How can corporate employees plan and secure their retirement with NPS?

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When it comes to retirement planning, corporate employees have a unique set of challenges. Not only do they need to save enough for a comfortable retirement, but they also need to be mindful of potential changes in their employment situation. Fortunately, corporate employees can take advantage of a corporate National Pension System to help them secure their retirement. It is the customised version of core NPS and is based on the concept of employer-employee relationship.

The NPS corporate sector model allows both the employee and the employer to contribute to the employee’s NPS corporate account. Here is how corporate employees can live with pride and maintain their quality of life during advancing years through this NPS scheme.

Exclusive tax benefits of NPS for corporate employees

Under NPS, employees can claim tax deductions up to 10% of their salary (basic pay + dearness allowance) contributed towards their pension corpus. This amount is eligible for tax exemption under section 80CCD (2) of the Income Tax Act, 1961. And as a corporate employee, you are eligible for additional tax exemptions of up to Rs. 50,000 under section 80CCD (1B). This exemption is in addition to the limit of Rs. 1,50,000 available under section 80C.

Additional NPS benefits that help corporate employees retire comfortably 

  • Open to all Indian corporate employees working for a company registered under the corporate NPS model.
  • Low-cost investment product with optimum growth options through long term market-linked returns.
  • The auto choice option allows employees to invest without having to worry about choosing the right investment option.
  • Employees can remain invested even after retirement and continue to avail tax benefits (you can also defer your withdrawal).
  • NPS offers tax exemptions on both employee and employer contributions as per the Income Tax Act 1961, making it an even more attractive proposition for people looking to save taxes.
  • The scheme also offers a voluntary savings facility known as the Tier II account, which provides subscribers with a greater flexibility in withdrawals and transfers.
  • Various funds are available with flexible investment patterns.
  • An efficient grievance management system in place.
  • It is also possible to defer annuities for a maximum of three years.
  • NPS for corporates offers different investment options depending upon the risk appetite of the subscriber.
  • With the portability option under NPS, employees can carry their accumulated corpus to the new employer with the same PRAN (Permanent Retirement Account Number) if the new employer is subscribed to NPS corporate.

These NPS benefits make this investment tool beneficial for corporate employees.

How to join corporate NPS?

There are two ways to complete NPS corporate registration – online and offline.

Corporates can complete online registration by visiting the eNPS website of Protean eGov Technologies Limited-CRA or through participating banks’ websites. For offline registration, you may need to submit a registration form along with the requested KYC documents.

During the NPS corporate registration process, employees should provide the following documents –

  • Subscriber registration form
  • KYC documents (passport, voter’s identity card, driving licence, Aadhaar, etc.)

Ending notes

With transparency and tax benefits as its key features, NPS has emerged as a reliable investment product for corporate employees looking to secure their post-retirement income. Moreover, subscribers can choose to continue investing beyond maturity and get enough time to accumulate a decent corpus for their golden years.