Key Points
HDFC Securities' Abhishek Mehrotra highlights that anyone between the ages of 18 and 60 can invest in the National Pension System (NPS) and take up to 60% of withdrawals upfront, with the remaining amounting to an annuity..
Mehrotra notes that a tier-2 NPS account is not compulsory, but those using the tier-1 account are required to invest for the duration of the scheme.ETMarkets.com..
There are currently 8 different pension funds which can provide you annuity and that freedom is open to the investor during the course of the investment and also at the end of the investment to decide whom they want to have an annuity with...
Government employees also have an advantage where their employer can contribute additionally up to 14% whereas in a private sector it is up to maximum 10% where if the employer wants to participate they can, but generally it is the employee who contributes up to maximum 10% of his basic salary..
The primary objective of a Tier-2 account is an investment whereas Tier-1 account is a long-term investment with tax savings. It is not voluntary; you have to do it by default if you are in Tier-1; you have to participate throughout the tenure and the timelines around it...
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