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Indian NPS (National Pension System)

What is NPS?

The National Pension System (NPS) is a voluntary retirement savings scheme regulated by PFRDA (Pension Fund Regulatory and Development Authority).

It’s designed to provide regular income after retirement by encouraging disciplined, long-term investment.

NPS

🔑 Key Features

The main difference between Statistic and Statistics is that the Statistic is a single measure of some attribute of a sample and Statistics is a study of the collection.

Eligibility

Indian citizens (resident/non-resident) aged 18–70 years

Types of Accounts

  • Tier I Account – Mandatory retirement account. Lock-in till age 60 (partial withdrawals allowed under specific conditions).
  • Tier II Account – Optional savings account. No lock-in, more flexible (but fewer tax benefits).

Investment Options

Equity (E), Corporate Debt (C), Government Bonds (G), and Alternative Investment Funds (A).

Fund Management

You can choose between Active Choice (self-allocate asset mix) or Auto Choice (allocation changes with age)

Portability

Works across jobs and locations in India

💰 Tax Benefits

AMFI Registered Mutual Fund Distributor (guiding you in mutual fund and SIP investments with integrity).

Section 80CCD(1)

Deduction up to ₹1.5 lakh (part of 80C limit)
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Section 80CCD(1B)

Additional ₹50,000 exclusive deduction (over and above 80C)
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Section 80CCD(2)

Employer contribution up to 10% of salary (not counted in 1.5 lakh limit)
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Maturity Taxation

  • 60% of corpus can be withdrawn lump-sum at retirement (completely tax-free).
  • 40% must be used to buy an annuity (pension), which is taxable as income when received.
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🧾 Example (Retirement Corpus)

  • Suppose you invest ₹5,000/month from age 30 to 60 (30 years).
  • Assuming 10% annual return, corpus may grow to ₹1.14 crore.
  • At retirement:
    ₹68.4 lakh (60%) tax-free lump sum.
    ₹45.6 lakh (40%) goes into annuity                                                    → gives you pension.

✅ Pros

  • Strong tax benefits (especially 80CCD(1B)).
  • Low-cost (fund management charges ~0.01%).
  • Diversified investment (equity, debt, govt. securities).
  • Portable and transparent.
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⚠️ Cons

  • Tier I has lock-in till retirement.
  • Partial withdrawals allowed only for specific reasons (marriage, education, illness, house purchase).
  • Annuity returns (post-retirement) are taxable and generally lower compared to equity returns.
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