Latest news with #KotakPensionFund
Mint
29-04-2025
- Business
- Mint
The NPS Wrap-Up: Myths, Mindsets & Long-Term Gains
After covering everything from Tier 1 and Tier 2 accounts to annuities, withdrawals, and tax benefits, the final episode of the 'NPS Made Simple' series brings it all together in a rapid-fire format, packed with bite-sized insights and some bigger reflections on retirement planning. This episode with Subhasis Ghosh, CEO of Kotak Pension Fund, cuts through the noise around retirement myths, SIPs vs lump-sum, early retirement, and even how to explain the NPS to a 7-year-old. The debate ends here. According to Ghosh, SIP (Systematic Investment Plan) wins hands down, especially when market timing is uncertain. Regular investing not only smooths out market volatility but also builds long-term financial discipline. "Time in the market is more important than timing the market," he emphasizes. While most seasoned investors focus on Tier 1 for its retirement benefits, Ghosh points out that Tier 2 is often overlooked. 'It's flexible, easy to withdraw, and offers the same low fund management cost,' he explains. Investors can use Tier 2 for short-term savings and even transfer it to Tier 1 later for tax benefits. Think of it as your liquidity cushion with long-term advantages. One of the biggest misconceptions about NPS, Ghosh says, is that your money is 'locked forever.' That's far from true. While Tier 1 is designed for retirement, it allows partial withdrawals for emergencies. And Tier 2 offers complete flexibility. In one of the most thoughtful moments in the series, Ghosh shares a personal take on what retirement means. 'It's not about stopping work,' he says. 'It's about doing what you couldn't do earlier.' Whether it's joining an NGO, traveling, or mentoring, staying engaged is key—not just for financial security but also for emotional and mental well-being. The final episode also dives into the FIRE movement. Can the average salaried employee in India realistically retire early? 'It's possible—but only if your lifestyle is sustainable and you start saving early,' Ghosh shares. Still, he cautions against seeing FIRE as an end in itself. "You have a talent—use it for society. How much can you swim in the sea or walk in the hills?" Ghosh wraps up with a powerful call for financial literacy, beginning at home. He introduces NPS VatSLay, a scheme that allows parents to open accounts for children from birth till age 18. 'Start early. Make them see the power of savings. That's the best gift you can give your child.' NPS, he says, isn't just a product. It's a mindset about taking charge of your future and making intentional choices. With India at the cusp of an economic transformation and the cost of living on the rise, planning today can give you the freedom to live fully tomorrow. Watch Episode 10 and start planning your retirement journey with clarity, confidence, and a long-term perspective. First Published: 29 Apr 2025, 06:04 PM IST
Mint
29-04-2025
- Business
- Mint
Approaching Retirement? Here's How to Withdraw Smartly from Your NPS
In the latest episode of our special series on the National Pension System (NPS), Subhasis Ghosh, CEO of Kotak Pension Fund, explains how individuals nearing retirement can navigate their NPS withdrawals effectively. The episode focuses on a relatable scenario—Anjali, a 58-year-old professional, who wants to understand how and when she can access her pension funds. Yes—but with some conditions. Subhasis Ghosh clarifies that at age 60, an individual can withdraw the entire NPS corpus tax-free. However, 40% of the accumulated amount must be used to purchase an annuity from a registered annuity service provider. The remaining 60% is available as a lump sum, and retirees have the flexibility to use or reinvest it as they see fit. 'There's also a lesser-known option,' Ghosh adds. 'Instead of withdrawing the 60% immediately, you can leave it invested in NPS and opt for a systematic withdrawal plan (SWP)—monthly, quarterly, or annually—till the age of 75, all while continuing to earn returns at the lowest fund management cost in the world.' An annuity, in simple terms, is a fixed monthly or regular income purchased from a life insurance company. Ghosh outlines four popular annuity options: Basic Annuity – Only the subscriber receives income; ends upon their demise. Joint Annuity – The spouse continues to receive the annuity after the subscriber's death. Return of Purchase Price – The nominee receives the full 40% annuity corpus upon the subscriber's passing. Joint + Return – Both spouse and nominee benefit from post-retirement financial continuity. Nominees can include spouses, children, or even parents (though less common due to age considerations). Yes. Ghosh confirms that partial withdrawals are allowed up to three times before the age of 60, with each withdrawal capped at 25% of the individual's contribution (not the total fund value). This feature is especially useful in emergencies, providing access to funds without fully exiting the scheme. For Tier II account holders, the process is even more flexible. One can withdraw any amount at any time, without restrictions or lock-ins, making it a handy option for managing short-term goals. In the unfortunate event of a subscriber's death before retirement, the entire accumulated amount (principal + returns) is transferred tax-free to the nominee. 'The moment a death is reported, the contract ends, and the full amount becomes payable,' says Ghosh. The episode also touches on a common investor dilemma—should one invest a lump sum or go the SIP (Systematic Investment Plan) route? Ghosh strongly recommends regular SIP-style contributions, particularly for those closer to retirement, as it allows for market averaging and cushions against volatility. However, even an annual lump sum (like ₹ 50,000 at the end of the financial year) can be effective if done consistently. Even for those in the new tax regime, Ghosh insists that the tax-free accumulation and withdrawal benefits of NPS remain extremely attractive. 'The exemption at the time of investment is just the cherry on the cake. The real value lies in exempt-exempt-exempt (EEE) status—no tax when you invest, no tax on returns, and no tax at withdrawal.' In essence, the NPS remains one of the most tax-efficient retirement products available, even without upfront deductions. As retirement nears, it's crucial to understand not just how much you've saved—but also how to use it wisely. Whether through annuity planning, SWPs, or flexible tiered withdrawals, the NPS offers a range of tools to ensure a financially stable and stress-free retirement. Stay tuned for the next episode in our 'NPS Made Simple' series as we decode more ways to maximize your retirement journey. First Published: 29 Apr 2025, 06:06 PM IST
Mint
26-04-2025
- Business
- Mint
Why Your First Paycheck Should Also Fund Your Last: Subhasis Ghosh on Starting Early with NPS
Financial experts are urging a rethink in a country where retirement planning often takes a backseat to short-term goals. In the first episode of "NPS Made Simple: Your Pension Partner for Life", Subhasis Ghosh, CEO of Kotak Pension Fund, sits down with Mint to explain why even 24-year-olds just entering the workforce should start planning for retirement—right now. Q: Raj, 24, just landed his first big job. He's excited, but isn't retirement planning a little premature at that age? Not at all. That's the best time to start. The power of compounding works in your favor when you begin early. Investing ₹ 1,000 a year can lead to a substantial retirement corpus over time. It's not about how much you save initially—it's about starting the habit. Q: But what exactly is the National Pension System (NPS)? How does it work? It's a government-regulated voluntary retirement savings scheme. You contribute regularly, and the money is invested in a mix of equity, corporate bonds, and government securities. It's market-linked, professionally managed, and low-cost—making it ideal for long-term wealth creation. Q: So, is it a government scheme or a private one? It's regulated by the Pension Fund Regulatory and Development Authority (PFRDA), but managed by private players like us. You get to choose your Pension Fund Manager and even switch once a year. It's your money, your call. Q: How does NPS compare with other investment options like mutual funds or fixed deposits? The objective is different. NPS is designed specifically for retirement, with features like annuity options and partial withdrawal restrictions to encourage long-term saving. It's also more cost-effective than most mutual funds and offers better returns than fixed deposits, historically. Q: Speaking of returns, can NPS beat inflation? Yes. Despite market fluctuations, NPS has delivered around 10.5% CAGR over the past 10 years. That's well above the average inflation rate. Of course, you need to stay invested long term to fully benefit. Q: And what if someone wants flexibility in contributions? That's the beauty of NPS—you can invest as little as ₹ 1,000 per year. Contribute more when you can, less when things are tight. But just don't skip entirely. The discipline matters. Takeaway: Starting early—even with small amounts—can create a powerful retirement cushion. As Ghosh puts it, 'Retirement planning isn't age-bound. It's intention-bound.' Watch Episode 1 now to learn why your 20s are the perfect time to start securing your future. [Link to Episode] Note to the Reader: This article is part of Mint's paid consumer connect initiative and is independently created by the brand. Mint assumes no editorial responsibility for the content, including its accuracy, completeness, or any errors or omissions. Readers are advised to verify all information independently. First Published: 26 Apr 2025, 11:32 PM IST
