Latest news with #KotakMahindraPensionFund
Mint
29-04-2025
- Business
- Mint
Choosing the Right NPS Fund Manager: Insights from Subhasis Ghosh
When it comes to retirement planning, flexibility and control are often underrated. With the National Pension System (NPS), not only can you choose how much and how often you invest, but you also have the power to select who manages your money. In Episode 7 of 'NPS Made Simple: Your Pension Partner for Life', Subhasis Ghosh, CEO of Kotak Mahindra Pension Fund, helps demystify a key decision-making point: How to choose the right Pension Fund Manager (PFM)? Through the case of Vinay, 42, who is reviewing his portfolio and wondering whether to switch PFMs, the episode explores how fund managers in NPS work, what investors should look for, and why this choice matters for long-term wealth creation. Who are the authorized Pension Fund Managers (PFMs) under NPS? All PFMs operating under NPS are approved by PFRDA (Pension Fund Regulatory and Development Authority). The criteria for selection are stringent, covering financial strength, experience, and regulatory compliance. Currently, only 10 PFMs are authorized to manage NPS funds in India. They've all passed a tough filter, and many have over five years of consistent performance to showcase . You can view their track records and fund-specific data on the NPS Trust website, which regularly updates performance by asset class. Yes. Every PFM is authorized to manage all four asset classes under NPS: E – Equity C – Corporate Bonds G – Government Securities A – Alternate Assets This means that you can have one PFM managing all your investments, or you can split them up based on performance. For instance, a subscriber can choose one PFM to manage equity exposure and another to manage government securities. You can allocate different PFMs for Tier I and Tier II accounts as well, giving you access to up to six different PFMs if you want to tailor it that way,' Ghosh explains. Absolutely. NPS allows you to switch your PFM once every financial year. This gives subscribers the freedom to pivot based on performance or preference—something most traditional pension plans do not offer. This switch is free of cost, and there is no tax implication for reallocating assets between PFMs or across asset classes, unlike mutual funds or FDs, where such moves may incur exit loads or capital gains tax. This is where it gets interesting. Should you choose a fund house based on its brand? Its track record in mutual funds? Or stick to the performance data? All 10 PFMs are reputable and monitored. What separates them is their performance history—how they've managed returns across equity and debt, consistently, over the years. Long-term returns across PFMs are publicly available. Look at the 7-year or 10-year CAGR (Compound Annual Growth Rate) across asset classes, and how stable the fund has been in both bull and bear markets. This flexibility is valuable not just for seasoned investors but for anyone serious about retirement. In fact, with volatility in equity and debt markets, being able to course-correct annually by switching PFMs or tweaking asset allocation is a strategic advantage. Don't get swayed by one-year highs. Look for fund managers with long-term discipline and patience. After all, NPS is a retirement vehicle—it's not about short-term wins.' One word: Patience. Ghosh emphasizes that the goal of an NPS fund manager should be to generate sustainable returns over decades, not to chase immediate spikes. This isn't about reacting to every market movement. It's about building stability for your 60s, 70s, and beyond.' To ensure safety, NPS equity investments are limited to the top 200 companies by market capitalization, keeping the risk profile lower than mid- or small-cap-heavy funds. NPS isn't just about where your money goes—it's also about who helps it grow. With the freedom to choose (and change) your Pension Fund Manager, subscribers can stay agile without sacrificing stability. Make use of the data, review your portfolio every year, and don't hesitate to shift if needed,' Ghosh advises. 'The system is designed to empower you.' First Published: 29 Apr 2025, 06:03 PM IST
Mint
29-04-2025
- Business
- Mint
Building Financial Security Across Generations with NPS
In Episode 9 of NPS Made Simple: Your Pension Partner for Life, we explore how NPS can serve as a multi-generational wealth solution. From retirees to mid-career professionals and young earners, each family member can benefit from a stable, disciplined, and tax-efficient savings strategy. Subhasis Ghosh, CEO of Kotak Mahindra Pension Fund, breaks down how NPS supports intergenerational financial well-being and long-term independence. In this episode, we're looking at a full family: a retiree, a mid-career contributor, and a young earner. How does NPS help each of them build financial stability? It's fantastic to see a family approach retirement planning together. For the retired member, NPS offers the comfort of a guaranteed annuity — a steady income stream for life or even for the spouse's lifetime, depending on the option chosen. That removes reinvestment risk and provides great mental security. The mid-career contributor benefits from the flexibility of tier 2 accounts for contingency planning, while continuing to grow tier 1 retirement savings. And for the young investor, compounding is the superpower. Even small, regular contributions from an early age can grow into a significant corpus by retirement. That sounds like a great long-term strategy. So, how can families begin building this shared mindset around retirement? Start by talking about it early. Parents who model smart saving behavior and talk openly about money build stronger financial literacy in their children. I always say — save one-third of your income if you want a comfortable retirement. That mindset needs to be taught, just like history or math. What's your take on financial literacy in India today — is it improving? We're getting there, but the gap is still wide. More people have Demat accounts than NPS accounts, and gaming apps have far more users than either. It reflects our tendency toward instant gratification. Retirement feels far away — until it isn't. That's why financial literacy, especially around long-term planning like NPS, is critical. Is NPS alone enough, or should people have other investments too? One product is never enough. NPS should be part of a broader portfolio — PF, mutual funds, gold, etc. But what makes NPS special is the long-term discipline, the low fund management costs, the tax advantages, and the fact that you don't see the money, so you don't spend it. It's engineered to create consistency. And for those nearing retirement who may not have saved enough, is there still time? It's never too late to start, but yes, it gets tougher. The key is to adjust your lifestyle now so that you're not forced to do it later. Financial independence — especially in old age — isn't just about money. It's about self-respect. Any final thoughts for families trying to build this together? Talk to each other. Watch content like this together. If each member of the family takes ownership of their future, financial stability becomes a shared value, not just an individual goal. Watch Episode 9 to discover how families across generations can use NPS to build security, independence, and smarter savings habits — together.
Mint
28-04-2025
- Business
- Mint
One ID, One Investment: Subhasis Ghosh on How to Start Your NPS Journey
If you've been thinking about opening an NPS (National Pension System) account but feel unsure about where to begin, Episode 3 of 'NPS Made Simple' breaks it down step by step. In conversation with Mint, Subhasis Ghosh, CEO of Kotak Mahindra Pension Fund, explains just how easy it is to get started—and why the system is built for lifelong flexibility. Q: So, let's say a group of young professionals or college friends, just starting their first jobs, want to open an NPS account. Where do they begin? First off, kudos to them! If they're thinking about NPS this early, they're financially ahead of the curve. To open an account, all they have to do is go through a Point of Presence (POP)—which is just a fancy term for a registered distributor. Almost every major bank is a POP. So, if you use your banking app, you'll likely find an 'Open NPS' option right there. Q: Is the process fully digital? Yes, absolutely. If your KYC is already completed with the bank, it's a two- or three-step process. Upload a few documents—Aadhaar, PAN—select your fund manager, choose between active or auto investment mode, and make your first contribution (as little as ₹ 1,000). Once done, you'll get your PRAN—Permanent Retirement Account Number—and you're officially in. Q: What is PRAN exactly? Think of it like your Aadhaar or UAN for retirement. It's your unique lifelong identity within the NPS system. Whether you switch jobs, take a sabbatical, or freelance, your PRAN remains the same. The beauty of NPS lies in this portability. Your entire pension journey is tied to this one number. Q: And POP—you said it's a kind of distributor? Yes. POPs are entities authorized to onboard NPS subscribers. Your bank is likely already a POP, and you can also find many of them online. Just Google 'NPS POPs' and you'll see a list. Most banks and even some fintechs offer this. Q: What if someone prefers an offline route? That's possible too. You can visit your bank branch or an authorized POP location. But honestly, everything—from registration to monitoring—is smoother online now. Q: Is there an official NPS app to manage investments? Yes. The NPS Trust app (operated by CRA—Central Recordkeeping Agency) allows you to track your balance, review fund performance, switch fund managers, adjust equity-debt ratio, and more. Many banking apps also offer similar features. Q: You mentioned earlier that NPS is a 'one-way street.' What does that mean? It means that once you exit the system, you can't re-enter. This isn't like mutual funds where you can jump in and out. NPS is designed to encourage long-term retirement discipline. So yes, you can exit early, but you'll have to forfeit re-entry. Q: Can people withdraw money before 60? Yes—under two conditions: Partial withdrawals of up to 25% of your contributions (not including returns) are allowed three times for specific needs like illness or education. A full exit before 60 is possible, but only 20% is paid out, and the remaining 80% must be used to buy an annuity. However, if your total corpus is below ₹ 2.5 lakh, you can withdraw the full amount without annuity obligations. Takeaway: You can open your NPS account in minutes, but the real commitment is to your future self. As Ghosh puts it, 'It's like Hotel California—you can check out, but you can't come back in. So get in when you're ready to commit to lifelong financial dignity.' Watch Episode 3 to learn how to open, operate, and manage your NPS account with ease. First Published: 28 Apr 2025, 06:08 PM IST
Mint
28-04-2025
- Business
- Mint
How Much Should You Invest in NPS?
For many first-time investors, the question isn't whether to invest—it's how much. In Episode 5 of 'NPS Made Simple', Subhasis Ghosh, CEO of Kotak Mahindra Pension Fund, sits down with Mint to break down the NPS contribution strategy: from the minimum required to the ideal asset allocation based on your risk appetite and life stage. Using the scenario of 30-year-old Meena, who wants to start saving for retirement but doesn't know how much to contribute or what returns to expect, the episode demystifies some of the most commonly asked questions around NPS investing. Q: What is the minimum and maximum one can contribute to NPS? The minimum annual contribution is just ₹ 1,000. That's it. There's no upper limit—you can invest as much as you like. Of course, tax benefits are capped, but you can continue contributing beyond those limits if you want to grow your retirement corpus. Q: What are the asset classes under NPS, and where does the money go? NPS invests across four asset classes—Equity (E), Corporate Bonds (C), Government Securities (G), and Alternative Assets (A). E: Equity—Top 200 listed companies C: Corporate Bonds—High-safety debt instruments A: Alternative assets—REITs, InvITs, etc. Each subscriber can customize allocation across these classes, depending on their risk profile. Q: Can one choose different fund managers for different asset classes? Yes, and that's one of NPS's greatest advantages. You can select separate fund managers for each asset class under both Tier 1 (retirement-focused) and Tier 2 (flexible, liquid) accounts. In fact, you can potentially work with up to six different fund managers at once. Q: Can I change my fund manager or allocation? Absolutely. You can switch your fund manager once a year and change your asset allocation four times a year, free of cost. These changes are not taxable—a big benefit compared to other financial instruments. Q: How do NPS fund managers perform in the long run? Ghosh points out that over a 7–10 year horizon, the difference in returns between the top and bottom performing NPS fund managers is often just 1%. 'If the lowest is 9.7%, the highest may be 10.7%. So wherever you've invested, if it's within NPS, you've already made a smart choice.' Active Choice lets you pick your asset mix (up to 75% in equity). Auto Choice uses predefined lifecycle-based models: LC75: High equity exposure at a young age, gradually decreasing. LC50 / LC25: More conservative allocations. Balanced Fund: Newer option that maintains 50% equity exposure until age 45, tapering down gently. You can switch between Active and Auto modes four times a year, allowing flexibility as your financial literacy and goals evolve. Q: How often should one contribute to NPS? Monthly SIP or yearly lump sum? There's no restriction. You can contribute as often as you like—even daily. But most people opt for a monthly SIP, which is simple and aligns well with salary cycles. Q: What advice would you give Meena—or any young investor—on choosing a strategy? 'If I were Meena,' Ghosh says, 'I'd opt for Active Choice, put 75% in equity, and let the fund manager handle the rest.' His logic? Equity consistently beats inflation over time. 'You can always move to a conservative strategy later. But your 30s are the time to take calculated risks.' Takeaway: Whether you want full control or set-it-and-forget-it simplicity, NPS has a structure that fits. As Ghosh puts it: 'Don't overthink the perfect time or perfect fund—just start. With the lowest fund management charges and flexibility, NPS is built to support you over decades.' Watch Episode 5 to learn how to align your contribution strategy with your life goals—and build retirement wealth with confidence. First Published: 28 Apr 2025, 06:23 PM IST
Mint
28-04-2025
- Business
- Mint
One System, Two Goals
In Episode 4 of 'NPS Made Simple', Subhasis Ghosh, CEO of Kotak Mahindra Pension Fund, dives into a topic that often confuses first-time investors—the difference between Tier 1 and Tier 2 accounts within the National Pension System (NPS). Can one system handle both long-term retirement goals and short-term liquidity needs? It turns out it can. In a candid conversation, Ghosh explains how NPS offers a dual-layered solution for Indian investors. Q: Arjun, 38, is trying to plan for both retirement and emergencies. What's the basic difference between Tier 1 and Tier 2 accounts? Think of Tier 1 as your core retirement account, just like a provident fund. It's designed for long-term savings, with limited withdrawals allowed only under specific conditions. Tier 2, on the other hand, is completely flexible. You can invest today and withdraw tomorrow—it's more like a savings or mutual fund-style account. Together, they offer both structure and liquidity. Q: So can Tier 2 replace mutual funds for short-term investments? To an extent, yes. Tier 2 offers similar liquidity with low fund management charges—the world-lowest charges as Tier 1. Fund managers apply the same discipline to both tiers, so performance is often comparable. However, Tier 2 doesn't offer any tax benefits. Q: Who typically uses Tier 2, and how? Some investors open a Tier 1 account with a minimum of ₹ 1,000 just to get started and then park most of their money in Tier 2 for flexibility. Later, when they're ready to commit to retirement savings, they shift funds from Tier 2 to Tier 1 and claim tax benefits at that point. It's a smart hack for balancing liquidity with long-term benefits. Q: What about withdrawal rules? Tier 1 is strict—you can only make three partial withdrawals (up to 25% of your contributions) before age 60 and only under specific circumstances, like health emergencies or education. Tier 2, however, is open-ended—you can withdraw anytime, any amount, without restrictions. ₹ 1.5 lakh under Section 80CCD(1) (within 80C limit). An additional ₹ 50,000 under Section 80CCD(1B)—exclusive to contribution up to 10% of basic (14% for government employees) under Section 80CCD(2) Tier 2 does not offer any tax deductions or exemptions, and withdrawals are taxable as per your income slab. Q: What about tax advantages in the new regime? In the new tax regime, individual deductions are not available, but employer contributions (under Section 80CCD(2)) are still eligible, making NPS one of the only investment products with a tax-saving component under the new regime. Q: So how should one decide how much to invest in each? Start by maximizing the employer contribution benefit—that's 10% (or 14%) of your basic salary. Beyond that, your Tier 1 contribution should depend on your retirement planning needs, and Tier 2 can be used for short-term flexibility. But remember: tax benefits and pension structure apply only to Tier 1. Takeaway: NPS doesn't just prepare you for retirement—it also gives you a disciplined system for managing emergency savings. As Ghosh sums it up: 'With one PRAN, you manage both your future and your present. That's the beauty of NPS.' Watch Episode 4 to learn how Tier 1 and Tier 2 accounts can help you balance long-term goals with immediate financial flexibility. First Published: 28 Apr 2025, 06:22 PM IST
