National Pension System (NPS) is a voluntary, defined contribution retirement savings scheme designed to enable the subscribers to make optimum decisions regarding their future through systematic savings during their working life. NPS seeks to inculcate the habit of saving for retirement amongst the citizens. It is an attempt towards finding a sustainable solution to the problem of providing adequate retirement income to every citizen of India.

Under NPS, individual savings are pooled in to a pension fund which are invested by PFRDA regulated professional fund managers as per the approved investment guidelines in to the diversified portfolios comprising of Government Bonds, Bills, Corporate Debentures and Shares. These contributions would grow and accumulate over the years, depending on the returns earned on the investment made.

At the time of normal exit from NPS, the subscribers may use the accumulated pension wealth under the scheme to purchase a life annuity from a PFRDA empaneled Life Insurance Company apart from withdrawing a part of the accumulated pension wealth as lump-sum, if they choose so.

• Flexible- NPS offers a range of investment options and choice of Pension Funds (PFs) for planning the growth of the investments in a reasonable manner and monitor the growth of the pension corpus. Subscribers can switch over from one investment option to another or from one fund manager to another.
• Simple – Opening an account with NPS provides a Permanent Retirement Account Number (PRAN), which is a unique number and it remains with the subscriber throughout his lifetime. The scheme is structured into two tiers:
  • Tier-I account: This is the non-withdrawable permanent retirement account into which the regular contributions made by the subscriber are credited and invested as per the portfolio/fund manager chosen of the subscriber.
  • Tier-II account: This is a voluntary withdrawable account which is allowed only when there is an active Tier I account in the name of the subscriber. The withdrawals are permitted from this account as per the needs of the subscriber as and when required.
• Portable- NPS provides seamless portability across jobs and across locations. It would provide hassle-free arrangement for the individual subscribers while he/she shifts to the new job/location, without leaving behind the corpus build, as happens in many pension schemes in India.
• Well Regulated- NPS is regulated by PFRDA, with transparent investment norms, regular monitoring and performance review of fund managers by NPS Trust. The account maintenance costs under NPS are the lowest as compared to similar pension products across the globe. While saving for a long-term goal such as retirement, the cost matters a lot as the charges can shave off a significant amount from the corpus over 35-40 years of investment period.
• Dual benefit of Low Cost and Power of compounding: Till the retirement, pension wealth accumulation grows over the period of time with a compounding effect. The account maintenance charges being low, the benefit of accumulated pension wealth to the subscriber eventually become large.
• Ease of Access: The NPS account is manageable online. An NPS account can be opened through the eNPS portal. Further contributions can be also be made online through the

A citizen of India, whether resident or non-resident, subject to the following conditions: Applicant should be between 18 – 60 years of age as on the date of submission of his/her application to the POP/ POP-SP. Applicant should comply with the Know Your Customer (KYC) norms as detailed in the Subscriber Registration Form. All the documents required for KYC compliance need to be mandatorily submitted

The Central Government had introduced the National Pension System (NPS) with effect from January 1, 2004 (except for armed forces i.e. Army, Navy & Air Force). All the employees of Central Autonomous Bodies who have joined on or after the above mentioned date are also mandatorily covered under NPS.

Ministry of Finance, vide Office Memorandum No 1 (2)/E.V./2007 dated June 30, 2009 has stated that these organisations may also be permitted to shift to a defined contribution pension scheme i.e. NPS in respect of employees who have joined before January 01, 2004

To be a subscriber under a State Government, the individual has to be employed under the particular State Government. Various State Governments have adopted NPS architecture and implemented NPS with effect from different dates. To know the States implemented NPS please

To be a subscriber under a State Autonomous Body (SAB), the individual has to be employed under the particular SAB which has implemented NPS.

Various State Governments have adopted NPS architecture and implemented NPS for the employees of State Government as well as for the employees of Autonomous bodies, State PSUs, Corporations, Boards, Nigams etc. with effect from different dates.. To know the States implemented NPS

For Corporates:

Corporate Model is available to any of the entities as under:-

• Entities registered under Companies Act
• Entities registered under various Co-operative Acts
• Central Public Sector Enterprises
• State Public Sector Enterprises
• Registered Partnership firm
• Registered Limited Liability Partnership (LLPs)
• Any Body incorporated under any act of Parliament or State legislature or by order of Central / State Government
• Proprietorship Concern
• Trust/Society

The employees of the corporate entity, enrolled by the employer having Indian Citizenship between the age of 18-60 years and complying with the KYC norms, are eligible to be registered as subscribers under NPS.

Government of India has discontinued new subscription under NPS Swavalamban with effect from 01/April/2015. However, the subscribers already registered under NPS Swavalamban prior to 01/April/2015 can continue to deposit their subsequent contributions through their respective aggregators registered with PFRDA.

Any individual who is Subscriber of NPS can claim tax deduction up to 10% of gross income under Sec 80 CCD (1) with in the overall ceiling of Rs. 1.5 lac under Sec 80 CCE.

Exclusive Tax Benefit to all NPS Subscribers u/s 80CCD (1B)

An additional deduction for investment up to Rs. 50,000 in NPS (Tier I account) is available exclusively to NPS subscribers under subsection 80CCD (1B). This is over and above the deduction of Rs. 1.5 lakh available under section 80C of Income Tax Act. 1961.

• Corporate Subscriber: Additional Tax Benefit is available to Subscribers under Corporate Sector, u/s 80CCD (2) of Income Tax Act. Employer's NPS contribution (for the benefit of employee) up to 10% of salary (Basic + DA), is deductible from taxable income, without any monetary limit.
• Corporates: Employer’s Contribution towards NPS up to 10% of salary (Basic + DA) can be deducted as ‘Business Expense’ from their Profit & Loss Account.
• How to make the Investment to avail the Tax Benefit:

  If you are an existing Subscriber, you can approach any POP-SP or alternatively you can visit eNPS website (https://enps.nsdl.com) for making additional contribution in your Tier I account.

  Please note: Tax benefits are applicable for investments in Tier I account only.

Subscriber can partially withdraw from NPS tier I account before the age of 60 for specified purposes. According to Budget 2017, amount withdrawn up to 25 per cent of Subscriber contribution is exempt from tax.

Amount invested in purchase of Annuity, is fully exempt from tax. However, annuity income that you receive in the subsequent years will be subject to income tax.

After Subscriber attain the age of 60, up to 40 percent of the total corpus withdrawn in lump sum is exempt from tax.

For example: If total corpus at the age of 60 is 10 lakhs, then 40% of the total corpus ie 4 lakhs, you can withdraw without paying any tax. So, if you use 40% of NPS corpus for lump sum withdrawal and remaining 60% for annuity purchase at the time of retirement, you do not pay any tax at that time. Only the annuity income that you receive in the subsequent years will be subject to income tax.

There is no tax benefit on investment towards Tier II NPS Account.