National Pension System (NPS)
The National Pension System (NPS) is a voluntary, long-term investment plan for retirement under the purview of the Pension Fund Regulatory and Development Authority (PFRDA) and the Government of India.
It enables systematic savings during your working life, offering a mix of equity, corporate bonds, government securities, and alternative assets. NPS is one of the most tax-efficient instruments under Section 80CCD. It provides long-term retirement planning benefits with flexible contribution options, professional fund management, and the ability to choose your investment allocation. Over time, it helps build a substantial corpus, ensuring financial security post-retirement. Additionally, it offers portability across jobs and locations, making it an ideal retirement tool for the modern workforce.
Key Benefits of NPS
Tax Savings: Up to ₹2 lakh tax benefit under Section 80CCD(1) and 80CCD(1B).
Low Cost: One of the lowest-cost pension schemes globally.
Flexible: Choose your asset mix and fund manager as per risk appetite.
Portable: Continuity even if you change job/location.
Compounding: Long-term investment horizon helps build a large corpus.
Types of NPS Accounts
Tier I Account
Primary retirement account with withdrawal restrictions and tax benefits.
Tier II Account
Voluntary savings account without tax benefits and with full liquidity.