Gift Secure Life and Future to your Loved Ones
Gift Secure Life and Future to your Loved Ones. With NPS, you can open account for your spouse. Visit the nearest CSC to Open NPS Account.
National Pension System (NPS)
The National Pension System (NPS) is a voluntary, contributory pension scheme in India. It was launched by the Government of India in 2004 with the aim of providing retirement income to all citizens. The NPS is managed by the Pension Fund Regulatory and Development Authority (PFRDA).
Here are some key features of the National Pension System:
- Voluntary Participation: NPS is open to all Indian citizens between the ages of 18 and 65, including salaried employees, self-employed individuals, and non-resident Indians (NRIs).
- Tiered Structure: The NPS has a two-tiered structure: Tier I and Tier II accounts. Tier I is a mandatory, non-withdrawable pension account, while Tier II is an optional savings account that offers more flexibility in withdrawals.
- Contribution and Investment: Under the NPS, individuals contribute regularly to their pension account during their working years. The contributions are invested in various pension fund options, including equity, corporate bonds, and government securities. Subscribers can choose from different fund managers and investment options based on their risk appetite.
- Portable and Transferable: The NPS is portable across jobs and locations, allowing individuals to continue their membership even if they change employment or move to a different city. It provides a unique Permanent Retirement Account Number (PRAN) to each subscriber, which remains the same throughout their lifetime.
- Tax Benefits: Contributions to the NPS are eligible for tax deductions under Section 80CCD(1) of the Income Tax Act, up to a specified limit. Additionally, an exclusive tax deduction of up to Rs. 50,000 is available under Section 80CCD(1B) for contributions to the NPS Tier I account.
- Retirement and Withdrawals: At the age of 60, subscribers can withdraw a portion of their accumulated NPS corpus as a lump sum, and the remaining amount must be used to purchase an annuity from a PFRDA-registered insurance provider. The annuity provides a regular pension income during retirement. Partial withdrawals are also allowed for specific purposes like education, marriage, or medical emergencies.
- Auto Choice: The NPS offers an “Auto Choice” investment option, where the investment mix is automatically adjusted based on the subscriber’s age. It starts with a higher equity exposure in the early years and gradually shifts to more conservative investments as retirement approaches.
The National Pension System has gained popularity as a retirement planning tool due to its tax benefits, professional fund management, and flexibility. It provides individuals with an opportunity to accumulate a pension corpus and secure their financial future after retirement.