NPS,PPF,NSC,FD

FINtastic Women Your Pathway To Be The Household CFO

PUBLIC PROVIDENT SCHEME 2019 FINtastic Women Program International College of Financial Planning

Who can open > Individual resident who is 18 years age and…. Where > State Bank of India or its subsidiaries, Head Post Office YEAR means > 1st April to 31st March Deposits> min Rs.500 p.a. and max Rs.150000 p.a. Frequency > single or as many as you want Penalty > Rs.50 for not depositing Mode > cash, cheque, DD, online etc. Extension > unlimited blocks ( 1 block = 5 years ) Taxation > EEE ROI > 7.1% p.a. FINtastic Women Program International College of Financial Planning

TERM OF FUND • Duration is 15 years from the end of financial year in which the account is opened. • Ex. DOC 14-6-2019 • DOM – 1-4-2020+15 FINtastic Women Program International College of Financial Planning

LOAN FACILITY • The first loan can be given in the third year of opening the account • But before expiry of 6th year including the year in which the initial subscription was made • 25% of the balance in the PPF account including interest at end of 2nd year immediately preceding the year in which the loan is applied. • Interest on loan is 1% p.a. FINtastic Women Program International College of Financial Planning

Ex. PPF a/c is opened on 21/10/2016, Calculate when and how much amount one can avail as first loan facility from the details below: Balance in PPF A/c on 31/03/17 70000 31/03/18 164000 31/03/19 192000 31/03/20 240000 FINtastic Women Program International College of Financial Planning

WITHDRAWALS 1. The first withdrawal can be made in the 7th year including the year in which a/c was opened. 2. Only one withdrawal in a year 3. Maximum amount of withdrawal is – 50% of the balance at the end of the 4th year preceding the withdrawal Year, or at the end of the preceding year, whichever is lower. FINtastic Women Program International College of Financial Planning

Ex. PPF a/c is opened on 21/10/2011, Calculate when and how much amount one could avail as the first withdrawal facility from the details below : Balance in PPF A/c on 31/03/12 72000 31/03/13 164000 31/03/14 192000 31/03/15 240000 31/03/16 325000 31/03/17 415000 31/03/18 489000 31/03/19 516000 FINtastic Women Program International College of Financial Planning

PREMATURE CLOSURE 1. change in residential status of the account holder 2. to finance higher education of the dependent children of the account holder 3. to finance treatment of serious ailments or life threatening diseases of account holder, spouse, dependent children or parents, or higher education of the account holder. NOTE> the premature closure is at a cost of a one percent reduction in the rate at which interest is credited to the account.\" FINtastic Women Program International College of Financial Planning

INTEREST GIVEN ON PPF A/C 1. Interest is calculated on the lowest balance between the close of the 5th day and the last day of every month. 2. The interest is calculated at the end of each Financial Year i.e. 31st March and credited on 1st April. FINtastic Women Program International College of Financial Planning

HISTORICAL RETURN OF PPF • PPF Interest Rate 1986 to Jan-2000 – 12.0% • PPF Interest Rate Jan-2000 to Feb-2001 – 11.0% • PPF Interest Rate Mar-2001 to Feb-2002 – 9.5% • PPF Interest Rate Mar-2002 to Feb-2003 – 9.0% • PPF Interest Rate Mar-2003 to Nov-2011 – 8.0% • PPF Interest Rate Dec-2011 to Mar-2012 – 8.6% • PPF Interest Rate 2012-13 – 8.8% • PPF Interest Rate 2013-14 – 8.7% • PPF Interest Rate 2014-15 – 8.7% • PPF Interest Rate 2015-16 – 8.7% • PPF Interest Rate 2016-17 (1st April 2016 – 30th September 2016) – 8.1% • PPF Interest Rate 2016-17 (1st October 2016 – 31st March 2017) – 8.0% FINtastic Women Program International College of Financial Planning

• PPF Interest Rate 2017-18 (1st April 2017 – 30th June 2017) – 7.9% • PPF Interest Rate 2017-18 (1st July 2017 – 31st Dec 2017) – 7.8% • PPF Interest Rate 2017-18 (1st Jan 2018 – 30th September 2018) – 7.6% • PPF Interest Rate 2018-19 (1st Oct 2018 – 30th June 2019) – 8.0% • PPF Interest Rate 2019-20 (1st July 2019 – 31st Mar 2020) – 7.9% • PPF Interest Rate 2020-21 (Currently – 1st April 2020 onwards) – 7.1% FINtastic Women Program International College of Financial Planning

• If Poonam ji opens a PPF a/c on 1-4-2020 with maximum amount and deposits the same amount every year , how much she will receive at maturity? 7.1% P.A. FINtastic Women Program International College of Financial Planning

NATIONAL PENSION SYSTEM (NPS) • Central Government made the National Pension System (NPS) mandatory for its new recruits (except defence forces) from 1st January, 2004. • A majority of State Governments have also shifted to the defined contribution based new pension system from varying dates. • For others it came into effect from 1st May 2009. • The scheme allows subscribers to contribute regularly in a pension account during their working life. On retirement, subscribers can withdraw a part of the corpus in a lump sum and use the remaining corpus to buy an annuity to secure a regular income after retirement. FINtastic Women Program International College of Financial Planning

• REGULATOR: Pension Fund Regulatory and Development Authority (PFRDA) • Point Of Presence: • performs the functions relating to registration of subscribers, • undertaking Know Your Customer (KYC) verification, • receiving contributions and instructions from subscribers FINtastic Women Program International College of Financial Planning

CENTRAL RECORDKEEPING AGENCY • The back office for maintaining records, administration and customer service functions. PRAN or PPAN – 16 DIGITS • i. NSDL e-Governance Infrastructure Limited • ii.Karvy Computershare Private Limited FINtastic Women Program International College of Financial Planning

PENSION FUNDS MANAGERS • HDFC Pension Management Co. Ltd. • ICICI Prudential Pension Fund Management Co. Ltd. • Kotak Mahindra Pension Fund Ltd. • LIC Pension Fund Ltd. • SBI Pension Funds Pvt. Ltd • UTI Retirement Solutions Ltd • Birla Sun Life Pension Management Ltd FINtastic Women Program International College of Financial Planning

ANNUITY SERVICE PROVIDERS (ASP) • ASP will offer Annuity schemes to the Subscribers. • The member has to purchase an annuity from one of the Life Insurance Companies regulated by IRDA. • 1. Life Insurance Corporation of India • 2. SBI Life Insurance Co. Ltd. • 3. ICICI Prudential Life Insurance Co. Ltd. • 4. Bajaj Allianz Life Insurance Co. Ltd. • 5. Star Union Dai-ichi Life Insurance Co. Ltd. • 6. Reliance Life Insurance Co. Ltd.` • 7. HDFC Standard Life Insurance Co Ltd FINtastic Women Program International College of Financial Planning

FEATURES • > Any Indian citizen between 18 and 65 years. • > Tier-I A/C : pension account • > tier-II A/C : just like saving account • > Min : Rs.1000 in a year • > Max : no limit • > penalty : Rs.100 • > Taxation : EEE or EE partial taxed FINtastic Women Program International College of Financial Planning

• Exit at or after age 60 years • 60% of accumulated amount corpus can be withdrawn tax free • Min 40% of pension wealth to purchase an annuity. FINtastic Women Program International College of Financial Planning

• The funds in the new pension scheme will be invested • in Equity, • corporate bonds • government bonds • Alternative Investment Schemes>CMBS (Commercial mortgage- backed securities), REITS(Real estate investment trust), • InvIts (Infrastructure Investment Trust )etc. FINtastic Women Program International College of Financial Planning

• The term 'alternative investment fund' or 'AIF' refers to any vehicle established for the purpose of raising capital from a number of different investors with an aim to invest these funds into assets to generate favorable returns. • KEY TAKEAWAYS • An alternative investment is a financial asset that does not fall into one of the conventional equity/income/cash categories. • Private equity or venture capital, hedge funds, real property, commodities, and tangible assets are all examples of alternative investments. FINtastic Women Program International College of Financial Planning

• The NPS offers you two approaches to invest your money: 1. Active choice - Individual Funds (Asset Class E, Asset Class C, and Asset Class G ) 2. Auto choice - Lifecycle Fund FINtastic Women Program International College of Financial Planning

FINtastic Women Program International College of Financial Planning

Three LCF Options Available  Aggressive LCF – Equity upto 75%  Moderate LCF – Equity upto 50%  Conservative LCF – Equity upto 25% Funds Managed on the Pattern of Life Cycle Options Age (in Years) Aggressive LCF Moderate LCF Conservative LCF Upto 35 E C G E C G E C G 36 37 75% 10% 15% 50% 30% 20% 25% 45% 30% 38 71% 11% 18% 48% 29% 23% 24% 43% 33% 39 67% 12% 21% 46% 28% 26% 23% 41% 36% 40 63% 13% 24% 44% 27% 29% 22% 39% 39% 41 59% 14% 27% 42% 26% 32% 21% 37% 42% 42 55% 15% 30% 40% 25% 35% 20% 35% 45% 43 51% 16% 33% 38% 24% 38% 19% 33% 48% 44 47% 17% 36% 36% 23% 41% 18% 31% 51% 43% 18% 39% 34% 22% 44% 17% 29% 54% 55 and Above 39% 19% 42% 32% 21% 47% 16% 27% 57% 15% 10% 75% 10% 10% 80% 5% 5% 90% FINtastic Women Program International College of Financial Planning

Partial Withdrawal will be allowed subject to:  Subscriber should be in NPS for 3 years  Amount should not exceed 25% of the contributions made by the subscriber Purpose:  For the purpose of higher education of his/her children  For marriage of his/her children  For purchase or construction of residential house or flat  For treatment of specified illnesses Purpose:  Maximum three times during entire tenure FINtastic Women Program  Partial Withdrawal is Tax Exempt International College of Financial Planning

Vesting Criteria Benefit At any point in time before superannuation • Compulsory Annuitisation- minimum 80% (allowed to subscriber who have been in NPS for at • Lump sum withdrawal- maximum 20% least 10 years) • If Corpus< Rs. 1.00 Lac, complete withdrawal permitted On attaining the age of superannuation (as • Annuitisation- minimum 40% prescribed in service rules) and upto 70 years of • Lump sum withdrawal- maximum 60% age • If Corpus< Rs. 2.00 Lac, complete withdrawal permitted • Subscriber can stay invested in the NPS upto the age of 70 years. • Fresh contributions are allowed during such a period of deferment. •Annuity purchase can also be deferred for maximum period of 3 years at the time of exit. • In such an unfortunate event, option will be available to the nominee to receive 100% of the NPS pension wealth in lump sum. Death due to any cause FINtastic Women Program International College of Financial Planning

To Employers Contributions made by the employer (upto 10% of Basic + DA) is allowed as a business expense under Section 36 (1) iv (a) of Income Tax Act 1961. To Employees Sec 80 CCD (1) Sec 80 CCD 1(B) Sec 80 CCD (2) Rs 1.50 L* Rs 50 K^ 10% of Basic+DA** * Employee Contribution up to 10% of Basic + DA. This is within the overall ceiling of Rs 1.50L under sec 80 CCE ^ Additional Tax Benefit to NPS Subscriber ** Employer Contribution is in addition to the tax benefit available under sec 80CCE. No monetary ceiling. To Self- Employed 20% of the Gross Income is eligible for tax deduction under sec 80 CCD (1) of Income Tax Act. Save Right ... Retire Bright…. FINtastic Women Program International College of Financial Planning

FINtastic Women Program International College of Financial Planning

FINtastic Women Program International College of Financial Planning

Various Charges & Method of Deduction Intermediary Charge Head Service Charge Method of Deduction PoP Initial Subscriber Registration Rs 200 To Be Collected Upfront CRA Initial Contribution Coustodian 0.25% Min: Rs. 20 & Through unit All Subsequent Contribution Max: Rs 25,000 cancellation PFM Through eNPS 0.10%, or Rs.10 , max Rs.10000 Through NAV PRA Opening (One Time) Adjustment NSDL KARVY PRA Maintenance (Per Annum) Rs. 40 Rs. 39.36 Per Transaction Rs. 95 Rs. 57.63 (Financial/Non-Financial) Asset servicing charges Rs. 3.75 Rs. 3.36 Investment Management 0.0032% p.a. for ele and phy (Per Annum) 0.01% Save Right ... Retire Bright…. International College of Financial Planning FINtastic Women Program

• I had seen in THE TIMES OF INDIA newspaper , front page, years back when rate of interest in term deposit was around 9% p.a. ….. • FD rate of interest of five years > 17.36% p.a.* • It was from reputed bank. • How it is possible? FINtastic Women Program International College of Financial Planning

IMPORTANCE OF KNOWLEDGE • IF YOU WANT TO INVEST Rs.10 lakhs for 3 years , your annual package is around 50 lakhs FINtastic Women Program International College of Financial Planning

FIXED DEPOSIT FIXED MATURITY PLAN DATE 2-4-2017 REDEEM 4-4-2020 Investment Amount 10,00,000 Invested Amount 8% ROI 10,00,000 ROI 80,000 Maturity Value 8% Int. after 1 year 24,960 Indexed Value 1000000*301/272 12,59,712 Tax on Interest 10,55,040 Tax(LTCG) 11,06,617 Bal after 1 year (MV-IV)*20% Final Bal after 3 year 30619 Bal Reinvested 10,55,040 Net Tax adjusted Return 12,29,093 Int. after 2 years 84,403 7.11% Tax on Interest 26,334 Bal after 2 years 11,13,110 NET PROFIT OVER FD Rs.54,717 Bal Reinvested 11,13,110 Int. after 3 years 89,048.8 Tax on Interest 27,783 11,74,376 Final Bal after 3 year Net Tax adjusted Return 5.5% FINtastic Women Program International College of Financial Planning

FINtastic Women Program International College of Financial Planning

NSC VS FD FEATURES NSC FD ( post office ) TENURE 5 YRS 5 YRS TAX U/S 80C, INT OF FIRST 4 YEARS CAN U/S 80c, BUT INT IS TAXABLE AS BE CLAIMED IN 80C PER SLAB RATE ROI 6.8% P.A. 6.7% P.A. COMP QTLY = 6.87% P.A. EX. 10 LAKHS, after 5 yrs 1389493, after 4 yrs Maturity 1394067 but ded of tax 1301023 31.2% after every year int Diff > 88470 FINtastic Women Program International College of Financial Planning

PM VAYA VANDANA YOJANA • PMVVY is exclusively available to those who are 60 years of age and above. • The PMVVY is a pension scheme for senior citizens that comes with guaranteed returns on monthly, quarterly, half-yearly or on an annual basis for a period of 10 years. • The maximum investment that can be made in PMVVY is restricted to Rs.15 lakh per senior citizen and the maximum monthly pension in PMVVY is Rs 9,250 per senior citizen. • ROI > 7.656% P.A. FINtastic Women Program International College of Financial Planning

PMVVY • So, if both spouses are above age 60, the maximum monthly pension can be Rs 18,500 in the family on an investment of • Rs 30 lakh. • You can buy PMVVY pension scheme from Life Insurance Corporation of India (LIC) of India. FINtastic Women Program International College of Financial Planning



ATAL PENSION YOJANA • AGE 18 30 40 • CONTRIBUTION 210 577 1454 • CORPUS 8.5 L 8.5 L 8.5 L • ROI 8.21% 8.20% 8.17% • PENSION 5000 5000 5000 • ROI 7.336% 7.336% 7.336% FINtastic Women Program International College of Financial Planning

FEATURES KVP MIS SCSS SSS Tenure 124 months doubled 5 yrs 5 yrs +3 15 yrs max contributions ROI 6.9% p.a. 6.7% p.a. payable 7.4% p.a. 7.6% p.a. monthly payable qtly Tax U/S 80 C (investment) U/S 80 C not available U/S 80 C not u/s 80 C available Maturity Taxable Every month Qtly interest is Maturity is tax Max free interest is taxable taxable 4.5 LACS, 9 LACS 15 lacs, FINtastic Women Program International College of Financial Planning

PM SHRAM YOGI MAAN-DHAN YOJANA OR PRADHAN MANTRI LAGHU VYAPARI MAAN- DHAN . Entry age between 18 and 40 years • Monthly Income 15000 or below • Monthly pension Rs.3000 at age 60 FINtastic Women Program International College of Financial Planning

FINtastic Women Program International College of Financial Planning



• Current age > 40 • Retirement age > 60 • Pension amount > Rs.3000 • Life expectancy > 85 • How much should be invested at age 60 so that he can get Rs.3000 per month pension till age 85, if ROI is 7% p.a. payable monthly? Ans: 424461 • How much ROI if Rs.200 per month invested for 20 years to accumulate Rs.424461? • ROI = 1.452% p.m. = 17.4255% p.a. comp monthly = 18.88% p.a.

• Government of India has introduced a pension scheme for un organised workers • The unorganised workers mostly engaged as home based workers, street vendors, mid- day meal workers, head loaders, brick kiln workers, cobblers, rag pickers, domestic workers, washer men, rickshaw pullers, landless labourers, own account workers, agricultural workers, construction workers, beedi workers, handloom workers, leather workers, audio- visual workers and similar other occupations whose monthly income is Rs 15,000/ per month or less and belong to the entry age group of 18-40 years.

• the laghu vyaparis, who are self-employed and working as shop owners, retail traders, rice mill owners, oil mill owners, workshop owners, commission agents, brokers of real estate, owners of small hotels, restaurants and other laghu vyaparis • They should not be covered under New Pension Scheme (NPS), Employees’ State Insurance Corporation (ESIC) scheme or Employees’ Provident Fund Organisation (EPFO). Further, he/she should not be an income tax payer.

• (i) Minimum Assured Pension: Each subscriber under the PM-SYM, shall receive minimum assured pension of Rs 3000/- per month after attaining the age of 60 years. (ii) Family Pension: During the receipt of pension, if the subscriber dies, the spouse of the beneficiary shall be entitled to receive 50% of the pension received by the beneficiary as family pension. Family pension is applicable only to spouse. (iii) If a beneficiary has given regular contribution and died due to any cause (before age of 60 years), his/her spouse will be entitled to join and continue the scheme subsequently by payment of regular contribution or exit the scheme as per provisions of exit and withdrawal.

• 9.Exit and Withdrawal: Considering the hardships and erratic nature of employability of these workers, the exit provisions of scheme have been kept flexible. Exit provisions are as under: (i) In case subscriber exits the scheme within a period of less than 10 years, the beneficiary’s share of contribution only will be returned to him with savings bank interest rate. (ii) If subscriber exits after a period of 10 years or more but before superannuation age i.e. 60 years of age, the beneficiary’s share of contribution along with accumulated interest as actually earned by fund or at the savings bank interest rate whichever is higher. (iii) If a beneficiary has given regular contributions and died due to any cause, his/ her spouse will be entitled to continue the scheme subsequently by payment of regular contribution or exit by receiving the beneficiary’s contribution along with accumulated interest as actually earned by fund or at the savings bank interest rate whichever is higher. (iv) If a beneficiary has given regular contributions and become permanently disabled due to any cause before the superannuation age, i.e. 60 years, and unable to continue to contribute under the scheme, his/ her spouse will be entitled to continue the scheme subsequently by payment of regular contribution or exit the scheme by receiving the beneficiary’s contribution with interest as actually earned by fund or at the savings bank interest rate whichever is higher. (v) After the death of subscriber as well as his/her spouse, the entire corpus will be credited back to the fund. (vi) Any other exit provision, as may be decided by the Government on advice of NSSB.

FINtastic Women Your Pathway To Be The Household CFO Thank You FINtastic Women Program International College of Financial Planning