About National Pension System India (NPS)

The National Pension System (NPS) is a voluntary, long-term retirement savings scheme designed to enable systematic savings to Indian citizens. It was launched by the Government of India in 2004 and is administered and regulated by the Pension Fund Regulatory and Development Authority (PFRDA).

Here are some key features and aspects of the National Pension System in India:

  1. Objective: The primary objective of the NPS is to provide a retirement income to all citizens, including those from the unorganized sector. It aims to encourage systematic saving for retirement.
  2. Eligibility: The NPS is open to all Indian citizens, including non-resident Indians (NRIs), between the ages of 18 and 60. Initially, the scheme was intended for government employees, but it has been opened to the general public as well.
  3. Types of Accounts: There are two types of NPS accounts: Tier-I and Tier-II.
    • Tier-I Account: This is a mandatory, long-term retirement account with restrictions on withdrawals. Subscribers can avail tax benefits on contributions to this account.
    • Tier-II Account: This is a voluntary savings account with no withdrawal restrictions. However, it does not offer the same tax benefits as the Tier-I account.
  4. Investment Options: NPS provides a choice of investment options to subscribers. They can choose between various asset classes, including equities, corporate bonds, and government securities. Subscribers can decide the allocation of funds among these options based on their risk appetite and financial goals.
  5. Fund Managers: NPS allows subscribers to choose from multiple fund managers who manage different investment funds. These fund managers are appointed by the PFRDA, and subscribers can switch between them based on their performance.
  6. Tax Benefits: Contributions made to the NPS are eligible for tax benefits under Section 80CCD of the Income Tax Act. Additionally, there is an exclusive tax benefit for self-employed individuals under Section 10(14) of the Income Tax Act.
  7. Annuity Options: At the time of retirement, subscribers can use the accumulated corpus in their Tier-I account to purchase an annuity from an insurance company. The annuity provides a regular income stream during the subscriber’s retirement years.
  8. Exit and Withdrawals: Subscribers can exit the NPS at the time of retirement or attaining the age of 60. Partial withdrawals are allowed under certain specified conditions like medical emergencies and higher education.
  9. Online Access: NPS provides online access to account information and statements, making it convenient for subscribers to manage their accounts.

It’s important to note that the rules and features of the NPS may be subject to change, so it’s advisable to check for the latest information from the official PFRDA website or other reliable sources.