In a bid to revolutionize the pension landscape and ensure the financial security of every Indian citizen, the Government of India introduced the National Pension System (NPS). This innovative pension scheme, underpinned by defined contributions, aims to provide a safety net for individuals across the nation.
Who Can Join? The NPS is open to all citizens of India aged between 18 and 65 years, regardless of their existing pension affiliations.
Two-Tier Structure for a Secure Tomorrow The NPS comprises two tiers:
Tier I – Pension Account: This mandatory account offers tax benefits. A minimum contribution of Rs. 500 is required during account opening, and a yearly total of at least Rs. 1,000 (with a minimum of Rs. 500 per contribution) is needed to maintain the account.
Tier II – Investment Account: An optional account, it allows any time withdrawal of the corpus without tax benefits. To open this account, a minimum of Rs. 1,000 is needed, with subsequent contributions requiring a minimum of Rs. 250 per transaction.
Empowering Partial Withdrawals Under Tier I:
- After a lock-in period of 10 years, up to 25% of employee contributions can be partially withdrawn.
- Three partial withdrawals are permitted during the account tenure, with a gap of 5 years between each withdrawal.
Seamless Exit Options On Reaching 65 Years:
- Up to 60% of the corpus can be withdrawn as a lump sum before the age of 70.
- A minimum of 40% of the corpus must be invested in an annuity scheme.
Before 65 Years:
- A lump sum withdrawal of 20% is allowed.
- 80% of the corpus is invested in an annuity scheme.
Tax Benefits to Lighten the Load
- Section 80CCD (1B): Exclusive tax benefit of up to Rs. 50,000 on NPS investments.
- Section 80CCD (1):
- Salaried individuals can deduct up to 10% of their Salary (Basic + Dearness Allowance).
- Self-employed professionals can deduct up to 10% of their Gross Annual Income.
- This is subject to a combined limit of Rs. 1.5 lakhs with Section 80C.
Empowering Your Retirement Journey
- Investment Choice: NPS offers a range of investment options, pension fund managers, annuity service providers, and plans.
- Switching Facility: Flexibility to switch service providers, investment options, and fund managers.
- Attractive Returns: NPS offers market-linked returns, outperforming many other pension products.
- Cost-Effective: With a mere 0.01% Fund Management Charge, NPS is one of the most cost-efficient investment options globally.
- Geographical and Employment Portability: Your NPS account remains unchanged even if you change locations or jobs.
- Flexible Contributions: Alter your contribution amount and frequency as per your needs.
- Continued Participation: Extend contributions post-retirement up to 70 years, allowing you to enhance your pension fund.
- Stringently Regulated: The NPS is regulated by the Pension Fund Regulatory and Development Authority (PFRDA).
- Online Accessibility: Manage your NPS account with ease through online access at NSDL.
The National Pension System isn’t just a retirement plan; it’s key to securing your future. With its diverse options, tax benefits, and transparent regulations, the NPS empowers you to craft a retirement tailored to your dreams and needs. Join the NPS today and unlock the door to a worry-free retirement journey.
