Retirement Solutions

Retirement Planning, though prevalent in the western world since long, is a relatively new phenomenon in the Indian society. The joint family system where a son took care of his parents, obliterated the need for retirement planning. A competent son used to be the best investment Indian couples made for retirement.

However, this has changed with the advent of urbanization, employment-led migration, nuclear families and rising aspiration levels of young Indian couples. Retirement planning has become a necessity in Indian society today.

The returns in the mid-cap mutual fund schemes have been badly hit in the recent stock market meltdown. However, the impact has not been the same across all the funds in the category. The 1-year return on some funds is close to 12 percent while many others are still down by almost 17 percent.

This means, the choice of the right mid-cap scheme is important rather than investing only in the current performer. Interestingly, the average 10- year return is about 12 percent for the category which shows that one needs to invest in these schemes for the long term.

In certain terms, the government now enables for premature withdrawal from the NPS or National Pension System.

Minister of State for Finance Shiv Pratap Shukla said in reply to a statement in Rajya Sabha on Tuesday that NPS subscribers are liable for three partial withdrawals from the pension system, with each withdrawal not exceeding 25 percent of the contributions.

The partial withdrawals from the NPS system will exclude the employer's contributions, the Minister added.

National Pension System (NPS) is a pension plan managed by the Pension Fund Regulatory and Development Authority (PFRDA) and is gaining popularity among investors primarily because of some tax modifications made in the scheme and the returns generated by the pension fund managers. 

Retirement planning is a sensible and essential step that every working professional must take upon to retire wealthy. It's true that by the age of 60, you will most likely accomplish all your financial goals and thus will have fewer liabilities but that doesn't mean your need for financial security will minimise once you grow old. Post-retirement, most likely, you won't have a regular source of income, your medical needs will increase, inflation will make things much costlier, you will feel an increased need of domestic help, convenience help, etc.

National Pension System, also known as NPS, is a voluntary defined contribution pension system cum tax planning tool introduced by Pension Fund Regulatory and Development Authority (PFRDA), created by an Act of the Parliament of India. The primary objective is enabling systematic savings during the working life of the subscribers.

The aim is to provide retirees with an option to achieve financial stability during their golden years.