New Pension Scheme is a government scheme to provide a pension for you. So why should you not invest in it?

I do not like the terms and conditions…and the fact that it is EET. I would prefer a PPF or ELSS which is EEE.

Forget that…Pattabhiraman Murari has more reasons than what I have about investing in NPS. Stay away, at least for the younger people that is the message.

What I do not like about NPS is something else. Look at the money that it controls. Assume that it is about Rs. 300,000 crores. Now this amount will increase @ 20% every year. About 10% by way of growth and 10% by way of new contribution. This is not small.

Now if this was in your control you will ensure that this is in safe hands…..However in the hands of the government this can be a bomb.

Some politician will look at Rs. 500,000 crore lying there and get nice, crazy, stupid, kameena ideas. Let me enumerate them:

1. The NPS fund has to invest 10% of its equity inĀ Psu bond funds. This could be extended to psu equities…

2. The nps money has to be invested only in India….however we are allowing investment in US indices.



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  1. If not NPS, what else do you suggest for retirement? Direct equity and MF has the drawback that it has not the lock in until 60 years of age.

    Also, if my understanding is correct NPS is EEE post budget.

  2. NPS has 50k separate exemption under 80CCD now post-budget.
    It is worth considering, given the benefit. Probably, your own employer contribute to it – much better.

    Second, instead of NPS, if one is really insistent on Pension funds, there are 3 choices within mutual funds:
    — Franklin Pension fund
    — UTI Retirement fund
    — Reliance Retirement fund.
    I like the first one most, but UTI could be better with more equity allocation @ 60%. Reliance one is a new fund.
    All these come under 80C benefit only. Although no harm in investing more (although would prefer diversified equity fund in such cases).

  3. NPS, as Pattu said in is not that bad if your employer provides it. For people who have flexible benefit plan, and apart from PF, if employer adjusts FBP in such a way that he shows 10% of basic to NPS as his contribution, it saves you tax under 80CCD. Post budget, you can add 50K and claim under 80CCD as well (instead of purchasing a new additional retirement fund).

  4. Subra, Don’t the same politicians look at similar/huge amounts in PPF and not get similar crazy ideas?

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