If there is opposition to National Pension System, NPS then why are the customers increasing? Fund is also increasing, what is the reason – why is there opposition to the national pension system
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Assets of All Citizen Scheme increased
There is also a model in which all citizens of 18 to 65 years of age can join. The asset of this all-citizen scheme has increased by 34% and has become ₹ 40,722 crore. In this model people join voluntarily. Their number has also increased by 34 percent. If central and state government employees are also included, the NPS now has 6.1 crore subscribers. His assets worth more than Rs 8.75 lakh crore are deposited in the scheme. In comparison, the Employees’ Provident Fund Organization (EPFO) manages a fund of Rs 11 lakh crore, while it has around 26 crore subscribers.
NPS is only two decades old
EPFO has been in existence since 1952, while NPS is only two decades old. EPFO is accessible only to organized sector employees. There was a lack of investment to meet the pension needs of workers in the unorganized sector and the self-employed. This was accomplished by NPS. Initially, the tax break available under Section-80C played a big role in attracting private sector employees to NPS. However, later this scheme has started connecting people on its own merits. The government is moving towards a new tax system, in which there is talk of eliminating exemptions. It has to be seen whether the NPS does not become weak in the system without exemption.
customized investment
Experts say that the structure of the scheme is very flexible for the employees. They can stick to the scheme by contributing as little as ₹1,000 annually. There is also transparency in this. The employee can choose the fund manager of his choice. He can also choose whether his money should be invested in the stock market or in government securities or in corporate securities. If they want, they can deposit money in different proportions in all the three. Asset management fees are considered very low compared to the market.
returns are also not less
NPS has also worked to bust the myth that market linked investments can never match the performance of guaranteed return schemes. Private fund managers of NPS have given 12-13% return on equity schemes and 8-9% on debt in 10 years. This is more than the fixed returns of EPF. Also beats inflation. For these reasons, young investors these days are preferring market-linked investments over fixed-return investments. If all the employees in the organized sector are given the option to choose between EPF and NPS, then NPS may win.
opposition not unanimous
Anand Dalmia, co-founder of Wealthtech platform Fisdom, says that the most opposition to NPS is among government employees. Barring a few states that have rejected this pension system outright, the opposition is not unanimous. The recent increase in the number of customers is mainly due to the All Citizen model. The growth of the corporate scheme is very close to it. The situation among central government employees did not change substantially.
Despite this, the overall increase in the number of subscribers of NPS rests on its merits. It has the facility of investment according to the needs and transparency is maintained. For this reason, it has attracted the general public towards itself.
simple scheme
If you want, you can become a subscriber of NPS by going to the internet. In this, SIP means that every month a fixed amount can be deposited from your account through auto-debit. Despite these features, the process of joining and transacting in NPS remains extremely complex. A need is being felt to go beyond the banking and broker channels for how the common man can access the NPS. It remains to be seen what new-age fintech platforms can do for the less educated to connect with it.
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