Here's a comprehensive overview of the National Pension System (NPS) scheme in India:
🧾 National Pension System (NPS): A
Complete Guide
The National Pension System (NPS) is a voluntary, long-term retirement savings scheme
introduced by the Government of India to encourage systematic savings among Indian
citizens. It is regulated by the Pension Fund Regulatory and Development Authority
(PFRDA).
Whether you’re a salaried individual, a self-employed professional, or someone planning
ahead for retirement, NPS offers a structured way to build your retirement corpus.
✅ Key Features of NPS
Feature Details
Eligibility Indian citizens aged 18–70 years
Voluntary Open to everyone—salaried, self-employed, NRIs
Regulated by PFRDA (Pension Fund Regulatory and Development Authority)
Tax Benefits Under Sec 80C, 80CCD(1), and 80CCD(1B)
Returns Market-linked (8–12% historically)
Account Types Tier I (mandatory), Tier II (optional)
Withdrawal Age After 60 years (partial withdrawal allowed earlier under conditions)
🧾 Types of NPS Accounts
1. Tier I Account (Pension Account)
Mandatory for joining NPS.
Locked until age 60 (with partial withdrawals allowed under specific conditions).
Minimum annual contribution: ₹1,000.
Eligible for tax benefits.
2. Tier II Account (Investment Account)
Optional savings account under NPS.
No lock-in period (withdraw anytime).
No tax benefit (except for government employees under 80C).
Works like a mutual fund with low charges.
💹 Investment Options
You can choose how your money is invested through:
Auto Choice: Allocation based on age (less risky as you get older).
Active Choice: Choose your own asset allocation (Equity, Corporate Debt,
Government Bonds).
Asset Class Type Max Allocation
E Equity Up to 75%
C Corporate Bonds Flexible
G Government Securities Flexible
💰 Tax Benefits under NPS
For Salaried Individuals:
Section 80C: ₹1.5 lakh (inclusive of other instruments like PPF, ELSS, etc.)
Section 80CCD(1B): Additional ₹50,000 exclusively for NPS
Section 80CCD(2): Employer contribution up to 10% of salary (Basic + DA) is tax-
exempt (for private sector employees)
Total tax benefit: Up to ₹2 lakh per annum
📤 Withdrawals and Exit Rules
At Retirement (Age 60+):
Withdraw up to 60% of the corpus tax-free
Remaining 40% must be used to buy an annuity (pension plan), which provides
monthly income
Early Withdrawal (before age 60):
Can withdraw up to 20% of corpus (tax-free); 80% must be used to purchase annuity
Partial withdrawals (up to 25%) allowed for specific needs like marriage, education,
illness, or house purchase
🏦 How to Open an NPS Account
You can open an account through:
Online via eNPS website
Offline via POPs (banks and post offices like SBI, ICICI, HDFC, etc.)
You will receive a PRAN (Permanent Retirement Account Number) for accessing your
account.
📊 Why Choose NPS?
Low-cost investment: Charges are among the lowest in financial products.
Market-linked returns: Higher potential than traditional retirement schemes.
Portable: NPS is accessible across India, and even if you change jobs or cities, your
account remains the same.
Well-regulated: Managed by professional fund managers under strict oversight by
PFRDA.
📌 NPS vs Other Pension Schemes
Feature NPS PPF EPF
Returns Market-linked (8–12%) Fixed (7–8%) Fixed (8–9%)
Lock-in Till age 60 15 years Till retirement
Tax Benefit ₹2 lakh ₹1.5 lakh ₹1.5 lakh
Withdrawal Partially allowed After 5 years Limited conditions
📞 Need Help?
You can visit the official NPS website or eNPS portal for more details.
Would you like a printable PDF guide or a step-by-step walkthrough to open an NPS account
online?
