Why NPS Is More Than Just A Retirement Tool, Experts Weigh In At 40After40 Retirement Expo

At Outlook Money’s  ‘40After40’ Retirement Expo in Mumbai, industry leaders explored the accessibility, cost-effectiveness, and strategic importance of the National Pension System (NPS) in a diversified retirement portfolio. Sriram Iyer, CEO of HDFC Pension Fund Management, emphasised the NPS as more than just a retirement tool, calling it a “long-term wealth creation vehicle,” setting the tone for a deeper dive into its role in securing a financially stable retirement.

The NPS stands out for its inclusivity, being open to individuals across ages. It is highly cost-effective, with minimal management fees, and offers flexibility to switch between 11 pension fund managers to suit investment goals. The system supports long-term savings through Tier-I accounts while providing withdrawal flexibility with Tier-II accounts. Further, its transparent structure allows users to easily track their investments online.

The NPS is an attractive option for retirement planning, offering significant cost savings with its ultra-low management fees compared to mutual funds. It has consistently delivered strong returns, averaging 14.3 per cent annually over 11 years, making it a reliable alternative to large-cap mutual funds. NPS ensures stability with good risk management and allows partial withdrawals under certain conditions, even though funds are locked until age 60. Moreover, 40 per cent of the savings are converted into an annuity at retirement, guaranteeing a regular income stream during your golden years.

The panel concluded that while NPS is a robust tool for retirement planning, its efficacy depends on how well it’s integrated into an individual’s broader financial strategy. With its low costs, competitive returns, and structured approach, NPS offers a compelling case for inclusion in retirement portfolios, especially when guided by informed financial advisors.