NPS Tier 2 vs mutual funds | Performance of Tier 2 fund managers | Tier 2 vs Tier 1

In this video, we discuss the features of Tier 2, the performance of its fund managers and compare the Tier 2 account with mutual funds.
First part of the video discusses the features of the Tier 2 account and some similarities and differences between Tier 1 and Tier 2.
In the second part of the video, we analyze the performance of Tier 2 fund managers. We tell you the best fund managers across asset classes and the fund manager that’s the best across all asset classes.
In the third part, we compare the Tier 2 account with mutual funds. We analyze the risk, return and other differences. Based on these, we tell you if you should invest in it or not.
#NPStier2 #NPStier2vsMutualFunds #NPS2
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Chapters
00:00 INTRODUCTION
01:40 Salient features of the NPS Tier II
04:34 Performance of Tier II fund managers
08:30 NPS Tier II vs mutual funds
13:40 Conclusion
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[@venumalyala9400]

Thank you for a detailed analysis. One major point missed is that there is no tax when tier 2 is converted to tier 1 before retirement. So one can operate it as an emergency fund and also get benefits of retirement corpus of tier 1 at the time of retirement, of course there is lesser management fee and the ability to switch. These are my main reasons for choosing NPS Tier 2

[@nikrecovery7969]

@ venumalyala9400...Just asking are you sure that NPS Tier 2 to NPS Tier 1 one way switch will not be taxed? I also searched about it..but got no perfect answer..

[@jishnu18]

Why would you place an emergency fund in equity?

[@puneetporwal]

​@@jishnu18i think one can choose to avoid equity n place emergency funds in schemes G & C

[@deepjoy011]

R u sure about it?? Couldn't find anything?

[@pavanramappa7464]

While I agree there are no taxes, the best approach according to me would be to build a 100% equity corpus in tier 2 and when you are nearing retirement, based on market conditions move the funds from tier 2 to tier 1. That will ensure we get overall optimal returns

[@nikrecovery7969]

Really thanks for creating this video... specially the taxation rule for the tier 2... I searched regarding the NPS Tier 2 withdrawal taxation a lot, but didn't get satisfactory answer or got confusing answer..Then few months ago I commented in one of ET Money's NPS video to create a video on Tier 2 taxation..in that comment ET Money replied that their Content Creation team will sure look at this topic. AND THEY REALLY DID IT.... REALLY THANKS TO ET MONEY TEAM.

[@ETMONEY]

Hi, glad to know that you found this video helpful. Please don’t forget to share it with your friends and family. We always take note of what our viewers want and try our best to prepare content around that.

[@themanugupta01]

Misleading info on taxation Refer to this answer on quora from Portean itself www.quora.com/How-are-investments-in-Tier-2-NPS-schemes-taxed/answer/Protean-eGov-Technologies-Ltd?ch=15&oid=188527541&share=452b26b2&srid=I9bz&target_type=answer

[@nikrecovery7969]

@@themanugupta01 ..yes, I did another query regarding the same to it's office, they shared me a document, where it's written that it will be taxed as per marginal tax slab (i.e income tax slab)

[@puneetporwal]

Congrats on a comprehensive video! Covered everything except taxation on shifting from tier 2 to tier 1. Would be great to get some clarity on that!

[@ETMONEY]

Hello, we are happy to know that you found this video useful. Please share it with your friends and family as well and help spread the word. As far as the taxation of one-way switch is concerned, in all likelihood, it's tax-free. However, do consult a tax advisor on this for more clarity.

[@sp-ye7ht]

Very well explained..👍 In my opinion the biggest disadvantage of tier-2 is its taxation structure..

[@abhishekmittal5440]

I've been asking for this since forever...thank you

[@ETMONEY]

Hello, thanks for your kind words. Please help spread the message by sharing this video with your friends and family.

[@jishnu18]

Annuity plans are such a bad thing and it's the reason why most people are avoiding NPS. Lower returns and even lower returns on monthly pension schemes. Also. To avoid LTCG Tax people are missing out on a lot of money by putting it in nps instead of a pure open ended equity. Govt employees don't have a choice to avoid this one too

[@puneetporwal]

What kind of IRR are the annuity plans offering?

[@jishnu18]

@@puneetporwal 4-6%. Returns. They are just insurance products. Also the returns are taxable

[@puneetporwal]

​@@jishnu18oh so they have a life insurance component also? And are they perpetual annuity or they have a maturity?

[@abhiishot2007]

I have been investing since last 5 years. It is showing as 14.1% xirr. 2.5 lakh has grown to 3.7L

[@himanshupanwar8007]

What is xirr

[@katwinart]

I still not get it. Should i opt for mutual funds or NPS??

[@shankar554]

Man, this is a super series. Keep it up.

[@ETMONEY]

Hi, nothing pleases us more than knowing that our content proved useful to our viewers. Do take out time to share it with your near and dear ones as well.

[@cmugunthan]

I invest 1 lakh in nps tier and i take 1.1 lakh within a year. To avoid tax, i invest 10000 in tier 1 and reinvest the 1 lakh in to Tier 2 Please correct if i wrong.

[@k0u0s0h0a0g0r0a0]

Tier 2 account can only be opened if a person has tier 1 account, but there is no minimum limit to tier 1 account, so what is the downside of having a tier 1 account?

[@vsgogia2569]

Dear @ETMONEY Please also explain how Tier-2 returns are taxed on transfer to Tier-1?

[@AmeySharmaOfficial]

1. When is the interest deposited into NPS Tier-1 and Tier-2 accounts? Is it credited at the end of the financial year? 2. When withdrawing from the Tier-2 account, does the withdrawn amount go to the same account linked during Tier-1 account opening? For example, if the Tier-1 account was opened through SBI, and the Tier-2 account was also linked to the same SBI account, can funds be deposited or withdrawn from this account at any time?

[@deepjoy011]

Transferring amount from Tier II to Tier I ... Will have Tax Implications as per Tax Slab?

[@ETMONEY]

Hello, in all likelihood, it's tax-free. Still, do consult a tax advisor for more clarity.

[@vavaiyabandish1530]

Tier 1 isn't popular but it is mandatory..

[@atchuth01]

howis that we choose different fund manager for diff classes eg LIC for G HDFC for E and icici for C?

[@user-wb3is5oc9v]

Can I freely withdraw money from Tier 2? This point should have been emphasised as mutual funds (other than ELSS) has no such restrictions. Hence in the comparison part, this should have been included. Plus, what about the cost structure of equity schemes in Tier 2? Comparison is only provided for G and C. It would have been better if comparison of cost structure of E would be provided with large cap index fund. Plus, as a tax efficient method, If I can convert tier 2 into tier 1 with whatever limits in place, the taxation will again change! Hence this also needs more clarity so to make final call on tier 2 vs mutual fund

[@suryajain4351]

What is the typical duration of corporate bonds in NPS Tier II account?

[@ramyasri6093]

Thanks ET money for such a comprehensive analysis... It cleared few things for me... Thanks

[@ETMONEY]

Hello, thanks for your kind words. Please help spread the message by sharing this video with your friends and family.

[@vimalns1970]

Any app showing retun including expense ratio? It plays a vital part in return..

[@kpwilzhimomi5179]

I think it make more sense to invest in nps tier 2 than mutual/debt fund for fixed income short term goals. Right?

[@himgarg12]

Very good analysis n presentation 👍

[@ETMONEY]

Hello, we are happy to know that you found this video useful. Please share it with your friends and family as well and help spread the word.

[@One_In_Training]

Is the taxation scheme for Tier 2 confirmed to be as per slab rate ? Last I checked, there was still some ambiguity on this and there has been no official word from PFRDA or Govt. on what the taxation rules are - so it is only conjecture at this point.

[@vikashkhannah9116]

I agree. In fact I read that T-2 is to be taxed as debt with indexation.

[@ETMONEY]

Hello, the FAQ section on the NPS Trust website confirms that realised gains from NPS Tier II are taxed at the marginal rate.

[@MrYogipogi]

@@ETMONEY how do you calculate gains when you change fund managers multiple times over the year?

[@ArjunKumar-zu2kl]

Very well explained, thank you so much...

[@vaibha3v]

Very well explained as always

[@sp-ye7ht]

Please make a video comparing nps tier 1 vs elss vs flexicap/multicap also including other parameters u consider in your videos..

[@marutikakade2146]

अभिनंदन आणि शुभेच्छा

[@gdp2102]

I have subscribed for NPS through my employer. It's voluntary my contribution shows only goes to Tier 1. Is it possible, will it be good?

[@ETMONEY]

Hello, yes, it's okay. The employer's contribution to the NPS will go only to your Tier I account.

[@RajaShyam32]

Thanks for the video. Do you have any plans to rollout the ET money app in other country app stores such as US, UK?

[@ETMONEY]

Hi, glad to know that you found this video helpful. Please don’t forget to share it with your friends and family. Will surely share your concern with our technical team.

[@shubhandpradiptaskitchen7147]

Thank you for the detailed information

[@ETMONEY]

Hi, glad to know that you found this video helpful. Please don’t forget to share it with your friends and family.

[@ashishchavan1921]

Good content

[@ArjunSingh-mw4to]

Please make a video on NPS especially for Central Government Employees. There are some restrictions in changing scheme and allocation. pls make a video on it.

[@ETMONEY]

We have a video on that. Please check kzbin.info/www/bejne/hmLNmWWdfLF2psk

[@ArjunSingh-mw4to]

@@ETMONEY Thanks for responding so promptly. Truly commendable !

[@kartikpramanik-ec1vq]

Tier 1 invest na kora tier 2 invest korta pare ke

[@yashsquats7194]

What if we just put tier 2 investment in tier 1, then we can refund the tax on taxable amount😅

[@apz7645]

Why I cannot allocate more than 50% in equity in my govt job ?

[@ETMONEY]

Hello, central and state government NPS schemes have their own thresholds. Hence, you can decide your asset allocation based on them only.

[@apz7645]

@@ETMONEY Thank you.

[@bhagavankovvada7131]

if I invested(say 1 lakh) in Mutual fund and withdrawn (120000)after paying capital gain tax as per rates. So my net gain is 20000. Now should I pay income tax again for 20000 along with my other income as per income tax slab rates.plz clarify.

[@nomanCyclewala]

no you don't have to pay the tax twice. that type of income is calculated separately and taxed separately as either long term gains or short term gains

[@themanugupta01]

Can u share any document from government or nps to support your claim on withdrawal taxation? It is clearly misleading. The truth is - There is no clarity on nps withdrawal from the government and in its absence we will go logically to consider equity scheme as equity MF and bonds scheme as bonds MF. How on earth u are suggesting to add it to income?

[@puneetporwal]

Can one open a tier 1 account and make just one contribution to it and then make all future contributions to tier 2?

[@ETMONEY]

Hello, the Tier I account requires a minimum contribution of Rs 1,000 in a financial year. If you don't make that contribution, your NPS account will become inactive. So, if you do want to use the Tier II account, make sure that your Tier I account remains active.

[@vishwanathvenkatapur8411]

Well presentation

[@SantuMukherjee-p6j]

Nice video

[@alam8340]

Nps tier2 is secured or not from fraud?

[@tirupathirao4405]

Hello Sir, If we gain 100000 and we are in 30 percent tax bracket the tax component is 30000?

[@Stupid_young]

i think so. If it is mostly equity based then 10% on gains, for Debt and Liquid i think it is tax slabs.

[@varunaggarwal425]

your information is wrong that nps tier 2 gains taxed as per income slab ....

[@ETMONEY]

Hello, that's what's mentioned on the NPS Trust website. Please check the FAQs at npstrust.org.in/activate-tier-ii

[@gprocky2010]

Very very nice

[@kvsk002]

If we invest 100% in tier 2 scheme E then what is the taxation

[@ETMONEY]

Hello, realised gains from NPS Tier II are taxed as per your slab rate, irrespective of the scheme you opt for.

[@kvsk002]

@@ETMONEY ok tq...

[@amarjyotidwibedi5371]

It's the worst form of investment..1.its forced on employee .2.its subscription is taxable it's reedem is taxable leading to dual taxation.3.its opaque with zero knowledge of its investment to the subscriber..4.one can generate more 500% secure return investing in bank rd rather investing in nps.more over u can't completely withdraw ur subscription.5.i guarantee give me one fund which has more returns than a Rd of bank in 10yrs span...

[@lankeshgaud2219]

ये वीडियो हिन्दी मे आयेंग क्या ?

[@shivakumariyer7805]

Great!!!

[@ETMONEY]

Hi, nothing pleases us more than knowing that our content proved useful to our viewers. Do take out time to share it with your near and dear ones as well.

[@SachinSharma-bd4vy]

How to exit from POP to eNPS?

[@vsgogia2569]

Just start investing online through eNPS. The PoP will be bypassed. You may have to go through PoP only for non-financial tasks - address update, bank account update, nomination changes etc. But with increasing digitalization, I hope, these tasks too may have or will be brought to online mode.

[@vsgogia2569]

Just start investing online through eNPS. The PoP will be bypassed. You may have to go through PoP only for non-financial tasks - address update, bank account update, nomination changes etc. But with increasing digitalization, I hope, these tasks too may have or will be brought to online mode.

[@abhishekchatterG]

Another nos video by etmoney. Nice.

[@ETMONEY]

Hello, we are happy to know that you found this video useful. Please share it with your friends and family as well and help spread the word.

[@sumitthaper3164]

Nice

[@ETMONEY]

Hi, glad to know that you found this video helpful. Please don’t forget to share it with your friends and family.

[@anirudh5484]

Is the transfer from tier 2 to tier 1 taxable ?

[@ETMONEY]

Hello, in all likelihood, it's tax-free. Still, do consult a tax advisor for more clarity.

[@sp-ye7ht]

​​@@ETMONEYplease bring a clarity on this..a confirmed answer, 'most likely' thing creates ambiguity.

[@awadhkishor9629]

Never choose NPS over Mutual fund. Mutual fund is safer

[@SachinVarshney-jw3mt]

Both are safe