At 59, I have accumulated Rs 75 lakh in PPF. Should I open NPS account and transfer all money to it?

I have had a Public Provident Fund (PPF) account for over three decades and accumulated around Rs 75 lakh. My age is 59. However, I have not opened a National Pension System (NPS) account. Should I open my NPS account and transfer the entire amount from my PPF to it?

Anil Kulshrestha

Reply by Rajiv Bajaj, Chairman & MD, BajajCapital

We complement you for your disciplined savings through PPF, where you have accumulated Rs 75 lakh. Yes, we recommend you open an NPS account immediately. However, please note that you should not close your PPF account. You can withdraw up to 60 per cent of the amount at the time of extension, which can be contributed to your newly opened NPS account. Please note that the PPF account should be continued lifelong as there is no upper limit to which you can continue to extend the same. But because there is no provision for a pension from the PPF account that is why we recommend that you should transfer Rs 45 lakh out of your PPF balance to the NPS account and then draw a pension from the same after contributing the minimum required amount in the same for at least two more years.

Please note that a pension from NPS can start after you have contributed the amount for at least three years, and your age should be above 60 years before you can avail of the facility of a monthly pension.

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Besides, subscribers should know they can soon buy multiple annuity schemes from the same life insurance companies. Hence, they can diversify their investments across several schemes. Moreover, they can mitigate risk across schemes and get superior value for their invested money from PPF.

(Views expressed by the investment/tax expert are his/her own)

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