner. Contribution of the employer and the Central Government is credited to the Insurance Funed. This in turn is credited to an account called the “Deposit-Limked Insurance Fund Account”. All expenses towards the cost of any benefits provided by or under this Scheme shall be met out of this account.

All employees to whom the Employees Provident Fund and Miscellaneous Provision Act applies, have a 'statutory liability' to subscribe to EDLI to provide for the benefit of life insurance to all their employees.

Due to Increase in the wage ceiling from Rs.6500.00 to Rs.l5000.00, benefit under the Employee's Deposit Linked Insurance (EDLI) from a maximum of Rs 1.30 lakh to a maximum of Rs 3.60 lakh will also be increased. 

1.Pension to Dependent Family members;                                                                   

Monthly Pension Amount =Pensionable Salary x Pensionable Service/70

Pensionable Salary: Last 12 months average salary and salary shall be limited to Rs.6500.00 per month.

Pensionable Service: (1) The pensionable service of the member shall be determined with reference to the contributions 16[received or receivable] on his behalf in the Employees' Pension Fund.

(2) In the case of the member who superannuates on attaining the age of 58 years, and/or who has rendered 20 years pensionable service or more, his pensionable service shall be increased by adding a weightage of 2 years.

In the year 2014, Central Board of Trustees (CBT) has decided to reduce administrative charges from 1.10 per cent of the basic wage i.e. basic pay and dearness allowance to 0.85 per cent and Pensionable Salary will be calculated on last 60 months average salary instead of last 12 months salary.

4.National Social Assistance Programme:

National Social Assistance Programme. NSAP was launched on 15th August, 1995.

The National Social Assistance Programme (NSAP) represents a significant step towards the fulfillment of the Directive Principles in Article 41 and 42 of the Constitution recognizing the concurrent responsibility of the Central and the State Governments in the matter. In particular, Article 41 of the Constitution of India directs the State to provide public assistance to its citizens in case of unemployment, old age, sickness and disablement and in other cases of undeserved want within the limit of its economic capacity and development.

Objective of NSAP

In providing social assistance benefits to poor households in the case of old age, death of the breadwinner and maternity, the NSAP aims at ensuring minimum national standards, in addition to the benefits that the States are currently providing or might provide in future. It also aims at ensuring that social protection to the beneficiaries everywhere in the country is uniformly available without interruption.

The NSAP at its inception in 1995 had three components namely

National Old Age Pension Scheme (NOAPS),

National Family Benefit Scheme (NFBS) and

National Maternity Benefit Scheme (NMBS). The National Maternity Benefit Scheme (NMBS) was subsequently transferred on 1st April, 2001 from the Ministry of Rural development to the Ministry of Health and Family Welfare.

On 1st April, 2000 a new Scheme known as Annapurna Scheme was launched. This scheme aimed at providing food security to meet the requirement of those senior citizens who, though eligible, have remained uncovered under the NOAPS.

In February 2009, two new Schemes known as Indira Gandhi National Widow Pension Scheme (IGNWPS) and Indira Gandhi National Disability Pension Scheme (IGNDPS) were introduced.

Presently NSAP comprises of five schemes, namely –

Indira Gandhi National Old Age Pension Scheme (IGNOAPS),

Indira Gandhi National Widow Pension Scheme (IGNWPS),

Indira Gandhi National Disability Pension Scheme (IGNDPS),

National Family Benefit Scheme (NFBS) and Annapurna.

Eligibility : For getting benefits under NSAP the applicant must belong to a Below Poverty Line (BPL) family according to the criteria prescribed by the Govt. of India.

5.NEW PENSION SCHEME (NPS):The NPS was introduced by Government of India for its new recruits (except the Armed Forces) joining w.e.f. January 1, 2004. With effect from 1stMay, 2009, NPS has been provided for all citizens of the country including the unorganised sector workers on voluntary basis.

To encourage people from the unorganised sector to voluntarily save for their retirement the Central Government launched a co-contributory pension scheme, 'Swavalamban Scheme ' in the Union Budget of 2010-11. Under Swavalamban Scheme, the government will contribute a sum of Rs.1,000 to each eligible NPS subscriber who contributes a minimum of Rs.1,000 and maximum Rs.12,000 per annum. This scheme is presently applicable upto F.Y.2016-17.

The contribution made by an individual to the fund are managed to create a retirement corpus. The NPS system consists of the NPS trust, central recordkeeping agency, pension fund managers, trustee bank and coustodian.

NPS Trust: PFRDA has established the NPS Trust under Indian Trusts Act, 1882 and appointed NPS Board of Trustees under whom the administration of NPS vests under Indian Law. The Trust is responsible for taking care of funds under NPS. The contribution of subscribers is pooled and held in their beneficial interest. The trust has the fiduciary responsibility for taking care of the funds and protecting the subscriber interests. NPS Trust is the registered owner of NPS funds. However, individual NPS subscribers remain beneficial owners of these funds.

Points of Presence ( PoPs): Point of Presence or PoP is the first point of interaction between the subscriber and the NPS. Subscribers open their NPS accounts by completing the documentation and formalities with the PoPs.

          Functions:

1. To receive the duly filled application form along with the KYC documentation as may be applicable from time to time.

2. To verify KYC documents as may be required from time to time.

3. To collect and verify contributions that may be received through cash/cheque/Demand Draft/Electronic Clearing System (ECS).

4. To collect/deduct NPS application processing fees and issue of receipt to the Subscriber against the same.

5. To submit complete and accepted forms on a daily basis, to CRA/CRA Facilitation Centre (FC).

6. To upload the subscriber contribution files into CRA system and simultaneously arrange to transfer the funds into the account of the NPS trust maintained with the Trustee Bank.

7. To maintain and report records of all transactions in accordance with the provisions of PML Act, 2002 and Rules framed thereunder, as may be applicable, from time to time.

8. Regular subscriber contribution upload : Verify PRAN card details on the deposit slip, the format for which shall be prescribed by PFRDA. Collection and verification of contributions that may be received through cash/cheque /Demand Draft/Electronic Clearing System (ECS). Collection/deduction of contribution processing fee and issue of receipt to the subscriber against the same. Uploading subscriber contribution details online into the CRA system, in respect of subscribers for whom clear funds are available, on a daily basis. Remit clear funds into the account of the NPS trust maintained with the Trustee Bank on at least T+1 basis. Maintain hard copies of deposit slips.

9. Subscriber servicing : Carry out changes in subscriber details on request by subscriber subject to the conditions stipulated by PFRDA. Receiving switch request for change in PFM and/or investment option from subscriber and transmitting the same to CRA. Receiving withdrawal requests from subscriber and transmitting the same to CRA. For this purpose, subscriber would put in a withdrawal request to PoP-SP. The subscriber’s pension wealth would be credited directly to his bank account by trustee bank, on receiving instructions from CRA, through RTGS/ NEFT or by way of a pay order where his/her personal bank details are not available. Attending to subscriber’s request for shift to another PoP-SP. Any other NPS account related service as may be prescribed by PFRDA from time to time.

10. Grievance handling : Receiving of grievances submitted by the subscriber against PoP / PoP-SP or any other NPS Intermediary in the format prescribed by PFRDA and uploading of all grievances in the Central Grievance Management System (CGMS) of CRA on a daily basis. The CGMS system of CRA would route the grievances to respective NPS intermediaries. Receiving grievances raised by the subscriber against PoP/PoP-SP through the CRA call center/CGMS of CRA by accessing the CGMS.

Central Record-keeping Agency(CRA) :

The CRA is the back-office for maintaining subscriber records, administration and customer service functions. National Securities Depository Ltd has been designated the CRA for the NPS.

Central Recordkeeping Agency is required to establish an internal system that delivers compliance with standards for internal organization and operational conduct, with the aim of protecting the interests of NPS subscribers and their assets.

Pension Fund Managers :

Pension Fund Managers are appointed to invest and manage the pension assets of the subscribers covered under NPS, which is inclusive of but not confined to the following-

1. Investment of contributions as per investment guidelines prescribed by the Authority.

2. Scheme portfolio construction.

3. Maintains books and records of its operations.

4. Reporting to the Authority at periodical intervals.

5. Public disclosure.

 At present there are 8 pension fund managers managing the pension wealth of subscribers. They are:  

   HDFC Pension Management Co. Ltd.

   ICICI Prudential Pension Fund Management Co. Ltd.

   Kotak Mahindra Pension Fund Ltd.

   LIC Pension Fund Ltd.

   Reliance Capital Pension Fund Ltd.

   SBI Pension Funds Pvt. Ltd

   UTI Retirement Solutions Ltd Pension Fund (PF) to be incorporated by Birla Sunlife Insurance Co. Ltd

Trustee Bank: Axis Bank Ltd has been appointed by PFRDA as the Trustee Bank for National Pension System (NPS) effective from 1st July, 2013.Before that, Bank of India was the designated Trustee Bank.

Trustee Bank as an intermediary is responsible for the day-to-day flow of funds and banking facilities in accordance with the guidelines/ directions issued by the Authority under NPS. It receives NPS funds from all Nodal Offices and transfers the same to the Pension Funds / Annuity Service Providers/other intermediaries as per the operational guidelines.

Custodian : Stock Holding Corporation of India Ltd has been appointed as the custodian for providing custodial and depository participant services for the Pension schemes regulated by the Authority. The securities brought for the NPS trust are held by the custodian, who also facilitates securities transactions by making and accepting delivery of securities.

Pension Fund Regulatory and Development Authority (PFRDA) is an autonomous body set up by the Government of India to develop and regulate the pension market in India.

Joining in NPS: At present there are four model of NPS available which are Government Sector Model,Corporate Sector Model, All Citizen Model and Swavalamban Yojana Model.

Government Sector Model : The Central Government had introduced the National Pension System (NPS) with effect from January 1, 2004 (except for armed forces).Hence,all Central Government employees joining on or after 01-01-2004 are mandatorily covered under NPS.Any other government employee who is not mandatorily covered under NPS can also subscribe to NPS under “All Citizen Model”.

NPS is applicable to all the employees of State Government, State Autonomous Bodies joining services after the date of notification by the respective State Governments.

Corporate Sector Model : A corporate would have the flexibility to decide investment choice either at subscriber level or at the corporate level centrally for all its underlying subscribers.The corporate or the subscriber can choose any one of Pension Fund Managers (PFMs).

NPS-Corporate model provides a platform to the corporate to co-contribute for the employee’s pension.The corporate can save expenses incurred on self-administration of pension functional like setting up separate trust, record-keeping, fund management, providing annuity, etc.Under NPS the corporate may exercise choice of PFM, as also the investment pattern (allocation of corpus amongst three asset classes) for its employees or leave the option to employees.

Employer can claim tax benefits for the amount contributed towards pension of employee’s upto 10% of the salary (basic and dearness allowance) as Business Expense’ form their Profit & Loss account under the Section 36(1) of the IT-Act. 

All Citizens Model : All citizens(Resident or Non-Resident) of India between the age of 18 and  60 years as on the date of submission of his/her application to Point of Presence( PoP )/Point of  Presence-Service Provider(POP-SP) can join NPS. Applicant should comply with the Know Your Customer (KYC) norms as detailed in the Subscriber Registration Form. All the documents required for KYC compliance need to be mandatorily submitted.

Swavalamban Yojana : The scheme is applicable for all citizens of India (age group of 18-60 years) in the unorganised sector, person will be deemed to belong to the unorganised sector if that person is not in regular employment of the Central or a state government, or an autonomous body/ public sector undertaking of the Central or state government having employer assisted retirement benefit scheme, or is not covered by a social security scheme under any of the following laws:

Employees' Provident Fund and Miscellaneous Provisions Act, 1952

The Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948

The Seamen's Provident Fund Act, 1966

The Assam Tea Plantations Provident Fund and Pension Fund Scheme Act 1955

The Jammu and Kashmir Employees' Provident Fund Act, 1961

The scheme will be applicable to all persons in the unorganised sector subject to the condition that the benefit of Central Government contribution will be available only to those persons whose contribution to NPS is minimum Rs.1,000 and maximum Rs.12,000 per annum, for both Tier I and II taken together, provided that the person makes a minimum contribution of Rs.1000 per annum to his Tier I NPS account.

BENEFITS OF NPS:

1. Low Cost : NPS is considered to be the world’s lowest cost pension scheme. Administrative charges and fund management fee are also lowest.
2. Simple : All applicant has to do is to open an account with any one of the POPs and get a PRAN.
3. Flexible : Applicant can choose his/her own investment option and Pension Fund or select Auto option to get better returns.
4. Portable : Applicant can operate an account from anywhere in the country and can pay contributions through any of the POP-SPs irrespective of the POP-SP branch with whom the applicant is registered, even if he/she changes his/her city, job etc.
5. Prudentially Regulated :Transparent investment norms, regular monitoring and performance review of funds by NPS Trust.
6. Tax benefit to employee:Individuals who are employed and contributing to NPS would enjoy tax benefits on their own contributions as well as their employer’s contribution as under: -

          (a) Employee’s own contribution - Eligible for tax deduction up to 10% of Salary (Basic + DA) under Section 80CCD (1) within the overall ceiling of Rs. 1.5 lacs under Sec 80 CCE.

         (b) Employer’s contribution – The employee is eligible for tax deduction up to 10% of Salary (Basic + DA) contributed   by employer under Sec 80 CCC(2) over and above the limit of Rs. 1.5 lacs provided under Sec 80CCE. Tax benefit for self-employed: Eligible for tax deduction up to 10 % of gross income under Sec 80CCD (1)  with in the overall ceiling of Rs. 1.5 lacs under Sec 80 CCE. Tax benefits would be applicable as per the Income Tax Act, 1961 as amended from time to time.

TYPES OF NPS ACCOUNT:

There are two types of accounts that the NPS offers – Tier I account and Tier II account

Features of Tier I and Tier II accounts:

CHARGES:

INVESTMENT FUND OPTIONS:

The funds contributed will be managed according to the investment mix selected by the contributor. The portfolio thus selected will be created and managed be the fund manager selected at the time of registering from among the approved fund managers.

The fund options available are equity or E, credit risk-bearing fixed income instruments or C and pure fixed investment products or G. A subscriber can choose to invest the entire corpus in C or G. However, investment in E is capped at 50 per cent. Any combination of the funds can be chosen to apportion the corpus within the limits specified. Investors who cannot make the choice between options can opt for the default option i.e. auto choice lifecycle fund. In Lifecycle based fund, 50% will be allocated in E for age group 18 to 36 years, 30% in C and 20% in G. After 36 years, the ratio of investment in E & C will decrease annually, while the proportion of G rises till it reaches 10% in E and C and 80% in G at the age of 55.

WITHDRAW / EXIT:

Upon attainment of the age of 60 years :On reaching the fixed retirement age of 60 years, the contributor has to use at least 40% of the accumulated corpus to buy an annuity. The remaining funds can be withdrawn as a lump sum either at once or in a phased manner before 70 years. Any balance in the account on reaching 70 years of age will be paid-out as a lump sum. The Annuity selected can be one that pays survivor pension to the spouse. A subscriber can also choose to invest more than 40% in an annuity.

At any time before attaining the age of 60 years:Exit before 60 years is possible through an option to withdraw 20 per cent of the accumulated savings and compulsorily buy an annuity with the remaining 80 per cent. In the event of the death of the subscriber, the entire corpus standing in the account will be paid-out to the nominee(s) as a lump sum.

Death of the subscriber:The entire accumulated pension wealth (100%) would be paid to the nominee/legal heir of the subscriber and there would not be any purchase of annuity/monthly pension.

Under National Pension System, PFRDA has entrusted the responsibility of receiving, processing and settlement of all withdrawal claims made to Central Recordkeeping Agency (CRA) and CRA has created a special NPS claim processing cell (NPSCPC) for this purpose for handling all types of withdrawal claims. The CRA will monitor the performance of NPSCPC on the withdrawal processing as per the instructions provided by PFRDA in this regard. At present the NPSCPC is fully functional.

The subscribers can submit their claims for withdrawal from NPS through any of the POP-SP’s to NPS Claim processing cell (NPSCPC) for processing of the claims.

Opening online NPS account-(Using Aadhaar No. and OTP received from UIDAI. In this case, you will instantly get your PRAN generated and can contribute online. You need to submit the physical form within 90 days from the date of allotment of PRAN to, CRA)(Using your PAN Card and net banking of the selected bank. In this case KYC verification will be done by the selected Bank. The PRAN gets activated only after KYC verification by Bank.)NPS allows additional deduction of Rs.50,000(under Section 80CC(D)) form taxable income over and above  the limit of Rs.1,50 L available under Section 80C limiting to 10% 0f salary.

5.ANNUITY: The word annuity derives from the Latin word annum means a year.An annuity is a series or stream of payments. In the context of retirement planning, an annuity is a contract between the annuity holder and the insurance company under which the insurance company promises to pay to the annuitant specified money for life or for life with minimum guaranteed period in case of prior death or for a stipulated period. It is designed to protect against the risk of deterioration of one’s financial resources.

Typically, annuities called as pension plan because these are bought to generate income during one’s retired life.A pension plan or annuity is an investment that is made either in a single lump sum payment or through installments paid over a contain number of years,in return for a specific sum that is received every year.Every half-year or every month either for a fixed number of years and for life thereafter.

There are different types of annuities, which one can consider at different points in one’s life.It is a difficult and confusing decision to purchase an annuity.There are a lot of factors that need to be considered to determine if an annuity product will fulfils a person’s financial objectives.Different types of annuities give financial result but in different ways.There are various options available for annuitants at the time of receiving their annuity funds. Based on the timing of annuity payment, the annuity products can be classified as: Immediate Annuity; and  Deferred annuity.

Immediate Annuity :In immediate annuity, payout i.e. annuity starts immediately. Animmediate annuity starts on the basis of receipt of one-time deposit from the annuity holder. Immediate annuities normally appeals to those people who wish to draw income immediately from the lump sum amount that they have in their hand. This lump sum amount they may have received by way of retirement benefits. An immediate annuity offers Security, Flexibility and Stability.

The various forms of immediate annuities are:

(a) Annuity for Life : The annuity is paid to the life assured as long as he/she is alive.After the death of the annuitant,the amount invested is refunded to the nominee.

(b) Annuity Guaranteed for certain periods or Guaranteed Period Annuity : The annuity is paid to the life assured for periods of 5 or 10 or 15 or 25 years as chosen by him/her whether or not he/she survives that period.After the chosen period, the annuity is paid to the life assured as long as he/she is alive.

(c) Annuity with return of purchase price on death : The annuity is paid to the life assured as long as he/she is alive.On the death of the life assured, the purchase price of the annuity is paid as death benefit.The purchase price includes the Sum Assured under the Basic Plan, the accrued Guaranteed Additions and any accrued bonuses, excluding the commuted value, if any.

(d) Lifetime annuity without return of purchase price : Under this option, the individual receives pension for as long as he lives. The pension ceases on occurrence of an eventuality and the insurance contract comes an end.

(e) Increasing annuity : The annuity is paid to the life assured as long as he/she alive.The amount of annuity increase every year at a simple per annum.

(f) Joint Life Last Survivor Annuity : The annuity is paid to the life assured as long as he/she is alive.On death of the life assured, 50% of the annuity is payable to the nominated spouse as long as the spouse is alive.

(g) Annuity Certain : Under this type of annuity, the stipulated annuity is paid for a fixed number of years.The annuity payments stop at the end of that period, irrespective of how much longer the annuitant may live.At this moment this type of annuity is not offered by insurers in India.

(h) Annuity with life cover : It offers an assured life cover in case of any eventuality.

(i) Annuity without life cover : The corpus built till date (net of deductions life expenses and premiums unpaid) is given out to the nominees in case of an eventuality.There is no sum assured paid to the nominee.

Deferred Annuity :In a deferred annuity plan the annuity payment starts after period of deferment. The principal amount is invested and allowed to grow tax-deferred over a specified time period. This type of annuity appeals to those people who want a tax-deferred investment so that they can save for retirement.

A deferred annuity has two stages called Accumulation Stage and Annuity Disbursement Stage.The accumulation stage is the period of time where the policy holder invests money into the annuity plan.The objective of the accumulation period is to accumulate a pool of money from which the policy holder will later draw regular payments.The plan also provides a risk cove during the deferment period.The main feature of the plan being the pension can commence at any stage of life.The various options for annuity payment under this plan are:

(a) Life annuity : Under this option, annuity will be paid until the policy holder dies.Once the annuity payment starts and the annuitant dies, annuity payments will stop and nothing will be payable to the beneficiaries.

(b) Life with certain period : This type of annuity payment is generally less than that of life annuity, but provides that annuity payments will continue for a fixed period of time regardless of whether or not he annuitant dies.If the annuitant dies before the pension period end the balance will be paid to the beneficiary already selected by the annuitant.

(c) Joint Life and Last Survivor : With this option, two or more individuals can get annuity until all individuals die.

Based on the nature of annuity amount there are two types of annuity policies- Fixed Annuities and Variable Annuities.

Fixed Annuities : A fixed annuity is defined as an annuity that offers a fixed rate of return over a period of years.Fixed annuity gives a steady return and allows annuitant to decide how much he or she needs to save for retirement. It guarantees rate o return for a period of time. This rate can change after the guarantee period. A policy holder will earn a guaranteed rate for a specified number of years and then he has the option to renew at another guaranteed rate at the end of the contracted time. 

Variable Annuities : A variable annuity is defined as an annuity in which the rate of return changes, depending on how well the sub-accounts perform.A variable annuity has no guaranteed rate of return, the annuity earns interest on funds that can be tied to stocks, bonds or a mixed of investments. When these investments perform well, the annuity earns a percentage based on their performance.One can lose money in a variable annuity.One can also buy a conservative variable annuity that invests in bonds and G-sec segment.Variable annuities also offer death benefits that allow money to be passed on to the heirs of the annuitant, just as fixed annuities and other types of annuities do. ULIP pension plans are the variable type annuity plan.

6.PUBLIC PROVIDENT FUND(PPF) :

The objective of the PPF is to provide a long term retirement planning option to those individuals who may not be covered by the provident funds of their employers or who are self-employed.

Individuals who are residents of India are eligible to open their account under the Public Provident Fund scheme.A PPF account may be opened under the name of a minor by his/her legal guardian. However, each person is eligible for only one account under his/her name.Account can be opened from the any authorized branch of commercial banks or post offices. Grand-parents cannot open a Public Provident Fund (PPF) account on behalf of minor grand-child; however, in case of death of both the Father and Mother, Grand-parents can open a Public Provident Fund (PPF) account as guardians of the Grand-child.

PPF is a 15 year deposit account.A customer can extend the tenure of a Public Provident Fund (PPF) investment for a block period of 5 years beyond the maturity period for any number of times by submitting Form H within one year from the date of maturity.

A PPF account can be opened with Rs.100.00 but minimum amount to be invested in a financial year is Rs.500.00 and maximum Rs.1,50,000.00 can be invested in a year.Payment can be made through cash/cheque/demand draft/pay order and even online.

The PPF follows the EEE regime for taxation.This means that the contribution made to the PPF will receive tax benefits in the form of deduction from taxable income, the interest accrued in a year will not be taxed in the year in which it is earned and at the time maturity the amount received by the individual will also not taxable.THIS BENEFIT IS MOST ATTRACTIVE

FEATURE FOR OPENNING A PPF ACCOUNT.

Interest calculated on the lowest balance in the account on the 5^th of the month, currently at 8.7% per annum and credited to the account on 31^st March. Interest is compounded annually.

One withdrawal is permissible in a financial year from 7^th financial year. Maximum withdrawal can be 50% of balance at the end of immediate preceding year of withdrawal.

Loan facility available from 3rd financial year upto 5th financial year.The rate of interest charged on loan taken by the subscriber of a PPF account shall be 2% p.a.Amount of loan must not be exceed 25% of balance of the previous financial year.

No court order can be attached with PPF account.

7.PENSION SCHEMES FROM MUTUAL FUNDS :

Templeton India Pension Plan and UTI Retirement Benefit Pension Fund are the two pension plans currently available from mutual fund houses in India.

People who are looking for accumulation of retirement corpus with tax deduction can definitely look for these funds. The investment objective of this type of fund is to build a retirement corpus for the investor over a long period of time. These two funds combined equity and debt securities, so investors who are bit risk averse can go for such funds. Both are old funds (more than 15 years). Also when you compare withdrawal taxation of typical pension plans to these funds, then these funds holds upper hand. In pension plans, whatever you receive will be taxed according to tax slab of an individual but in these funds it will be subject to capital gains tax applicable to debt-oriented funds. So for higher tax bracket individual, these plans seem better tax efficient. Also apart from typical ELSS (Equity Linked Saving Schemes), these are the only two schemes which entertain such tax benefit under Sec 80 C.

 In these plans you are free of withdrawal all accumulated amount at the time of retirement.

8.ATAL PENSION YOJANA –

1. Atal Pension Yojana (APY) is a Government of India Scheme administered by PFRDA through NPS.
2. The objective of the APY is to encourage the persons to save small amounts during their productive years to enable them to draw a pension in old age.
3. APY is based on defined benefit for providing fixed minimum pension ranging from Rs 1000 to Rs 5000 p.m.for the subscribers, if he/she joins and contributes between the age of 18 years and 40 years, depending on their contributions.
4. The benefit of fixed minimum pension is guaranteed by the GoI. GoI will also co-contribute 50% of the contribution amount or Rs. 1000 per annum, whichever is lower.
5. GoI co-contributes to each eligible subscriber’s account, for a period of 5 years, i.e., from 2015-16 to 2019-20. who joins on or before 31st December 2015.
6. GOI co-contribution is available for the subscirbers who are not covered under any statutory social security scheme and are not income tax payers.

 SAILENT FEATURES

• The subscriber wishing the Government co-contribution should not be covered by a social security scheme under any of the following laws:

1. Employees’ Provident Fund and Miscellaneous Provisions Act, 1952
2. The Coal Mines Provident Fund and Miscellaneous Provisions Act 1948
3. The Seamen’s Provident Fund Act, 1966
4. The Assam Tea Plantations Provident Fund and Pension Fund Scheme Act,
5. 1955The Jammu and Kashmir Employees’ Provident Fund Act,
6. 1961and other statutory social security schemes.

ELIGIBILITY CRITERIA  

• Any Citizen of India in unorganised sector . 
• Age of joining – 18 years - 40 years. Date of Birth Proof is mandatory.
• Aadhar No. to be preferred at the time of opening APY account.
• Non Aadhar bank account customers can also join the scheme but Aadhar details are to be provided later.
• Valid mobile number mandatory.

CHARGES/CONTRIBUTION UNDER APY 

• Contributions are to be deposited by selecting monthly auto debit facility.
• Non-maintenance of required balance in the savings bank account for contribution on the specified date will be considered as default.
• Banks are required to collect additional amount for delayed payments, such amount will vary from minimum Re 1 per month to Rs 10/- per month upto Rs. 100 per month. Re. 2 per month for contribution upto Rs. 101 to 500/- per month. Re 5 per month for contribution between Rs 501/- to 1000/- per month.Rs 10 per month for contribution beyond Rs 1001/- per month. 

HOW TO OPEN APY ACCOUNT BANK ACCOUNT HOLDER NON BANK ACCOUNT HOLDER

1. Submit the APY Form q Provide Aadhaar No and Mobile Number
2. Deposit the initial contribution according to the type of pension opted.
3. Provide KYC Documents and open a Bank account by providing KYC document and Aadhaar
4. Submit a signed APY proposal form
5. The subscriber will: • Contact Bank branches under core banking platform Mandatory to provide Savings Bank account details, mobile number and authorization letter to the bank for the monthly auto debit option for remittance of contribution. • Mandatory to provide Spouse/Nominee details in APY form. • Receive Permanent Retirement Account Number (PRAN) immediately.

Discontinuation of payments of contribution amount shall lead to following: After 3 months account will be frozen.After 12 months account will be deactivated.After 24 months account will be closed. Subscriber should ensure that the Bank account to be funded enough for auto debit of contribution amount. The fixed amount of interest/penalty will remain as part of the pension corpus of the subscriber.

OTHER FEATURES OF APY  

• Periodical mobile alerts to the subscribers for subscriptions, balance and credits.Subscribers can open only one NPS-APY account.
• Incentive is payable to banks up to Rs. 120/- per account.
• The contributions under APY are invested as per the investment pattern specified by Government for India for Non-Government PFs, Superannuation Funds/Gratuity Funds 
• The subscribers do not have any other choice on investment pattern or Pension Fund.

F.A.Q.

Q: What is corpus amount?

A: Subscriber contribution (Accumulated) + Govt. of India contribution + Interest earned ( Returns) = Corpus Amount

Q: Where will my savings be invested?

A: The contributions under APY are invested as per the investment pattern specified by GoI. · G-Securities-Min-45% and up to 50%, · Debt Securities and term deposits of banks-Minimum 35% and up to 45%, · Money Market Instruments-Up to 5% · Equity and related instrumentMinimum 5% up to 15%, · Asset Backed Securities etc. – Up to 5 %.

EXIT / WITHDRAWAL FROM APY

A. On attaining the age of 60 years: The exit from APY is permitted at the age with 100% annuitisation of pension wealth. On exit, pension would be available to the subscriber.

B. In case of death of the Subscriber due to any cause: In case of death of subscriber pension would be available to the spouse and on the death of both of them (subscriber & spouse), the pension corpus would be returned to his nominee. c. Exit Before the age of 60 Years: The Exit before age 60 would be permitted only in exceptional circumstances, i.e. ,in the event of the death of beneficiary or terminal disease. Repeated defaults for a year: The APY account will be closed. Government co-contribution will be forfeited with penalty. Subscriber contribution can be withdrawn as lump sum.

It would be safe to say that retirement in any case is the toughest stage of life, but with proper planning, it can be better at least financially. Investing in a retirement plan at an early age will allow your investment enough time to grow so that you can reap bigger payouts when you need most during retirement.

Soruces : pfrda/epfo/nsap web sites