A big update is coming out for NPS account holders. Under which the rules of NPS have changed. According to pension fund regulator PFRDA, now after reaching the age of 51 years, subscribers will be able to put 75 per cent of their investment in Tier 1 account under Active Choice in equity-linked investments.
The possibility of getting higher returns for investors in NPS has increased. According to pension fund regulator PFRDA, now after reaching the age of 51, subscribers will be able to put 75 per cent of their investment in equities linked to equity in Tier 1 account under Active Choice. Also, for this they will not be compelled to accept any condition like reducing their contribution.
PFRDA has said in a notification that it has changed the rules for investment in equity for Tier 1 and Tier 2 accounts. Information about the new rule has been given in a new circular. It is worth mentioning that under NPS, the subscribers get two options to invest in equities which are Auto Choice and Active Choice.
The PFRDA notification also said that with the change in the rules for investing in Tier 1 account, subscribers have been given the option to transfer 100% of the amount in the Tier 2 account to equity under Active Choice. It may be noted that at present, NPS subscribers have to choose any one registered pension fund. This is followed by four options under Active Choice – Equity, Corporate Bond, Government Security, and Alternate Assets.
What is the difference between Tier 1 and 2 account-
Two types of accounts are opened in NPS. In these, Tier 1 account is mandatory and pension is fixed on the basis of the amount deposited in it. There is an exemption to withdraw the amount only after retirement. Whereas Tier 2 account is like a savings account and it can be opened only if you have a Tier 1 account. You can withdraw money from it at any time.
Balance between risk and return
Financial advisors say that during the Corona period, there has been a lot of enthusiasm about investing in stocks and related products. Seeing the high returns, it has increased the attraction of young people as well as older people. He says the risk on investments should decrease with age. Whereas investing in stocks carries the highest risk. However, it also has high returns. This is the reason why PFRDA has tried to strike a balance between investment and risk for the shareholders.
Choose the option carefully-
Pension fund regulator PFRDA has advised that subscribers should assess their past performance and risk appetite before choosing an investment scheme or category in it. After that you should decide to invest in it. Financial advisors say that the performance should be based on at least five years rather than one year or so. Also one should compare with others in that category.
