You are sitting at your desk, planning your retirement and thinking about ensuring financial stability when you no longer have a regular income. The idea of a secure future brings comfort, but getting there seems daunting. Then you remember your friend mentioning the National Pension System (NPS) and how easy it was to contribute online. You already use a Credit Card for most transactions, so why not use it for NPS payments too?
The Government of India launched the NPS scheme in January 2004 to serve as a contribution scheme well-suited for establishing a means of income for post-retirement. It is an excellent tax-saving and long-term investment tool. It was initially restricted to government employees.
However, in 2009, NPS was made accessible to all Indian citizens between 18-60 years of age. It is designed to ensure that NPS Account holders can continue earning a stable income after retirement, besides considerable investment returns.
Before diving into NPS payments using a Credit Card, it's essential to understand the NPS contribution rules. NPS offers two types of accounts: Tier I and Tier II.
Individuals must contribute a minimum of ₹6,000 annually for a Tier I account. After staying invested until retirement (or reaching 60), they can withdraw up to 60% of the total. Ideally, the remaining 40% should be used to purchase an annuity, providing a regular income post-retirement.
In contrast, a Tier II account offers greater flexibility, acting as a voluntary savings account. It requires a minimum contribution of ₹250 per transaction and allows the account holder to withdraw funds at any time.
Read more on the NPS Tier 1 and NPS Tier 2 Tax benefits here.
You can contribute to NPS both online and offline. For online payments, you can use a Credit Card. Here are the steps to do so.
NPS account holders can make online contributions with a Credit Card, Debit Card, and Internet Banking. It's important to note that using a Credit Card for NPS investments may incur additional charges. For Net Banking, the transaction fee is ₹0.60 per transaction plus GST at 18%, while Debit Card transactions are charged 0.80% of the transaction amount plus GST at 18%. Credit Card transactions have a fee of 0.90% of the transaction amount plus GST at 18%.
As Covid-hit people looked for security in their golden years, NPS and Atal Pension Yojana surged 30% in subscribers and value.
Start investing today by opening your NPS Account today! Click here to get started!
*Terms and Conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice before you take any/refrain from any action.