National Pension System (NPS)
What is NPS?
The National Pension System (NPS) is a government-backed retirement savings scheme launched by the Pension Fund Regulatory and Development Authority (PFRDA). It is open to employees from the public, private, and even unorganized sectors (except those from the armed forces).
Key Features of NPS
Voluntary: You can join and contribute as per your financial convenience.
Flexible: Choose your fund manager and investment options.
Portable: Move across jobs and locations without impacting your NPS account.
Regulated: Managed by PFRDA, ensuring transparency and security.
How NPS Works
When you invest in NPS, your money is allocated across equity, corporate bonds, and government securities, depending on the option you select (Auto or Active Choice). The returns are market-linked, but historically stable.
At retirement:
60% of the corpus can be withdrawn tax-free (lump sum).
40% must be used to purchase an annuity, which provides a monthly pension.
Benefits of NPS
Tax Benefits:
Up to ₹1.5 lakh under Section 80C.
Additional ₹50,000 under Section 80CCD(1B).
Low Management Cost: One of the lowest among pension schemes.
Compound Growth: Long-term investing boosts corpus through compounding.
Secure Retirement: Offers financial independence post-retirement.
Who Should Invest in NPS?
Salaried individuals seeking tax savings and retirement corpus.
Self-employed people looking for safe long-term investments.
Young professionals aiming to start early for better returns.
How to Open an NPS Account
Online via eNPS portal: https://enps.nsdl.com
Offline through authorized Point of Presence (POP) like banks.
You will need:
PAN/Aadhaar card
Bank details
KYC documents
