Government securities funds and national pension system’s (NPS) schemes are well liked by people as they offer substantial results. These pension funds have often outpaced the mutual fund gilt counterparts.
According to data by mutual fund tracking firm Value Research, pension funds have indeed done way better than the mutual fund gilt schemes.
When compared with the performance in schemes E (equity) and C (corporate debt), LIC Pension Fund has also been a top performer and has delivered the highest return measuring 11.99 percent and 11.48 percent respectively in the three-year and five-year return categories till November-end this year.
As per the data, gilt mutual funds and the benchmark turned out 10.33 percent as and 10.39 percent respectively during the aforementioned period. These NPS schemes retuned between 10.46 percent and 11.99 percent results.
During this period, HDFC Pension Fund was a top performer as well as it reported 11.23 percent and 10.6 percent returns respectively during the corresponding periods.
The popularity of NPS as a retirement option has been growing over the years through the various schemes which are market-linked returns. Would you like to know more about NPS and its benefits read on.
How does this work?
If you are less than 50 years, you will be able to allocate around 75 percent of your investment towards. For people who are over 60 years, the limit is 50 percent.
One can also give all the decision-making ability to the scheme, by going for auto choice also known as lifecycle fund. When one opts for auto choice, the corpus’ exposure to equity and corporate debt will decrease and s the government securities’ share will increase.
The investments which will be made in NPS will be eligible for deductions of up to Rs 1.5 lakh as it falls under section 80C and Rs 50,000 under 80CCD (1B). The employers’ contribution of up to 10 percent (14 percent for government employees) of the basic salary, which includes dearness allowance, will be eligible for tax exemption.