{"id":7441,"date":"2016-12-22T08:23:52","date_gmt":"2016-12-22T02:53:52","guid":{"rendered":"http:\/\/www.apnaplan.com\/?p=7441"},"modified":"2018-08-16T23:53:21","modified_gmt":"2018-08-16T18:23:21","slug":"nps-rule-changes-2016","status":"publish","type":"post","link":"https:\/\/www.apnaplan.com\/nps-rule-changes-2016\/","title":{"rendered":"6 Changes in NPS Rules in 2016 & How it Impacts You?"},"content":{"rendered":"
\"NPS
NPS – Rule Changes in 2016<\/strong><\/figcaption><\/figure>\n

In last two years government has been trying to make NPS the preferred choice for Pension product for Indians. It started with the tax exemption of up to Rs 50,000 for investment in NPS u\/s 80CCD(1B)<\/a> in Budget 2015. This year has been pretty dynamic for NPS as PFRDA (Pension Fund Regulator and Development Authority) which administers NPS has made the following 6\u00a0changes:<\/p>\n

    \n
  1. Added two more options under Auto Choice<\/li>\n
  2. New asset class for Alternative Investments for private sector subscribers<\/li>\n
  3. Option to defer the purchase of annuity by 3 years<\/li>\n
  4. 40% of corpus tax free on maturity<\/li>\n
  5. Minimum investment lowered to Rs 1,000<\/li>\n
  6. One time option to shift from EPF & Superannuation fund<\/li>\n<\/ol>\n

    We cover these changes in detail below:<\/p>\n

    1. Two more options under Auto Choice<\/h2>\n

    Until now you had following two broad choices while opening NPS account: Auto Choice & allocation to asset classes on your own.<\/p>\n

    On November 4, NPS introduced 2 more options in auto choice<\/a> for non-government subscribers only, making 3 auto choices options:<\/p>\n

      \n
    1. Aggressive Life Cycle Fund (LC 75)\u00a0\u2013 New<\/li>\n
    2. Conservative Life Cycle Fund (LC 25) \u2013 New<\/li>\n
    3. Moderate Life Cycle Fund (LC 50) \u2013 Existing \u2013 also default option<\/li>\n<\/ol>\n

      Also Read:<\/strong>\u00a0NPS Tax Benefit u\/s 80CCD(1), 80CCD(2) and 80CCD(1B)<\/a><\/p><\/blockquote>\n

      I. Aggressive Life Cycle Fund (LC 75)<\/h3>\n

      In case of Aggressive Life Cycle Fund, the equity exposure (E) is 75% till the age of 35 years and reduces by 4% every year till the equity exposure is reduced to 15% at 55 years of age.<\/strong> Henceforth the equity exposure remains at 15% till the maturity.<\/p>\n

      This plan is suited for young investors who can harness the returns of equity and have enough investment time to manage the risk.<\/p>\n

      II. Conservative Life Cycle Fund (LC 25)<\/h3>\n

      In this case the equity exposure is 25% till the age of 35 years and reduces by 1% every year till the equity exposure is reduced to 5% at 55 years of age.<\/strong> Henceforth the equity exposure remains at 5% till the maturity.<\/p>\n

      This plan is suited for subscribers who want low risk portfolio.<\/p>\n

      III. Moderate Life Cycle Fund (LC 50)<\/h3>\n

      In this case the equity exposure is 50% till the age of 35 years and reduces by 2% every year till the equity exposure is reduced to 10% at 55 years of age.<\/strong> Henceforth the equity exposure remains at 10% till the maturity.<\/p>\n

      This was the existing auto choice is also the default choice for investors.<\/em><\/p>\n

      \"NPS
      NPS Life cycle Funds – Equity Exposure<\/strong><\/figcaption><\/figure>\n

      Impact:<\/strong> I personally recommend to choose your own asset distribution, so this additional option is not much relevant. However its a good move for people who choose auto investment option.<\/p>\n

      \n

      Also Read:<\/strong>\u00a0Best Tax Saving Investments u\/s 80C<\/a><\/p>\n<\/blockquote>\n

      2. New Alternative Investments asset class<\/h2>\n

      Until now NPS allowed its subscribers to choose from following 3 asset classes:<\/p>\n

        \n
      1. Equity (E) \u2013 with maximum cap of 50%<\/li>\n
      2. Corporate Bonds (C)<\/li>\n
      3. Government Bonds (G)<\/li>\n<\/ol>\n

        In November PFRDA has introduced a new class called Alternative Investments (A) <\/a>for private sector subscribers only. The maximum limit for the asset class is 5%. The Alternative Investments would invest in the following:<\/p>\n