look news india
An epoch-making beginning has been made towards ensuring financial security in old age for crores of working youth, self-employed people and middle class families of the country. Till now, opening an account in the Retirement Fund i.e. National Pension System (NPS) was considered to be full of lengthy paper formalities, visiting Point of Presence (PoP) and complex e-KYC processes. To eliminate this hassle from its roots, Pension Fund Regulatory and Development Authority (PFRDA) and NPCI BHIM Services Limited have jointly taken a revolutionary initiative. The ‘Tatkal NPS’ feature has now been officially launched on India’s indigenous and secure digital payments platform ‘BHIM’ Payments App. Under this modern system, any eligible citizen of the country can open an active pension account in just two minutes from his smartphone, without visiting any bank branch, without uploading any documents and without the intervention of any agent. The basic objective of this historic step is to provide the benefits of social security and financial inclusion to the last person sitting in the country, so that every Indian can lay the foundation of his golden tomorrow with utmost ease and self-respect.
Bringing the vision of Digital India to the ground, this entire process has been made so easy and transparent that any common user can complete it in a jiffy. To open an account under Tatkal NPS you have to go through only three very basic steps:
First step: Open the updated BHIM Payments app from Google Play Store or Apple App Store on your smartphone and tap on the ‘NPS’ or ‘Financial Services’ icon on the home screen.
Second step: Enter your Date of Birth and select the bank account linked to your UPI displayed on the screen. During this, the app will securely fetch the certified CBS-KYC data already available with your bank, eliminating the need to upload Aadhaar or PAN card separately.
Third step: Confirm your nominee details and pension fund preferences and transfer the first initial contribution of minimum ₹250 by entering your UPI PIN. Once the payment is successful, the process of generating your Permanent Retirement Account Number i.e. PRAN will start immediately and a digital confirmation message will appear on your screen.
Often there is a misconception in the minds of common citizens, especially the low income group and the young generation, that retirement planning is only for those who can make a huge investment of five to ten thousand rupees every month. The government has completely demolished this psychological barrier. The minimum contribution limit for initial account opening under ‘Tatkal NPS’ has been reduced to only ₹ 250. This means that any youth of the country can start a formal pension account in his name at a cost less than the cost of a normal tea-snack. What’s even more reassuring is that there is no binding minimum limit for future regular contributions once the account is opened; Investors can make top-up investments as per their convenience, even with a nominal amount like ₹ 10, whenever they wish. This unprecedented flexibility is a boon for daily wage earners, delivery boys, Ola-Uber drivers, freelancers and professionals fresh out of college to deposit their small everyday savings into a pension fund without feeling the pressure of a fixed installment every month.
In this pilot and first commercial phase of Tatkal NPS on BHIM App, this special facility has been provided to the account holders of six largest and leading commercial banks of the country. This prestigious list includes the country’s largest public sector bank State Bank of India (SBI), Bank of Baroda as well as top private sector lenders HDFC Bank, ICICI Bank, Axis Bank and IndusInd Bank. If your main savings account is with any of these six banks and it is linked to UPI on your BHIM app, you can avail this facility immediately. Officials are clear that this is only the beginning; Within the next few weeks, all the regional rural banks and cooperative banks of the country including Punjab National Bank (PNB), Canara Bank, Union Bank of India will also be connected to this network, so that no citizen of the country remains untouched by this welfare scheme due to technical or geographical reasons.
Opening a pension account is not just savings, but becoming a part of the best wealth creation tool in the country. The capital pooled in the National Pension System is invested by experienced pension fund managers (PFMs) in a balanced portfolio of equity (stock market), corporate debt and government securities. The historical track record of the last 15 years witnesses that NPS has given excellent compound annual returns (CAGR) of 9 to 12 percent compared to traditional PPF or bank FDs. If a 22 year old youth saves just ₹ 1,000 to ₹ 2,000 every month in this Tier-1 account, then by the time he reaches the age of 60, due to the effect of compounding, his total corpus can cross ₹ 1.5 crore to ₹ 2 crore, due to which he can get a monthly lifetime pension of more than ₹ 70,000. Additionally, there is no bigger safeguard for taxpayers than NPS. In addition to the general limit of ₹1.5 lakh under Section 80C of the Income Tax Act, NPS Tier-1 offers a special additional tax exemption of ₹50,000 under Section 80CCD (1B). This means that a secure old age can be prepared by saving tax on total investments up to ₹ 2 lakh.
From the small retail traders of Chowk, Hazratganj, Aminabad in the capital of Uttar Pradesh, Lucknow, to Kanpur, Prayagraj, Varanasi, Jaipur, Patna and all the Tier-2, Tier-3 cities and rural areas of the country, there is a huge workforce in the unorganized sector. These are those hardworking people who do not come under the EPFO ambit of any government job or big multinational company, due to which they did not have any solid support of regular income after the age of 60. The launch of ‘Tatkal NPS’ on BHIM App directly connects crores of workers of this informal and gig economy with the economic mainstream. By freeing bank employees from the fear of asking for documents and long lines at branches, this digital interface is making pension a right of every person. Fintech experts believe that just as UPI made cash transactions history in the country, similarly this 3-step model of BHIM app will give new life to India’s pension sector. For today’s youth who are struggling with the uncertainties of the future, this investment of just ₹ 250 on a screen of their smartphone is going to prove to be the strongest guarantee of a dignified, self-reliant and secure life in the future.