Jayant R. Pai CFP and Head – Products, PPFAS Mutual Fund replies: According to EPFO regulations, ex-employees can’t give a contribution to their EPF account, since any contribution through the member should be matched with the employer’s proportion of contribution. Hence you don’t seem to be accredited to give a contribution. You would possibly imagine choices just like the Public Provident Fund (PPF) or NPS as an alternative.
I’ve been making an investment in ICICI Prudential’s lifetime pension scheme since 2003 and in every other pension scheme from the similar workforce since 2006. What different pension merchandise can I imagine?
Adhil Shetty CEO, BankBazaar replies: You can imagine the NPS for added funding. It has more than a few fairness and debt choices that you’ll choose between relying for your chance urge for food. On retirement, you’ll withdraw all of the quantity if the pension accrued is lower than Rs 2 lakh. Else, you’ll withdraw as much as 60% of the corpus and invest the rest 40% in some of the 8 annuity merchandise lately to be had. NPS has a twotier construction, a pension account that provides tax get advantages and is necessary, and an non-compulsory account with withdrawal flexibility.
The Tier-1 account is the required number one account and purposes because the pension account. Tier-2 account is related to the Tier-1 account and is supposed for use as an funding account. You can go for making an investment solely in a Tier-1 account or a mixture of Tier-1 and Tier-2 accounts relying for your funding objectives. There is not any cap on how a lot you’ll spend money on a Tier-1 account. However, while you open the account, you wish to have to speculate no less than Rs 1,000 in a monetary 12 months. Investments as much as Rs 1.five lakh within the tier-1 account are exempted from tax below Section 80CCD(1) and extra investments of as much as Rs 50,000 are exempted from tax below Section 80CCD(1B). However, as it is a retirement account, withdrawals from this account are limited. The Tier-2 purposes like a regular mutual fund scheme and could be very low cost with an expense ratio of 0.01%. There aren’t any caps on most investments or restrictions on withdrawal, alternatively, neither the cash invested nor the positive aspects are exempted from tax.
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