I opened an NPS account 6 years ago but didn't continue. Can I reactivate it now?

Ans: The National Pension System (NPS) is a good retirement planning tool. You started it six years ago but did not continue. To restart your NPS, follow the steps below.

Steps to Reactivate Your NPS Account
Contact the POP: The first step is to visit your Point of Presence (POP). This is usually a bank or financial institution. They will guide you on the reactivation process.

Submit KYC Documents: Provide your KYC documents. This includes your PAN card, Aadhaar card, and address proof.

Fill the Reactivation Form: You need to fill the reactivation form. The form is available at the POP or on the NPS website.

Pay the Penalty: There might be a small penalty for the inactive period. The POP will inform you about this.

Deposit the Minimum Contribution: You need to deposit the minimum contribution. This will reactivate your account. The minimum contribution is Rs. 500 for Tier I and Rs. 250 for Tier II.

Benefits of NPS
Long-Term Growth: NPS offers good long-term growth. It invests in a mix of equity, corporate bonds, and government securities.

Tax Benefits: You get tax benefits under Section 80C and 80CCD. This reduces your taxable income.

Flexibility: You can choose your investment mix. There are options to invest more in equities or bonds.

Investment Strategy
Consistent Contributions: Make regular contributions to your NPS. This will help in building a good retirement corpus.

Diversified Portfolio: NPS allows you to choose your asset allocation. Diversify your investments to manage risk and maximise returns.

Monitor and Review: Regularly monitor your NPS account. Review your investment strategy based on your risk appetite and market conditions.

Actively Managed Funds vs. Index Funds
Actively Managed Funds: These funds have professional managers. They aim to outperform the market. Actively managed funds can adapt to market changes.

Disadvantages of Index Funds: Index funds only replicate the market. They cannot outperform it. They lack flexibility in changing market conditions.

Direct Funds vs. Regular Funds
Disadvantages of Direct Funds: Direct funds do not offer advisory services. You might miss out on strategic investment advice.

Benefits of Regular Funds: Regular funds offer advisory services through a Certified Financial Planner (CFP). This ensures you get professional guidance.

Final Insights
Reactivating your NPS account is simple. Visit your POP, submit the necessary documents, and make the required contributions. NPS is a great tool for long-term retirement planning. It offers good growth, tax benefits, and flexibility. Consider actively managed funds and regular funds for better returns and professional guidance. Regularly monitor your investments to ensure they align with your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in