Tuesday, April 26, 2011

NPS a threat to existing pension schemes

New Pensions Scheme or (NPS) has been launched by Pension Fund and Regulatory Development Authority (PFRDA).

This new scheme has given one of the highest returns if compared to the various mutual funds in the market. So far the average return by the NPS has been between 12-14%.

Insurance is not a bad idea when it comes to investment options for retirement. Research a bit and you might find a profitable deal.

It is being expected that NPS might manage to eat into the market share of Insurance products and mutual funds as post retirement investment options.

The NPS where the Central Government employee has to make a contribution was started in January 2004. Once the NPS was deemed successful it was extended to all Indian citizens in the age bracket between 18-55 years in May 2009.”

27 states have accepted and implemented the scheme. West Bengal, Tripura and Kerala (states governed by the left) have refrained from accepting NPS. Guess they will stick to Insurance.

A total of 20 lakh members which includes 12 lakh Central Govt, 6 lakh State Govt employees with 6 lakh corporate accounts, so far NPS has been moderately successful.

The things holding back the massive acceptance of this scheme are a few as well. Very low commission, and poor distribution most private organizations and many Government organizations have not accepted this scheme.

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