Thursday, December 1, 2016

national pension system

Another emerging investment product is the National Pension System (NPS) launched by NSDL e-Governance Infrastructure Limited providing exposure to four different asset classes—Equity Shares, Corporate Bonds, Government Securities, Alternate Investments (such as real estate investment, mortgage based securities etc.) at the same time and thus providing for portfolio diversification. This product is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). PFRDA has appointed NSDL as Central Recordkeeping Agency (CRA) for carrying out the functions of Record Keeping, Administration and Customer Service for all subscribers under NPS. CRA issues a Permanent Retirement Account Number (PRAN) to each subscriber and maintains database of each Permanent Retirement Account along with recording transactions relating to each PRAN.

The funds contributed by investors are managed according to the investment mix selected by the subscriber between equity, debt securities, low risk government securities and alternate investments funds. The portfolio is managed by the fund manager that is selected by the investor at time of registering from the list of approved fund managers. On retirement, the individual gets the option of taking a part of the corpus as lump sum amount and the balance in the form of a fixed monthly income. However, it should be remembered that NPS is more of a retirement product just like a pension scheme account. However, it is a product that young investors can certainly think about which would help them to effectively plan for their retirement.

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