Do you want to make the golden years of your life – retirement – stress-free? Then National Pension Scheme (NPS) can be your best financial partner. In India, NPS is a trusted and government-backed retirement planning option that creates long-term wealth with tax benefits.
NPS (National Pension Scheme) is a voluntary retirement savings scheme which is regulated by Pension Fund Regulatory and Development Authority (PFRDA). The main goal of this scheme is to encourage people to save for retirement.
In this, you make regular contributions until you retire. After retirement, you get a fixed monthly pension and a lump sum amount.
Target Audience: Salaried employees, self-employed people, and any Indian citizen whose age is between 18 to 70 years – everyone can join NPS.
How does NPS work?
NPS is a market-linked, defined contribution scheme. That is, the more you contribute, the more will be your retirement corpus. This corpus is invested in assets like mutual funds by fund managers.
2 Types of Accounts are in the NPS Scheme
1. Tier-I Account
This is a retirement account.
Minimum yearly contribution: ₹ 1,000
There are withdrawal restrictions in this.
2. Tier-II Account
This is a voluntary savings account.
Money can be withdrawn at any time.
No tax benefits.
Your NPS fund invests in 4 asset classes:
Equity (E)
Corporate Bonds (C)
Government Securities (G)
Alternate Assets (A)
You can select Active choice (decide yourself how much to invest in which asset) or Auto choice (age-based automatic allocation).
Benefits of NPS
1. No worries about retirement security.
💰A large corpus is prepared for your retirement, which gives you monthly pension and lump sum as well.
2. Tax Benefits – Triple Advantage
✅Investment in NPS gives 3 types of tax benefits:
✅Section 80CCD(1): deduction up to ₹1.5 lakh (within ₹1.5 lakh limit of 80C).
✅Section 80CCD(1B): Extra deduction of ₹50,000.
✅ Total = ₹2 lakh/year tax benefit
✅Employer contribution is also exempted under Section 80CCD(2).
3. Low Cost
Compared with mutual funds and ULIPs, the fund management charge of NPS is very low (~0.01% annually).
4. Power of Compounding
Due to long-term investment and market-linked returns, the corpus can become quite large.
5. Flexible Investment
You can invest every year or whenever you want – there will be no monthly compulsion. You can also make easy contributions by logging in from the mobile app or from the website too.
How to Open an NPS Account
Your NPS account can be easily opened online or offline.
👉2. Keep your PAN, Aadhaar and mobile number ready.
👉3. Complete KYC.
👉4. PRAN (Permanent Retirement Account Number) will be generated.
👉5. Make the first contribution.
👉6. You will get the PRAN card by post.
🟠 Offline (Through POP – Point of Presence)
👉1. Go to the nearest bank branch or POP center and fill the NPS form.
👉2. Submit Identity & address proof.
👉3. PRAN is received after the first contribution.
Withdrawal Rules After Retirement
Withdrawal Rules After Retirement
✅When you turn 60, you can take 60% lump sum of total corpus – tax-free.
✅You will get monthly pension (annuity) from the remaining 40%.
✅ Some withdrawal options are available on early exit as well, but with some conditions.
For example, if you have less than 2 lakhs, you can withdraw the entire amount
Is NPS right for you?
If you are looking for a secure, low-cost and tax-efficient plan for retirement, then NPS can be a best option. Especially for:
✅ Salaried people should also save tax.
✅ Self-employed who do not have any formal pension scheme
✅ Young investors who want long-term returns from early start
Pro Tips for Maximizing NPS Benefits
💡 Start Early: The earlier you start, the more corpus you will create.
💡 Use Auto Choice if You’re Not an Expert: Age-based investment allocation is smart for most people.
💡 Claim 80CCD(1B) Tax Benefit: Don’t miss extra ₹50,000 deduction.
💡 Review Annually: Keep checking fund performance and asset allocation.
Conclusion: NPS – A Secure Path to Peaceful Retirement
Retirement planning is one of the most important financial priorities today. NPS not only provides you with a regular pension, but also reduces your tax burden. With a combination of low cost, flexibility, and government-backed security, NPS is definitely one of the best retirement planning options in India.
If you have not joined NPS yet, start now!
FinSecurePro Tip: Along with NPS, include mutual funds, term insurance and health cover in your portfolio – so that your retirement is secure, stress-free and fulfilling.
