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Secure Your Golden Years: A Guide to Corporate NPS for Employees

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Planning for retirement might seem like a distant concern, but the reality is, it arrives sooner than we expect. Corporate NPS (National Pension System) is an initiative designed to help you, the employee, build a secure and independent future. Let’s delve into how Corporate NPS empowers you and why you should consider registering.

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What is Corporate NPS?

Imagine a systematic savings plan that grows alongside your career, culminating in a substantial retirement corpus. That’s Corporate NPS in a nutshell. The Corporate National Pension Scheme (NPS) is a government-backed retirement savings vehicle designed to allow employees to systematically accumulate a corpus over their working years. Managed by the Pension Fund Regulatory and Development Authority (PFRDA), the scheme encourages corporates to provide a robust pension system for their employees beyond mandatory provident fund contributions.

Here’s how it benefits you:

  • Systematic Savings: Every contribution, however small, adds up over time. NPS fosters a habit of regular saving for your future self.
  • Tax Advantages: Get a double tax benefit! Your contributions qualify for a deduction under Section 80CCD(1) (up to Rs. 1.5 lakh) and an additional Rs. 50,000 if your employer contributes under Section 80CCD(2).
  • Employer Contributions: Corporates can also contribute towards their employees’ NPS accounts, and these contributions are eligible for tax benefits under Section 80CCD(2).
  • Investment Flexibility: Choose your investment path. NPS offers a range of options like Equity, Government Security, Corporate Debt, and Asset Allocator funds, allowing you to tailor your portfolio to your risk tolerance.
  • Portability: Take your retirement savings with you! Your NPS account remains portable even if you switch jobs, ensuring continuity in your retirement planning.
  • Long-Term Growth: Compounding interest works its magic over the years, potentially leading to a significant retirement corpus.
  • Flexibility and Control: Employees can choose their fund managers and switch between them. There are two investment options available - Active Choice, where employees have the discretion to allocate their investments, and Auto Choice, a lifecycle fund option.

Tax Benefit to Corporate

10% of the salary (basic and dearness allowance) of employers Contribution can be deducted as “Business Expense” from their Profit & Loss Account.

Why You Should Register for Corporate NPS?

  • Early Start, Big Advantage: Starting early allows your contributions to benefit from compounding for a longer period, maximizing your potential returns.
  • Employer Contribution (Optional): Some employers contribute a portion of your salary towards your NPS account, further boosting your retirement savings.
  • Government Guarantee: NPS investments are managed by professional fund managers and backed by the Government of India, offering a sense of security.

Taking the First Step:

Talk to your HR department about your company’s Corporate NPS program. The registration process is simple and can be done online or offline. Remember, a secure retirement starts with a proactive approach. Don’t let your golden years be a financial worry.

What is a PRAN Number?

The PRAN (Permanent Retirement Account Number) is a unique and crucial element in the National Pension System (NPS) in India. Here’s a breakdown of what it is and its significance:

  • A PRAN is a 12-digit unique identification number assigned to each subscriber who registers for an NPS account.
  • It remains constant throughout your NPS journey, regardless of job changes or location shifts.
  • It acts as a single point of reference for all your NPS transactions and account management activities.

Importance of PRAN

  • Account Identification: The PRAN is your unique identifier within the NPS system. It helps track your contributions, investment details, and account balance.
  • Portability: When you switch jobs, your PRAN allows you to seamlessly transfer your NPS account to your new employer’s NPS program. This ensures continuity in your retirement savings plan.
  • Transactions: You’ll need your PRAN to perform various NPS related actions like viewing your account statement, making contributions, or changing investment options.

Exiting the National Pension System (NPS)

The NPS is a long-term investment scheme designed to provide financial security after retirement. However, there may be situations where you need to exit your NPS account before reaching retirement age (60 years or later).

Types of Exit from NPS:

  • Normal Exit: This is available only at the age of 60 years or later. You can withdraw up to 60% of the corpus as a lump sum, and the remaining 40% will be used to purchase an annuity (pension) that provides you with regular income after retirement.

  • Premature Exit: This allows you to exit NPS before reaching 60 years, but with certain restrictions. The options and restrictions depend on your employment sector and the duration of your NPS subscription.

Empower yourself, secure your future. Register for Corporate NPS today!

Additional Notes:

While Corporate NPS offers numerous advantages, it’s important to understand the lock-in period. Generally, contributions are locked until retirement, with exceptions for specific situations. Market volatility can affect investment returns. Carefully consider your risk tolerance before choosing your investment options. Corporate NPS is a long-term investment. Consistency in contributions is key to reaping the maximum benefits.

Looking to integrate NPS into your employee benefits program?

Connect with us for a seamless onboarding experience for your company’s NPS adoption.

This article is for informational purposes only and does not constitute financial advice. Consult a financial advisor for personalized recommendations.

(Updated: )

Tushar Seasoned Financial Companion | Mutual Fund Distributor | Providing Expert Guidance to Help Clients Achieve Their Financial Goals 📈💼 | Ex- Software Developer
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