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New Pension System (NPS)
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| uming a 10 per cent per annum return. If put in a mutual fund, the money will grow to Rs 0.8 crore. And even though NPS returns will be taxed when withdrawn under the exempt exempt tax (EET) regime (investment taxable when withdrawn) — an anomaly that the regulator has been fighting with ministry of finance to equalise with the provident fund scheme that enjoys exempt exempt exempt (EEE) regime (investment not taxable even at the time of withdrawal) — it will still gen- erate a higher return than a mutual fund. As fund management fee is very low, experts argue that it is unsustainable for the fund houses. “Operating at such cost is not feasible and no one will be able to recover their cost,” said the head of a finan- cial institution that could not make it into the list of suc- cessful bidders. This is a long-term game, PFRDA Chairman D Swarup told Hindustan Times. “I had warned all the bidders that you enter this business only if you are a serious player. Because even if there is lot of potential, you are not going to make money for the first sev- eral years.” While it appears to be an ideal investment option for long-term retirement savings for households, financial planners have their reserva- tions. “It is a good initiative but I have my concerns on the quality of fund managers who will be managing the scheme,” said a financial planner on conditions of anonymity “At . such a low charge it is practi- cally impossible for the fund house get good fund managers to manage the fund.”
Source : Hindustan Times |
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