Benefits of National Pension Scheme
The NPS offers you two approaches to invest your money:
  Active choice - Individual Funds (Asset Class E, Asset Class C, and Asset Class G )
  Auto choice - Lifecycle Fund

Active Choice
Under NPS you will have the option to actively decide as to how your NPS pension wealth is to be invested in the following three options:
Asset Class E - investments in predominantly equity market instruments.
Asset Class C- investments in fixed income instruments other than Government securities.
Asset Class G - investments in Government securities.
Asset class E (equity market instruments) - The investment by an NPS participant in this asset class would be subject to a cap of 50%. This asset class will be invested in index funds that replicate the portfolio of either BSE Sensitive index or NSE Nifty 50 index. Index Fund Schemes invest in securities in the same weight age comprising of an index. The PF will have to choose which index they intend to track in advance on a yearly basis. The permitted cap, as mentioned above, is expected to be maintained at that level at all points in time. However, the amount of funds invested in that asset class can differ from the specified cap by no more than 5% for purposes of portfolio balancing.
Benchmark - the performance of the scheme will be measured by reference to the total performance (dividends reinvested) of either BSE Sensex or NSE Nifty 50 Index, as chosen by the PF. The PF will have to choose which index they intend to track in advance.
Performance objective - the investment objective is to optimize returns while investing in the chosen index over a rolling annual basis

Asset class G (Government Securities)
- This asset class will be invested in central government bonds and state government bonds
Performance objective - the investment objective is to optimize returns.
Risk - It is expected that the PF will be able to identify and justify the additional risks relative to the return, while managing the portfolio on an absolute return basis

Asset class C (credit risk bearing fixed income instruments)
- This asset class contains bonds issued by any entity other than Central and State Government. This asset class will be invested in liquid funds of Mutual Funds, credit rated debt securities. This includes rated bonds/securities of Public Financial Institutions and Public sector companies, rated municipal bodies/infrastructure bonds and bonds of all firms (including PSU/PSE) , subject to restrictions outlined in section 2 below.
Performance objective - the investment objective is to optimize returns.
Risk - It is expected that the PF will be able to identify and justify the additional risks relative to the return, while managing the portfolio on an absolute return basis.
While exercising an Active Choice, remember that your investment allocation is one of the most important factors affecting the growth of your pension wealth. If you prefer this hands-on approach, keep the following points in mind:
National Pension Scheme (NPS) - We will definitely explore if investing in NPS is a wise option or not in next write-up but before that as an aware investor, do go through about the concept of NPS and how it is structured in this write-up.

About National Pension Scheme
NPS is available to all citizens of India with effect from May 1, 2009, other than Government employees already covered under NPS with the motive to promote old age income security

Under NPS following two types of accounts will be available to you:

Tier-I account: You shall contribute your savings for retirement into this non-withdrawable account.

Tier-II account: This is a voluntary savings facility. You will be free to withdraw your savings from this account whenever you wish.

While Tier-I account is available from May 1, 2009, the facility of Tier II account is offered from December 1, 2009 to all citizens of India including Government employees mandatorily covered by NPS.

1. The facility of Tier II account is available from December 1, 2009 to all citizens of India including Government employees mandatory covered by NPS, who hold a Tier I account.

2. Unlike Tier I which is a non-withdrawable pension account, Tier II is a withdrawable account with an aim to provide a window of liquidity to NPS subscribers. Both Tier I (Pension Account) and Tier II (Savings Account) will be pure retirement savings products, the only distinction being that Tier- I is a non- withdrawable account while Tier-II is a withdrawable account to meet financial contingencies.

3. The Tier-II would enable the existing Permanent Retirement Account (PRA) holders to build savings over and above the investments in the Tier I pension account. An active Tier I account is a pre-requisite for opening a Tier II account.
Enrollment to NPS: To enroll in the NPS, one needs to submit the Composite Registration Form (UOS-S1) to the POPSP of your choice. The list of POP - SPs is available on the PFRDA website www.pfrda.org.in, on the CRA website www.npscra.nsdl.co.in and on the website of the concerned POP.

For Tier-I account:
  You are required to make your first contribution at the time of applying for registration at any POP - SP.
  You are required to make contributions subject to the following conditions:
  Minimum amount per contribution - Rs 500
  Minimum contribution per year - Rs 6,000
  Minimum number of contributions -01 per year
Consider both risk and return. The E Asset class has higher potential returns than the G asset class, but it also carries the risk of investment losses. Investing entirely in the G asset class may not give you high returns but is a safer option.

You can reduce your overall risk by diversifying your investment. The three individual asset classes offer a broad range of investment options, it is good not to put all your eggs in one basket.

The amount of risk you can sustain depends upon your investment time horizon. The more time you have before you need to withdraw from your account, the more is the risk you can take. (This is because early losses can be offset by later gains.)

Periodically review your investment choices. Check the distribution of your account balance among the funds to make sure that the mix you chose is still appropriate for your situation. If not, rebalance your account to get the allocation you want.

Auto Choice

Allocation of funds across asset class for Auto choice
The methodology for allocating funds in the three asset classes under Auto Choice are outlined below:
NPS offers an easy option for those participants who do not have the required knowledge to manage their NPS investments. In case you are unable/unwilling to exercise any choice as regards asset allocation, your funds will be invested in accordance with the Auto Choice option. You will, however, be required to indicate your choice of PFM. In case you do not do so, your form shall not be accepted by the POP-SP.

In this option, the investments will be made in a life-cycle fund. Here, the fraction of funds invested across three asset classes will be determined by a pre-defined portfolio. At the lowest age of entry (18 years), the auto choice will entail investment of 50% of pension wealth in E Class, 30% in C Class and 20% in G Class. These ratios of investment will remain fixed for all contributions until the participant reaches the age of 36. From age 36 onwards, the weight in E and C asset class will decrease annually and the weight in G class will increase annually till it reaches 10% in E, 10% in C and 80% in G class at age.

Like the active choice, you must choose one PFM under the auto choice.

The table below illustrates the allocation of each asset class for Auto Choice option based on age of the investor.
THE PENSION FUNDS AVAILABLE UNDER NPS (in alphabetical order)
  ICICI Prudential Pension Funds Management Company Limited
  IDFC Pension Fund Management Company Limited
  Kotak Mahindra Pension Fund Limited
  Reliance Capital Pension Fund Limited
  SBI Pension Funds Private Limited
  UTI Retirement Solutions Limited

What are the benefits of joining the NPS?
  It is voluntary- NPS is open to every Indian citizen. You can choose the amount you want to set aside and save every year.
It is simple- all you have to do is to open an account with any one of the POPs and get a PRAN.
It is flexible- You can choose your own investment option and Pension Fund Manager and see your money grow.
It is portable- You can operate your account from anywhere in the country, even if you change your city, job or your pension fund manager.
It is regulated- NPS is regulated by PFRDA, with transparent investment norms and regular monitoring and performance review of fund managers by NPS Trust.
Withdrawal in NPS
On attaining the Normal Retirement Age (NRA) of 60 years - You will be required to compulsorily
annuitize at least 40% of your pension wealth and the remaining 60% can be withdrawn as a lump
sum or in a phased manner; in case, you opt for a phased withdrawal:
Minimum 10% of the pension wealth should be withdrawn every year.
Any amount lying to the credit at the age 70 should be compulsorily withdrawn in lump sum.

Withdraw any time before 60 years of age-
In such case; you will have to compulsorily annuitize 80% of your accumulated pension wealth. The remaining 20% can be withdrawn as a lump sum.
Vesting Criteria
Benefit
At any point in time before 60 years of age
You would be required to invest at least
80% of the pension wealth to purchase a
life annuity from any IRDA - regulated life
insurance company. Rest 20% of the
pension wealth may be withdrawn as lump
sum.
On attaining the Age of 60 years and upto
70 years of age
At exit you would be required to invest
minimum 40 percent of your accumulated
savings (pension wealth) to purchase a life
annuity from any IRDA-regulated life
insurance company.
You may choose to purchase an annuity for
an amount greater than 40 percent. The
remaining pension wealth can either be
withdrawn in a lump sum on attaining the
age of 60 or in a phased manner, between
age 60 and 70, at the option of the
subscriber.
Death due to any cause
In such an unfortunate event, option will be
available to the nominee to receive 100% of
the NPS pension wealth in lump sum.
However, if the nominee wishes to continue
with the NPS, he/she shall have to
subscribe to NPS individually after following
due KYC procedure.
NPS Charges
NPS offers Indian citizens a low cost option for planning their retirement. A 0.0009%* fee (based on assets under management) for managing your wealth, makes pension funds under NPS perhaps the worlds lowest cost money managers.

What is Swavalamban Scheme?

Under the scheme, Government will contribute Rs. 1000 per year to each NPS account opened in the year 2010-11 and for the next three years, that is, 2011-12, 2012-13 and 2013-14. The benefit will be available only to persons who join the NPS with a minimum contribution of Rs. 1,000 and maximum contribution of Rs. 12,000 per annum.
Welcome to Indian Share Market
Serving Since 2007
nse,bse,nse India,bse India,bombay stock exchange,share market live,national stock exchange,stock market live,money market,stock exchange,bse nse,sharemarket,share price,nse live,bse live,how to invest in share market,live share market,intraday tips,online trading,live stock market,indian share market,intraday trading,trading,what is share market,share market today,intraday trading tips,trading account,stock market basics,nifty live chart,share market basics,live market,share market news,online share trading,financial market,share trading,share tips,options trading,share market India,trading tips,market live,free intraday tips,market today,share prices,market analysis,shares market,equity shares,stock market news,today share market,share market software,share market online,how to buy shares,free stock tips,online share market,bse share price,bse market,live market watch,live share prices,online trading account,option trading,penny stocks
www.DayTradingShares.com
indian stock market live,indian stock exchange,stocks to buy,stock charts,shares to buy,online stock trading,stock market game,share trading tips,intraday trading strategies,indian stock market news,trading strategies,stock tips India,intraday trading techniques,share marketing,about share market,indian share market live,share India,free share tips,trading software,,free stock market tips,how to invest in shares,forex trading strategies,how stock market works,live stock prices,indian market news,stock trading tips,stock market analysis,indian share market tips,share market tutorial,share market holidays,share market price,share market in India,futures trading,basics of share market,high frequency trading,stocks and shares,how share market works,how to trade in share market,share market live chart,nse tips,mumbai share market,market news India,trading platform,share prices India,learn share market,todays share market,share market in hindi,online share trading India,shares and stocks,share market for beginners
Free Technical Charts|Get Free Advice|Stocks for Investment|Share Market Holidays|
Home Page|Readers|About us|Suggestions|Free Learning Section|
Disclaimer: Information presented on this site is a guide only. It may not necessarily be correct and is not intended to be taken as financial advice nor has it been prepared with regard to the individual investment needs and objectives or financial situation of any particular person. Stock quotes are believed to be accurate and correctly dated, but www.daytradingshares.com does not warrant or guarantee their accuracy or date.
www.daytradingshares.com takes no responsibility for any investment decisions based on recommendations provided on website.
Financial contents like Technical charts, historical charts and quotes are taken from NSE and Yahoo sites.
Note - All quotes are delayed by 15 minutes and unless specified.

Google Adsense Ads are posted on every page of the website so visitors clicking on Ads and going to those links and carrying any financial deal is not at all related to www.daytradingshares.com and any financial deal should be done on their own sole responsibility.
Please read at
www.daytradingshares.com/disclaimer.php before using any material or advice given at www.daytradingshares.com