The New Pension System (NPS), as the New Pension Scheme is now known, can henceforth be subscribed to through the systematic investment plan (SIP) route.
ICICdirect.com on Monday launched the facility on its broking site.
Under the facility, a customer can subscribe to NPS, select a fund manager of his choice, view and access registration details and also place contributions online.
One can start an SIP for as low as Rs500 a month and also track the net asset values online. ICICIdirect will charge Rs40 for opening an account and Rs20 for every subsequent transaction.
The launch of SIP facility on the NPS is expected to boost its subscriber base.
“The total corpus of NPS is Rs7,000 crore, whereas collections from the unorganised sector under the scheme is only Rs40 crore. The Bajpai Committee report is expected by January 2011, which will help in studying as to why the contributions from the unorganised sector are low,” Yogesh Agarwal, chairman, Pension Fund Regulatory and Development Authority said.
NPS is managed by seven pension fund managers, namely, SBI Life, ICICI Prudential, Reliance Life Insurance, IDFC Pension Fund, Kotak Life Insurance, UTI and LIC, which is for the government.
Currently, only Tier I NPS accounts are available on ICICIdirect, wherein account holders cannot withdraw money up to the age of 60. Tier II, to be launched in a few months, will offer the facility to withdraw the money as many times as a customer wishes to. But unless you have invested in Tier I, you cannot opt for Tier II account.
Some experts though continue to have reservations about the NPS.
“A balanced fund looks more attractive. In the NPS, information is not easily available. Also, if it is 50% equity and 50% debt and the returns are taxable, I won’t recommend the scheme. If a person is ready to wait for the long term, he can earn better returns in mutual funds. Return on the NPS is around 11%, whereas a balanced fund would easily give 12% return in the long run and it is more tax-efficient,” said Rajendra Dhulla, financial planner, partner with Pratham Services.
The government had announced Swavalamban Scheme in the Union Budget 2010-11, to which the government will be contributing Rs1,000 per NPS account each year for the next three years. The benefit will be available to persons who join the NPS with a minimum contribution of Rs1,000 and maximum contribution of Rs12,000 per annum. In order to open an NPS account, a minimum contribution of Rs6,000 per annum is mandatory, whereas in case of NPS Lite, the minimum amount is Rs1,000 per annum.
Source: http://www.dnaindia.com/money/report_now-you-can-sip-into-new-pension-system-too_1477697
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