Why NPS is not a good investment

Part 1:

NPS offers you to save for your golden years with tax benefits on your investments. However, the amount of pension is not guaranteed and depends on the accumulated corpus and rates available at the time of vesting. 

Read more at: http://www.moneycontrol.com/news/retirement/should-you-investnps_1667841.html?utm_source=ref_article


Part 2: From Economic times.

Friends want to know whether they should invest in the NPS. With tax saving driving investment decisions, people are drawn to the additional Rs 50,000 deduction under Sec 80CCD(1b). But here is why I wouldn't be investing in the NPS.

Very long lock-in period
All tax-saving investments have lockin periods, but none as long as that of the NPS. The NPS can only be withdrawn at the age of 60. If you start at the age of 25-30, the lock-in period is 30-35 years. Even then, only 60% of the corpus can be withdrawn, and the remaining 40% will have to be put into an annuity for a monthly pension.

Taxation on maturity
The NPS is not really tax-friendly. No one talks about the taxes that will apply at maturity. Out of the 60%, this Budget has proposed to make 40% tax-free on withdrawal, but the remaining 20% will be taxed as income. You can avoid taxation by putting this amount in an annuity, but pension  .. 

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