National Pension System (NPS) Accounts Quiz

National Pension System (NPS)

• A unique Permanent Retirement Account Number (PRAN) is generated and maintained by the Central Recordkeeping Agency (CRA) for individual subscribers.
• NPS offers two types of accounts: Tier-I and Tier-II.
• Tier-I account is a pension account with restricted withdrawals.
• Tier-II account is a voluntary account that offers liquidity of investments and withdrawals, but requires an active Tier-I account.
• At least 40% of the corpus must be used to procure a pension for life by purchasing an annuity from a life insurance company on exit/retirement/superannuation.

Public Provident Fund (PPF)

• A 15-year scheme that can be extended indefinitely in blocks of 5 years.
• Can be opened in a designated post office or bank branch, or online with a few banks.
• Can be transferred from a post office to a bank or vice versa.
• A person of any age can open a PPF account, including those with an EPF account.
• A maximum of 12 deposits can be made in a year, but must be before the 5th of the month to get interest for the full month.

Debt Mutual Funds

• A mutual fund scheme that invests in fixed income instruments, such as corporate and government bonds, and money market instruments.
• Also referred to as Income Funds or Bond Funds.
• Ideal for investors who want regular income and are risk-averse.
• Less volatile and less risky than equity funds.
• Helps achieve financial goals in a more tax-efficient manner and earns better returns.

Senior Citizens' Savings Scheme (SCSS)

• A scheme for senior citizens that allows a deduction of up to Rs 1.5 lakh under section 80C of the Income-tax Act, 1961.
• The investment minimum is Rs 1,000 and the maximum is Rs 30 lakh.
• Interest is payable on a quarterly basis and applicable from the date of deposit to 31st March/30th June/30th September/31st December.
• Excess amounts in a SCSS account will be reimbursed to the depositor, and only the PO Savings Account Interest Rate will be in effect until reimbursement.

Real Estate

• The house you live in is for self-consumption and should not be considered an investment.
• A second property can be an investment if you do not intend to live in it.
• The location of the property determines its value and rental income.