The Indian government has introduced a new pension scheme called the National Pension System (NPS) which is a voluntary contribution-based p...
The Indian government has introduced a new pension scheme called the National Pension System (NPS) which is a voluntary contribution-based pension system. It was launched in January 2004 for all citizens of India including those who are self-employed.
Under the NPS, individuals can open a pension account and make contributions towards it during their working years. The contributions are invested in various schemes based on the risk preference of the individual. The accumulated corpus is then used to provide a pension during retirement years.
The NPS offers two types of accounts - Tier I and Tier II. Tier I is a mandatory account which restricts withdrawals before retirement age. Tier II is a voluntary account which allows withdrawals at any time.
The NPS is regulated by the Pension Fund Regulatory and Development Authority (PFRDA) which ensures transparency, accountability and security in the management of funds. The scheme also offers tax benefits under Section 80C of the Income Tax Act, 1961.
Overall, the NPS is a good option for individuals who want to plan for their retirement and ensure financial security in their later years.
