Recently, the facility of Systematic Withdrawal Facility has been started by PFRDA. With this facility, investors can withdraw money on monthly, three months, six months or annual basis.
The amount that investors can withdraw through the Systematic Withdrawal Facility is the same amount which till now could be withdrawn in lump sum as 60 per cent. If you are also planning for Systematic Withdrawal Facility (SWF), then it is important for you to know about it.
This money is tax free
Here it is important for you to know that when you select the Systematic Withdrawal Plan, you cannot invest further in NPS. Returns will keep coming on the money deposited in your account but you will not be able to invest much. If you understand in simple language, it means that you will not be able to claim any kind of tax deduction on investment in NPS. Till now, 60 percent of the money received at the time of retirement is tax free. But it is not clear whether this system (tax free money) will be applicable on Systematic Withdrawal Facility (SWF) or not.
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Do this work to get the benefit of compounding
Investors who select the systematic withdrawal option can opt for immediate annuity or can fix it till the age of 75 years. In case of fixing, your money will be frozen for the period decided by you. Later you will be able to remove it systematically. According to experts, any investor should fix his annuity till the age of 75 years. With this you will get the benefit of compounding and its effect will be visible in pension also.
The new change will allow retired people to invest in NPS for a longer period. Government employees have been expressing their displeasure regarding NPS for years. They believe that they will not get adequate pension from this pension scheme. For the pension received from NPS, both the employee and the government have to deposit money.
In this scheme, employees get pension after the age of 60 years. Let us tell you that in the old pension scheme, after 25 years of service, pension was 50% of the last salary at the time of retirement. At the same time, in NPS, the employee gets a pension of 60% of his average salary for 30 years of his service.
The amount of pension received in NPS depends on the market situation. Due to the resentment of government employees, many state governments have recently announced the restoration of the old pension scheme. The states which have implemented the old pension include Chhattisgarh, Rajasthan, Punjab, Himachal Pradesh and Jharkhand.
The central government is trying to remove the dissatisfaction of the employees regarding NPS. A committee has been formed by the government for this. It is believed that under NPS, the government can guarantee 40 to 45 percent of the final salary as pension.
